BT has lost its controversial bid to sue Prodigy Communications over a patent that it claimed covered the use of hyperlinks. US District Judge Colleen McMahon awarded Prodigy its motion for summary judgement to have the case dismissed, saying that no jury could find that Prodigy infringes (BT's) patent.
The ruling frees all ISPs from the threat of having to pay a licence fee to BT for hosting pages that use hyperlinks -- the building blocks of the Web. If BT had won and licence fees had been imposed, the charges would have almost certainly been passed on to ISPs' customers.
BT had contacted Prodigy and 16 other ISPs, including America Online, in June 2000, asking them to buy a hyperlink licence -- and when they refused, the telco pursued Prodigy as a test case.
The ruling will be an embarrassing blow for BT, which had doggedly pursued the case. Shortly before the case went to trial in February, BT chairman Sir Christopher Bland dismissed suggestions that BT would be wise to ditch the lawsuit. "The case will go ahead," said Bland at the time. "The idea that we should abandon this suit in order to provide ISPs with a feel-good factor is, frankly, bizarre," Bland insisted. "Everyone sues all the time in the States, anyway," the BT chairman added.
BT appeared to be losing the case almost from the start. In March, Judge McMahon ruled in what is known as a Markman ruling that many of BT's claims were invalid. The Markman ruling constitutes the first phase of patent trials, and is concerned primarily with putting the words of the patent claim into plain English.
A BT spokesman said the company was disappointed with the result. "We are going to spend a bit of time looking over all 27 pages of the ruling," he said.
The hyperlink patent -- properly known as the Sargent patent -- describes a system in which multiple users, located at remote terminals, can access data stored at a central computer. BT had argued that the Internet infringes the Sargent patent, and that Prodigy facilitates infringement by its subscribers by providing them with access to the Internet.
But Judge McMahon found three problems with BT's arguments. First, she said, the Internet has no "central computer" as described in the Sargent patent. Therefore, she said, because the Internet itself does not infringe the Sargent patent, "Prodigy cannot be liable for contributory infringement or active inducement for providing its users with access to the Internet."
And third, said the judge, BT's argument that Prodigy's Web servers directly infringe the Sargent patent also fails, "because Web pages stored on Prodigy's Web servers do not contain 'blocks of information' or 'complete addresses' as claimed in the Sargent patent."
"In contrast to what BT would have us believe," said Judge McMahon, "there are no disputed issues of material fact in this case. Instead, the two sides reach vastly different conclusions based on the same set of facts. I find that, as a matter of law, no jury could find that Prodigy infringes the Sargent patent... either as part of the Internet or on its Web server viewed separate from the Internet. Prodigy's motion for summary judgement is therefore granted."
The Sargent patent, number 4,873,662, was issued to BT in the US in 1989 and expires in 2006. The company said it only discovered the patent in a routine trawl through its own patents four years ago.
The patent was filed in the US in 1976. David Weaver of Houston-based law firm Vinson & Elkins, who acted on behalf of Prodigy, told ZDNet UK following the Markman ruling in March: "The Patent and Trademark Office here analysed it and for 12 years said there is nothing new in this patent application. So for 12 years they rejected the claims that were asserted, but the patent attorney representing BT kept pressing BTs case and eventually convinced the US Patent and Trademark Office to issue the patent."
Some patent experts arguing against BT's case point to a video of a demonstration delivered by Douglas C. Engelbart, who had been working with a group of 17 researchers in the Augmentation Research Center at Stanford Research Institute in Menlo Park, California. In a live demonstration of the online system called NLS, which the researchers had been working on since 1962, Englebart demonstrated the ability of NLS to jump between levels in the architecture of a text, making cross references, creating internal linking and live hyperlinks within a file.