Globetrotter Software, Inc. v. Elan Computer Group, Inc., 362 F.3d 1367 (Fed. Cir. 2004), was an appeal in a patent dispute between two vendors of software licence managers, the tools that count how many copies of an application run at once and refuse further copies when the purchased number is reached.[1] Globetrotter was the producer of the FLEXlm licence manager, which Macrovision acquired in 2000 and later renamed FlexNet Publisher, according to Revenera’s company history.[2] The decision is unusual because it describes in court language what a concurrent-licence control system does, and shows how the licence-management market itself was contested.
Background
Globetrotter owned three patents directed to licence management systems that let a purchaser use an application on more than one computer on a network while preventing use of more copies than were licensed.[1] The court’s example: a purchaser can install a copy on each of ten computers, yet with three licences the system prevents a fourth simultaneous use because no licence is available. The ‘297 patent covers controlling the number of concurrent copies against the number of licences, the ‘369 patent covers metering use remotely without hardware wear, and the ‘412 patent covers licence management that lets licensors organise licence records and group licences for suites.[1]
Globetrotter alleged that Elan’s licence manager infringed the ‘297 patent. Elan’s product had also been sold by Rainbow Technologies under its own SentinelLM trademark, under a licence from Elan, and Rainbow had also distributed Elan’s software.[1]
The dispute
Globetrotter sued Elan and Ken Greer, its majority shareholder and chief executive, in November 1997.[1] In October 1997, while Rainbow was negotiating to buy the rest of Elan for USD 4,000,000, Globetrotter sent an e-mail to Rainbow’s president and two letters to Greer, copied to Rainbow, alleging infringement of its patents. Greer alleged that Globetrotter did this in bad faith to make Rainbow abandon the deal, which it did, and Rainbow later acquired Elan for a much lower price. Greer counterclaimed under state law for tortious interference with prospective economic advantage and unfair competition.[1]
Decision or outcome
On the counterclaims the Federal Circuit affirmed summary judgment for Globetrotter. Because Globetrotter’s infringement claims were not objectively baseless, state-law claims arising from its communications about potential patent litigation were preempted by federal patent law.[1]
On Globetrotter’s cross-appeal, the court addressed claim 55 of the ‘297 patent. It held that the district court had construed “prevent” too narrowly by requiring active prevention. The specification’s embodiments return a status or message to the requesting program, which then shuts itself down, and the court construed the claim to require only a message that results in the program being prevented from running. It therefore vacated summary judgment of non-infringement as to Elan’s version 5.0 and remanded for further proceedings limited to that product.[1] Elan and Rainbow had abandoned their own appeals, and Globetrotter dismissed its appeal against Rainbow.[1] The opinion does not report what happened on remand.
Significance for software licensing and SAM practice
- Licence enforcement technology is itself intellectual property. The patents describe the control of concurrent licences, licence files and metering, the mechanisms behind floating-licence products.[1]
- Floating licences count simultaneous use, not installations. The court’s own example shows ten installed copies governed by three licences.[1]
- A rebranded licence manager has several vendors. The same code appeared under Elan’s and Rainbow’s names, so a publisher’s licence server may come from a third party.[1]
Lessons learned
- Concurrent licence control was itself the subject of patent claims. The three patents each addressed a form of licence management, including counting simultaneous copies against purchased licences.[1]
- A licence-management product can be sold under a reseller’s brand. Elan’s product was marketed by Rainbow as SentinelLM, and the dispute reached both.[1]
- Patent warning letters sent to a competitor’s business partner are protected from state-law claims unless objectively baseless. The court affirmed summary judgment on that basis.[1]
- A “may not run” message can count as preventing a copy from running. The court held active prevention was not required.[1]