Vlingo, the Cambridge, MA-based startup that makes a suite of speech-to-text applications used by millions of iPhone, BlackBerry, and Nokia mobile device owners, is about to get a brain transplant of sorts. It said today that it will largely abandon a core speech-recognition engine developed by IBM and maintained by Nuance Communications in favor of a system from AT&T Labs in New Jersey.

As part of the shift, says Vlingo CEO Dave Grannan, Vlingo and AT&T have agreed to a long-term strategic alliance. Vlingo’s speech scientists will be able to modify and improve the source code for the AT&T technology, called Watson, while AT&T will take a minority ownership stake in Vlingo. All of Vlingo’s applications will be running on top of the AT&T speech-recognition system by the first quarter of 2010, Grannan says.

Vlingo’s own speech scientists have developed software that exploits information collected from users—the way a Bostonian’s pronunciation of a dictated phrase like “I parked my car” might differ from a New Yorker’s, for example—to build statistical models that help improve speech-recogition accuracy over time. These models provide supplemental input that helps to guide a core speech-recognition engine as it transforms speech sounds into text. Vlingo didn’t build its own core engine—it has long licensed that part of its system from IBM.

The switch from IBM’s engine to AT&T’s is a “best of all worlds” situation for Vlingo, in Grannan’s words. For one thing, he says, the Watson technology simply works better than the IBM recognizer. “Watson is superior on speed and base-level accuracy,” he says. Once the transition is complete, users of Vlingo’s iPhone, BlackBerry, and Nokia apps should notice fewer wrong guesses in the transcriptions of their utterances. Grannan says they’ll also see a few new features, such as automatic punctuation, that Vlingo can now add because it will be able to tinker with Watson’s innards.

But just as important, the switch will help Vlingo disentangle itself from its strained relationship with Nuance.

Burlington, MA-based Nuance (NASDAQ: NUAN) is one of the Boston area’s biggest high-tech firms, and it is the world’s largest specialized provider of speech-related technologies. It offers software for mobile speech recognition that competes directly with Vlingo’s. In June 2008, after losing out to Vlingo on a contract to supply Yahoo with speech-recognition technology for its oneSearch service, Nuance hit Vlingo with a lawsuit alleging that …Next Page »

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The Boston Herald reports that an investor in Genzyme (NASDAQ:GENZ) has filed a securities lawsuit against the Cambridge, MA-based biotech powerhouse. The daily tabloid writes that the suit, filed by Florida resident Jon Rahn, claims that Genzyme took “too long” to disclose issues that federal regulators found last fall at its drug-production facilities in Boston and Belgium.

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The board of directors at Santa Clara, CA-based Data Domain (NASDAQ: DDUP) yesterday recommended that shareholders reject a $1.8 billion, $30-per-share cash tender offer from Hopkinton, MA-based EMC (NYSE: EMC). The board of the data deduplication software company stuck to its earlier decision to pursue a merger with Sunnyvale, CA-based NetApp (NASDAQ: NTAP), which is also offering $30 per share in cash and stock but whose offer is valued at $1.9 billion overall. Meanwhile, two law firms said yesterday that they filed a class-action shareholder lawsuit against Data Domain in Delaware on June 12; the firms, Bernstein Litowitz Berger & Grossmann LLP of New York, NY, and Grant & Eisenhofer, P.A., of Wilmington, DE, said in a press release that the board members at Data Domain are “breaching their fiduciary duties to their shareholders by refusing to negotiate with a potential acquirer, EMC Corporation…and for agreeing to sell Data Domain to NetApp without taking any steps to maximize the price paid to Data Domain’s shareholders.”

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The stellar plaintiffs in a patent lawsuit over genotyping technology developed at MIT are raising the stakes by dragging a second California company into the dispute.

In 2008, MIT and E8 Pharmaceuticals, a Cambridge, MA-based startup created by MIT biologist David Housman and Harvard biologist Richard Mulligan, sued Santa Clara, CA-based Affymetrix for allegedly including technology in its GeneChip microarray products that infringes on an MIT DNA-screening technology exclusively licensed to E8. That suit has been dragging on for the last 10 months, but now MIT and E8 are going after an Affymetrix partner, a Foster City, CA-based genetic testing company called Navigenics.

In a lawsuit filed Tuesday in the District Court of Massachusetts, the two plaintiffs say Navigenics is infringing on the same MIT patent by using Affymetrix-manufactured microarrays as part of its genetic testing services.

Mass High Tech broke the story on Wednesday. The MHT story pegged the demand for damages at $75 million. But court documents examined by Xconomy don’t specify an exact damage amount, and say only that the amount of the damages requested is greater than $75,000.

It’s the latest development in a fractious story. As Bob explained in an extensive article last July, Housman is one of the named inventors on an MIT-owned U.S. patent, No. 6,703,228, which covers methods for high-throughput genotyping using single-nucleotide polymorphisms (SNPs). The patent was filed in 1999 and granted in March 2004, but Affymetrix claimed in September 2004 that it had actually filed a patent application on substantially the same invention in 1994. In 2007, the U.S. Patent and Trademark office eventually ruled that priority belonged to the MIT group. In its suit last year, E8 and MIT claimed that by continuing to sell its GeneChip equipment, which allegedly uses the same SNP genotyping technology, Affymetrix was infringing on the MIT patent.

Now, in the complaint filed this week, MIT and E8 say that Navigenics is also infringing the patent “by providing, selling and offering to sell, on a nationwide basis, genetic counseling services that use certain GeneChip products manufactured by Affymetrix.” The nub of the MIT-E8 complaint appears to be the fact that in February, Navigenics purchased an Affymetrix facility in West Sacramento, CA, where Affymetrix formerly performed microarray-based clinical testing services. “As part of its purchase of the CLIA facility, Navigenics has taken over infringing activities that were previously performed by Affymetrix and has continued to provide, sell and offer to sell services that directly infringe the ‘228 patent,” the complaint says.

The complaint asks the Massachusetts court to force Navigenics to pay damages and legal fees to MIT and E8. If Navigenics doesn’t ultimately take a license to the MIT patent, the plaintiffs say the court should either force Navigenics to pay royalties, or issue an injunction to keep the company from using the Affymetrix technology.

The legal team representing MIT and E8 includes Wiley Rein—the Washington, DC-based firm that helped NTP Win a $612 million settlement with Blackberry maker RIM in 2006—and Duane Morris of Boston. Navigenics has until June 8 to respond to the complaint; no hearings or other deadlines have been scheduled in the case. Representatives of E8 and Navigenics were not immediately available to comment on the suit.

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It’s a rare event for EMC, the Hopkinton, MA-based storage and information management giant that has been on an acquisition spree over the last few years, to launch a new product line in-house. But that’s what’s happening this week as EMC rolls out “SourceOne,” a new family of software products designed to help companies prepare for, and minimize the costs of, legal cases that may require them to produce corporate documents such as e-mails.

When companies get hauled into court, new federal rules put into place in 2006 mean they have to be ready to hand over stored e-mail and instant messages as part of the discovery process. If they haven’t been archiving this information systematically before a discovery request hits, it can be extremely costly to comply fast enough to meet court deadlines. Market research firm Gartner reported last year that paying lawyers to sift through e-mail files for relevant messages costs an average of $18,750 per gigabyte.

SourceOne is designed to drastically reduce those costs. It consists, at launch, of two components. The first is an e-mail management program that works with corporate e-mail server systems such as Microsoft Exchange and IBM Lotus Notes/Domino to create a definitive archive of e-mails and instant messages. The system not only makes sure that all of a company’s e-mails are in one searchable location, but decreases storage needs by getting rid of duplicate data. The SourceOne e-mail management product is designed as a next-generation replacement for EMC’s EmailXtender product, which EMC inherited when it acquired Legato Systems in 2003, according to Kelly Ferguson, a senior product marketing manager at EMC.

The second component is the SourceOne Discovery Manager, which is specialized for searching large volumes of e-mail and isolating the subset of documents that must be handed over to outside counsel in legal cases. “A company might have a million messages that fit the date range or subject” for a given case, says Ferguson. “Discovery Manager will narrow that down so that only what is relevant is held in a secure ‘legal hold’ folder.” The system complies with the Electronic Discovery Reference Model (EDRM), a set of e-discovery guidelines set up several years ago by a group of roughly 100 software vendors and consulting firms, including EMC.

Later this quarter, EMC plans to add a third component to the SourceOne family, the Discovery Collector, which will quickly scour a company’s larger information …Next Page »

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Back in February 2008, a Texas jury told Natick, MA-based Boston Scientific (NYSE: BSX) it would have to pay $431 million in damages to Dr. Bruce Saffran, who alleged that the company’s Taxus Express and Taxus Liberte drug-eluting stents infringed on patents he owns. Boston Scientific appealed the ruling, and a Federal Circuit panel reviewed the case in early March. In a late-afternoon filing with the SEC today, Boston Scientific said it settled the case with Saffran on March 16, and that as a result, it will record a pre-tax charge to earnings of $50 million this quarter.

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Boston Scientific (NSYE:BSX), the Natick, MA-based medical devices giant, and Medtronic (NYSE:MDT) have settled two lawsuits and agreed to stand down from three others to end all litigation between the two industry rivals in the fields of interventional cardiology and endovascular repair, Boston Scientific announced late this afternoon. The company says terms of the settlements with Minneapolis-based Medtronic are confidential, and all the lawsuits were related to intellectual property disputes.

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The economic downturn means it’s likely the wireless industry will stay with third-generation, or 3G, technologies for the foreseeable future, Qualcomm’s top executives said last night during a panel discussion.

Qualcomm CEO Paul Jacobs said customers of the San Diego wireless giant have pushed out their chip orders for 3G technologies because of the economic downturn, but the company is looking for a business rebound in the second half of 2009. He cited the “uncertainty of consumer demand” as a key underlying issue, but Jacobs also noted that sales of 3G handsets based on Qualcomm technology have increased 25 percent over last year.

The panel discussion at Qualcomm’s corporate headquarters, in the 534-seat Irwin M. Jacobs Qualcomm Hall, was billed as a “town hall” meeting by CommNexus, the San Diego telecom industry association that organized the event. “It’s meant to disseminate ideas, share knowledge, and build networks with industry peers,” CommNexus CEO Rory Moore told the audience.

Jacobs, who was named as Qualcomm CEO in 2005, is the son of Qualcomm founder and chairman Irwin Jacobs. The second-generation CEO was joined by his second-in-command, former Sprint executive Len Lauer, who was named as Qualcomm COO in August, and by Steve Mollenkopf, who also was named in August to head the all-important QCT, Qualcomm CDMA Technologies.

So in a way, the event featured the 2.5G version of Qualcomm management discussing 3G technologies and the prospects for 4G products and services.

But for all the discussion about digital wireless technology, the Qualcomm chips in the Blackberry Storm and Qualcomm software in Google’s Android operating system, about USB dongles, and LTE versus WiMax, what may have been the most interesting question didn’t come until the end.

“What do people misunderstand about Qualcomm?” asked Iain Gillott, the wireless industry expert who was recruited as moderator for event.

“From a PR point of view, I think the way we are most misunderstood is from the newspaper headlines and everyone attacking our licensing model,” said Lauer, referring to industry complaints about the high cost of Qualcomm’s licensing deals. “What they miss underneath that is all of the innovation and research and development we do… opening mobile radios to new apps and services.”

CEO Jacobs added that because of Qualcomm’s patent lawsuits against Nokia and Broadcom, “You think this is a litigious company, but we did not go out and sue everyone first… Our (business) model is built around licensing. We have one of the broadest models. We don’t sell cell phones to end users. We work with partners. We consciously developed this strategy of working through partners and we go to our partners and say we’re here to be a good partner with you.”

It was an interesting moment of executive self-reflection, especially since a federal appellate court last week upheld most of a lower court’s findings against Qualcomm in a patent dispute dating to 2003. The court found substantial evidence that Qualcomm had deliberately withheld its proprietary video compression technology from a standard-setting industry group, a move that left room for Qualcomm to later file a patent-infringement lawsuit against Broadcom, a rival chipmaker in Irvine, CA.

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A federal judge in Santa Ana ruled yesterday that San Diego’s Qualcomm is in contempt of an order he issued in December to prevent Qualcomm from infringing on two patents held by rival Broadcom of Irvine, CA.

The ruling is the latest salvo in a continuing legal battle that involves at least four lawsuits between the rival Southern California chipmakers over patents covering various chip designs.
In a statement issued this morning, Broadcom’s David Rosmann pounced on the implications of the ruling, saying, “This is the second time that Qualcomm has been found in contempt of the same federal court injunction.”

U.S. District Judge James Selna issued a similar contempt order in August, declaring there was “clear and convincing evidence” showing that Qualcomm had defied his Dec. 31 order.

In his statement, Rosmann, Broadcom’s vice president for intellectual property litigation, said provocatively that “Qualcomm’s ongoing contempt reflects a remarkable disregard for a system meant to protect intellectual property rights.”

But in his order, Selna notes that he did not impose monetary sanctions on Qualcomm “in light of remedial efforts” Qualcomm has undertaken. Just the same, Selna rejected Qualcomm’s continuing legal argument, which is that the company should only be held liable to pay royalties to Broadcom where Qualcomm’s patent-infringing chips were installed in a radio unit, i.e., a wireless phone. Selna says Qualcomm is liable for the chipsets, period.

The judge ordered Qualcomm to pay Broadcom its gross profits within 60 days on any infringing chips that cannot be recovered or destroyed. Selna also ordered Qualcomm to pay Broadcom’s attorneys fees in the matter.

The injunction Selna issued in December prohibits Qualcomm from making, using, selling, importing, and developing certain next-generation chips capable of operating on CDMA2000 and EV-DO networks. The injunction also provides a sunset period that allows Qualcomm to continue to sell legacy EV-DO chips to certain customers through January 31, 2009, provided that it pays a royalty to Broadcom.

In its statement today, Broadcom says Judge Selna found that Qualcomm violated both provisions of the injunction by selling and offering to sell the prohibited EV-DO chips and by failing to pay royalties on legacy EV-DO chips..

The dispute arises from an infringement suit that Broadcom filed against Qualcomm in 2005. A Santa Ana federal jury determined in 2007 that Qualcomm had infringed on three fundamental patents held by Broadcom and awarded $19.64 million in damages for past infringement.

Qualcomm has appealed that case and in a statement issued this afternoon, Qualcomm’s seems to take the defiant position that—despite the 2007 verdict—the company can’t be found in contempt if did not infringe on Broadcom’s patents.

“As the court recognized, the outcome of this issue turns on a legal question of whether there can be a violation of the court’s injunction in the absence of an infringement or acts leading to infringement,” Qualcomm said. “We respectfully disagree with the court’s conclusions. We are analyzing our options.”

In a separate ruling yesterday, Selna granted Qualcomm’s request to amend counterclaims it has filed against Broadcom in the case. And so the battle rages on.

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The biggest development in the digital media world this week, by far, was the settlement of a pair of class-action copyright-infringement lawsuits brought against Google in 2005 by the Authors Guild, the Association of American Publishers, and several publishing houses. The compromise agreement, which was announced October 28 and now awaits approval by the federal courts, could eventually result in improved access to books, especially the millions of books that are no longer in print but are still covered by U.S. copyrights. It promises to free Google to move forward with its ambitious library digitization effort, which will put a vast collection of literature at the fingertips of students, researchers, and at least a few public library patrons. It should also placate the Chicken Littles in the publishing industry, who have spent years using every available means, including the Google lawsuit itself, to obstruct the sharing of knowledge enabled by the digital revolution.

But for readers—the group whose interests are closest to my own heart, and the only major class of stakeholders in the lawsuit whose interests weren’t being protected by a team of well-paid attorneys—the Book Search settlement contains some major disappointments. I should emphasize that I am not a lawyer, and I have only spent a few hours studying the settlement agreement. (It’s 323 pages long, which may explain why it took the parties more than two years to negotiate a solution.) But I’m saddened by the gap between the level of open access to literature that was considered possible when Google first launched its project to digitize millions of library books and what we’re probably going to get as a result of this agreement.

Specifically, the settlement seems to put an end to hopes that the Google Library Project would result in widespread free or low-cost electronic access to books that are out of print but have not yet passed into the public domain. These books—and there are millions of them—are in a painful state of limbo. They’re deemed commercially non-viable by their original publishers, so you can’t find them in most bookstores. Yet no one else can republish them without getting permission from the original copyright holders or their heirs or assignees—and for many so-called “orphan works,” these rightsholders can’t even be identified or located. So the only way to read one of these books is to find a copy at a used bookseller, or figure out which public or academic library owns a copy, and then physically travel there.

The hope was that Google—consistent with its stated mission to “organize the world’s information and make it universally accessible and useful”—would simplify access to these out-of-print but still-presumptively-copyrighted books by sharing their full text over the Internet at little or no cost to readers, the same way it does with the public-domain books it has digitized. (Under U.S. law, the copyright on all works published before January 1, 1923, has irrevocably expired, and Google lets readers peruse and download these books for free. If you click here, for example, you can read my favorite novel of all time, E.M. Forster’s 1910 masterpiece Howards End.)

If Google had chosen to take the lawsuit to trial and prevailed, it might have been at liberty to do this, monetizing the practice (just as it monetizes all of its other services) through keyword-based advertising. Such a service would have been a great boon to readers everywhere. Indeed, when I interviewed a bunch of librarians about the Google initiative back in 2005, before the lawsuit, most of them were ecstatic: they’d been waiting for years for someone to come along and help them put their collections online. I bet Google could even have charged a little something for the service—after all, nobody else is trying to scan so many library books (7 million of them so far).

Alas, the nation’s authors and publishers organized a campaign to stop Google. Letting avarice run roughshod over common sense and the common good, the plaintiffs in Authors Guild et al. v. Google and McGraw Hill et al. v. Google argued that the very act of scanning an in-copyright book without the rightsholder’s permission is an egregious copyright violation. Even the short snippets of text that Google Book Search serves up among its search results were too much for these groups to stomach. (This despite the fact that the courts long ago ratified the inclusion of snippets in general Web search results as an example of “fair use” under copyright law.)

It quickly became clear that the plaintiffs in the lawsuits would sooner see out-of-print books remain in limbo forever than sacrifice one penny of potential profit to Google. No matter that these authors and publishers weren’t even marketing the books Google was scanning: if the rightsholders themselves couldn’t figure out how to make money on their out-of-print titles, no upstart search-gizmo company was going to, either.

It may surprise you that, as a writer, I’m on Google’s side in this dispute. But my point of view is that decent writers can always find ways to get paid for their work. They shouldn’t have to leech off the people who …Next Page »

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Boston-based Ze-gen has struck back at Quantum Catalytics. Ze-gen, in documents filed yesterday in federal District Court in Boston, says the patent infringement claims Quantum filed against it in August are “transparently fraudulent” and “so oblique as to be unfathomable.”

Many of the patents at stake in the lawsuit have expired, Ze-gen pointed out in a motion filed yesterday asking Massachusetts District Court Judge Judith Dein to dismiss Quantum’s lawsuit. Ze-gen also claims Quantum failed to specify how Ze-gen’s waste gasification technology–which turns ordinary municipal and construction waste into hydrogen- and carbon-monoxide-rich “syngas”—infringes on the remaining patents.

Quantum Catalytics, a Fall River, MA, company headed by John T. Preston, the former top technology licensing officer at MIT, alleges that Ze-gen wrongfully acquired trade secrets relating to a technology originally patented by MIT spinoff Molten Metal Technologies for vaporizing waste in a bath of molten iron. Quantum obtained the rights to those patents after Molten Metal went bankrupt in 1997, and it charged in its original complaint, filed August 22, that Ze-gen obtained confidential information about the patented technologies by hiring a series of former Molten Metal employees.

Ze-gen not only denies that its gasification technology is based on the Molten Metal patents, but argues that the case is moot, since many of the patents have expired and are now “irretrievably” in the public domain. Ze-gen filed documents with its motion showing that six of the 14 allegedly infringed patents lapsed between 2000 and 2004 after Quantum failed to pay required maintenance fees to the United States Patent and Trademark Office. Federal laws “preclude any claims based upon lapsed patents,” Ze-gen’s attorneys assert in the motion.

I attempted to contact Quantum Catalytics for comment on Ze-gen’s assertions, but the company didn’t immediately respond to phone messages.

I did talk briefly with Ze-gen CEO Bill Davis. The motion speaks for itself, he said, explaining that there was little else he could say publicly about the case while it is still being litigated. “Our position is that we have not done anything wrong or violated anybody’s intellectual property of any form, and we’re going to vigorously defend ourselves,” Davis said.

The Ze-gen motion (which we’ve posted here) asserts that the court should, on the basis of the expired patents alone, dismiss all counts in Quantum’s complaint. But the motion mainly argues that Quantum’s complaint should be thrown out because it is too vague.

Indeed, while the 21-page complaint filed by Quantum enumerates the 14 patents granted to Molten Metal between 1993 and 1998 for such things as a “method and system for injection of a vaporizable material into a molten bath,” it offers no details that I could find about how the technologies Ze-gen is testing at its pilot plant in New Bedford, MA, overlap with the technologies covered by those patents. It merely asserts that Ze-gen’s pilot facility and patent applications are based on Quantum’s intellectual property.

Ze-gen’s attorneys—a team at Boston-based law firm Hanify & King led by Christopher Morrison—write that the Quantum complaint involves “the same nebulous, undefined glob of alleged trade secrets” that were at stake in …Next Page »

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It appears that Natick, MA-based Boston Scientific (NYSE: BSX) will be forced to pay medical products giant Johnson & Johnson the full $703 million patent-infringement award finalized last week by the U.S. District Court of Delaware, after the U.S. Supreme Court declined yesterday to hear the company’s appeal of the case. Johnson & Johnson claimed that Boston Scientific infringed on a coronary artery stent patent owned by its Cordis division. A $521 million judgment against Minneapolis-based Medtronic will also stand, as Medtronic did not appeal the Delaware court’s judgment.

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[Addendum, 10/6/08: RealDVD has been offline as of this weekend---the result of a restraining order requested by the Hollywood studios and granted by a federal judge. The RealDVD site says, "Due to recent legal action taken by the Hollywood movie studios against us, RealDVD is temporarily unavailable. Rest assured, we will continue to work diligently to provide you with software that allows you to make a legal copy of your DVDs for your own use."]

Last week, we reported on the lawsuit filed by the big Hollywood studios against Seattle-based RealNetworks—and Real’s countersuit against Viacom and the DVD Copy Control Association. At issue is whether Real’s new DVD-copying software, RealDVD, violates digital copyright law, as the Motion Picture Association of America contends. The software, which has been on sale since last Tuesday, enables users to copy DVDs to their computer’s hard drive and a limited number of other computers.

For some informed local reaction, I reached Seattle-based Cozi’s chief technology officer, Bill Baxter. He knows a thing or two about digital rights management, having been the founder of Snaptune, which some described as “TiVo for the radio.” True to form, Baxter had some compelling thoughts on the impending court case, and on the interpretation of copyright laws for digital media.

“Real has a rich history of pushing ‘fair use’ to the limit,” Baxter writes in an e-mail. “Real Jukebox was the industry’s leading tool for enabling illegal file sharing to reach massive scale. Real Jukebox made ripping CDs very easy and, hence, accelerated the illegal file sharing revolution. But, were there substantial non-infringing uses of it? Yes. Hence, they could not get in trouble. Here, I think they have a similar opportunity. At least in this case, they do not allow ripping to non-DRM’d movie formats. Therefore, it is highly unlikely this could result in a legal way to power illegal file sharing networks.”

Here’s the problem: “I think there are two questionable features of RealDVD,” says Baxter. “First, and this has nothing to do with copyrights, per se, did they violate the DRM protections on DVDs meant to allow copyright holders to control their content? If so, they are in violation of the DMCA [Digital Millenium Copyright Act]. I think it is clear that they have. Second, they seem to be gaining monetary advantage by enabling multiple PCs to view these ripped DVDs, for which they have circumvented copy protections. I think the studios would rather set the rules for how many PCs and for how long can a user watch a DVD. You see this in legal alternatives like iTunes and now, more recently, TiVo. I think this may expose them to liability. Real is going to argue… ‘fair use.’ The MPAA is going to argue that it violates the DMCA. Fair use is not an argument you can use to defend against the DMCA. Real is in trouble.”

But the case strikes at the heart of an even deeper issue: what constitutes “fair use” of digital media? “In my mind the biggest problem is that U.S. copyright laws and the DMCA are so antiquated or are so inflexible in protecting legitimate technologies that the only recourse is to litigate,” says Baxter. “Ignoring the alleged DMCA violation for the moment, it is clearly the case that anyone who uses RealDVD is violating U.S. copyright laws. The question that must be asked is whether the copyright infringement constitutes a ‘fair use’ infringement. There are four tests that were established by the Supreme Court that must be applied in order to determine if the infringement is fair use. These tests are vague at best and require a court to address and, most likely unless there is a negotiated settlement, it will land in the Supreme Court. A company like RealNetworks has deep enough pockets to fight this battle. Because of this cost, small technology companies are squashed because they cannot afford it.”

“If the substantial application of RealDVD is deemed to not fall under the fair use doctrine, then RealNetworks could be found to be a contributory copyright infringer which makes it liable for all the infringements of its users,” Baxter continues. “I hope it goes to the Supreme Court. I hope consumers win by being given more control over their content. If I buy a DVD, I should be able to rip it and watch it anywhere, on any device and any time I want to. I should not be limited to watching that movie on a DVD, which the MPAA hopes will get scratched, lost, etc., which implies I will have to pay for again the content I’ve already purchased.”

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Digital rights management, here we go again. First, it was the music industry. Now Seattle-based RealNetworks and Hollywood’s big movie studios are suing one another in California federal court, after yesterday’s release of RealDVD on RealNetworks’ site. The software, which costs $30, allows DVD users to make copies of their videos on their computer and transfer the copies to no more than five other computers (paying an extra $20 for each). The studios, which include Disney, Paramount, Sony, Twentieth Century Fox, NBC Universal, and Warner Bros., assert in their complaint that RealDVD violates the Digital Millennium Copyright Act, and are asking for a restraining order on its sale.

RealNetworks saw this coming, but went ahead with its release anyway—and fired back with its own lawsuit. In a statement, the company said, “RealNetworks took this legal action to protect consumers’ ability to exercise their fair-use rights for their purchased DVDs…We are disappointed that the movie industry is following in the footsteps of the music industry and trying to shut down advances in technology rather than embracing changes that provide consumers with more value and flexibility for their purchases.”

The reaction in the media so far has been fairly non-committal. The New York Times and others point out that RealNetworks thought its software would be legal, in part because of a recent court case involving Kaleidescape, a maker of media servers, in which the ruling was favorable towards media duplication. The Los Angeles Times says the case may hinge on the exact wording of the license RealNetworks obtained from the DVD Copy Control Association; the article quotes Stanford law professor Mark Lemley as saying, “If Real has a legitimate license to do this under the contract, the circumvention claim goes away, because they’re not cracking the encryption system.”

Meanwhile, the Seattle P-I says the suit is about the money, not the copyright law. Which, of course, it is—movie studios and retailers stand to lose up to $16 billion in annual DVD sales (2007 figure from the Digital Entertainment Group) if people can just borrow or rent the discs and copy them instead of buying them. The impact on DVD rentals, a $7.5 billion market, is less clear.

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Boston clean-energy startup Ze-gen is building a pilot plant where waste materials are vaporized in a giant vat of molten iron, producing “syngas” that can then be burned to make electricity. When a federal judge in Texas dismissed a patent-infringement lawsuit against the company last month, Ze-gen had cause to hope that its recent legal hassles had also turned to vapor. But then, last month, its accusers filed a new complaint in federal district court in Boston. And with Ze-gen expected to file documents refuting the allegations soon, the case is likely to get a lot more complicated before it burns out.

Ze-gen’s plant, which I toured last year, is located adjacent to a waste-management facility in New Bedford, MA. Quantum Catalytics of nearby Fall River, MA—a company led by MIT’s former top technology-licensing officer, John T. Preston—says the design of the Ze-gen plant is based on patents and trade secrets owned by Quantum, intellectual property the company licenses exclusively to Texas Syngas, a Houston company that it co-owns. On August 22—the same day Ze-gen filed a motion to make Quantum pay its legal expenses in the dismissed Texas case—Quantum and Texas Syngas filed a complaint in the U.S. District Court of Massachusetts that repeated and expanded upon the Texas suit’s allegations of patent infringement and misappropriation of trade secrets.

Ze-gen, founded in 2004, hasn’t yet filed a response to the Massachusetts suit. But CEO Bill Davis calls the case “frivolous” and says that Ze-gen will “respond forcefully” in documents that could be submitted to the court as soon as this week.

It all adds up to an interesting case study in the tussles that can spring up between early stage technology companies as potential rivals seek to head one another off, even in industries such as clean energy that supposedly occupy a moral high ground. And a review of the available court records suggests that Ze-gen may have a tougher time fighting back against Quantum’s accusations in Massachusetts than it did in Texas. There, the courts didn’t rule on the substance of the patent-infringement allegations, but merely said that the dispute between the two Massachusetts companies was outside their jurisdiction.

Quantum’s side of the story—which stretches back to the late 1980s, when a Fall River company called Molten Metal Technology began developing methods for breaking down waste in a superheated metal bath—can be read in detail in the complaint it submitted to the Massachusetts court and in the welter of documents filed in the Texas case.

Davis, for his part, will only say that, “It’s a classic kitchen-sink case where people are trying to essentially extort money from other companies.” But parts of Ze-gen’s side of the story, too, can be extracted from the paperwork it filed in the Texas case.

Molten Metal Technology, where Quantum CEO Preston was a director and major shareholder, was formed in 1989 around technology developed at MIT that promised an environmentally friendly way to dispose of hazardous wastes. The company raised $80 million in a 1993 IPO, and at one point was called “a shining example of American ingenuity, hard work and business know-how” by Vice President Al Gore. But the company filed for bankruptcy in 1997 after anticipated commercial contracts and government grants failed to materialize. Allied Technology Group, a radioactive waste handling company, purchased the remains of the company in 1998 for $10.5 million. As part of the bankruptcy proceedings, Quantum Catalytics obtained the rights to 14 of Molten Metal’s patents, including methods for dissolving waste and controlling chemical reactions inside a molten metal bath.

In its complaint, assembled by prominent Boston intellectual-property law firm Brown Rudnick, Quantum alleges that Ze-gen gained access to the confidential information and trade secrets embodied in these patents by hiring a string of former Molten Metal employees, beginning with a man named Vick Gatto, who joined Ze-Gen in 2004. Quantum says Gatto advised Davis to approach Quantum and Texas Syngas about licensing the companies’ molten bath technology. Davis did meet with Preston, who refused to grant the license, according to Quantum’s complaint. But Ze-gen got the proprietary information it needed anyway, according to the complaint, both through Gatto and by …Next Page »

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Fall River, MA-based Quantum Catalytics and an affiliated Houston company called Texas Syngas have filed a patent infringement suit against Boston-based waste gasification startup Ze-gen in federal district court in Boston, the Patriot Ledger in Quincy, MA, first reported on Tuesday. The suit alleges that Ze-gen’s gasification technology is based on trade secrets obtained through former employees and consultants of Molten Metal Technology—the original assignee for gasification patents now owned by Quantum Catalytics—who later went to work for Ze-gen. Bill Davis, CEO of Ze-gen, told the Patriot Ledger that the lawsuit is frivolous and was “brought by ‘patent trolls’ whose motives are to extort money from the company.” We profiled Ze-gen, which is building a pilot syngas plant in New Bedford, MA, in August 2007.

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Marlborough, MA-based 3Com and Realtek Semiconductor Corporation of Hsinchu, Taiwan, said yesterday that they’ve resolved a longstanding patent dispute over Realtek network controller chips that 3Com claimed appropriated aspects of its parallel processing technology. 3Com won a $45.3 million judgment against Realtek in the U.S. District Court for the Northern District of California in April, but the new agreement nullifies that settlement, replacing it with a $70 million licensing payment to 3Com that will allow Realtek to continue sell chips containing the disputed technology.

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As soon as news broke Tuesday that Burlington, MA-based Nuance Communications was suing Harvard Square startup Vlingo for allegedly infringing one of Nuance’s speech-recognition patents, I requested an interview with Dave Grannan, Vlingo’s CEO. Grannan, who came to Vlingo from Nokia last year, has spent quite a bit of time with Xconomy in the past, talking about Vlingo’s speech-to-text technology and its deal with Yahoo, which is using the disputed software for its oneSearch with Voice mobile search service.

I got through to Grannan Wednesday afternoon. He politely upbraided me for the provocative headline I attached to yesterday’s post on the lawsuit. Grannan also shared his opinion that Nuance is a historically litigious company that’s crying foul over the oneSearch technology because it couldn’t win Yahoo’s business using its own speech recognition systems. An edited transcript of our conversation follows.

Xconomy: Thanks for making time to talk.

Dave Grannan: Sure. The first thing is that I did want to register an official complaint with you, in terms of the headline you ran yesterday—”Nuance Suit Against Vlingo Could Shut Down Yahoo’s Voice-Driven Mobile Search Service.” My issue with that is that there has been an allegation of infringement. The only way something gets shut down is if there is proof in court that that is the case. So that headline is achieving for Nuance exactly what they are trying to achieve, which is using the media to jump to a conviction.

X: I see your point. I wrote that headline. In my defense, it did include the word “could.” And the lead paragraph in the article makes it clear that a shutdown would only be a worst-case scenario, if Nuance won the injunction against you that they’re seeking. I think we’ve seen that these patent infringement suits actually can lead to shutdowns, as with the NTP injunction against RIM that nearly shut down the Blackberry service. But I can see your point of view, so thanks for sharing that, and I’ll make sure to include it when we publish this interview.

DG: Thanks. But mainly, of course, we wanted to talk about the substance of Nuance’s allegation.

X: Right. What do you think they’re trying to accomplish here?

DG: To me, this is the clearest admission yet from Nuance that they cannot compete with us in the marketplace, so they want to move the competition to the courtroom. I think their intent is to damage us in the marketplace. Their press release yesterday was the first we’d heard about the lawsuit. One would think that if they had a legitimate concern about intellectual property they would have just approached us and told us. This was clearly intended to be a marketing kind of event, to harm our business.

As far as the patent itself goes, we do not make use of the patent they’ve pointed out here. In our minds, it’s a very limited patent. Further, we have some very serious doubts as to the patent’s validity to begin with. It’s our intent to very vigorously defend ourselves and fight this.

X: My reading of the patent is that it covers a way to adapt speech-recognition algorithms so that they get better over time as they collect more data from speakers. And there is definitely an adaptive element to Vlingo’s technology, isn’t that right?

DG: There is absolutely an adaptive element to our technology. But the way in which we do it is different than what’s described in the patent they cite.

X: In a public statement about the suit earlier today, you said that Vlingo’s speech recognition technology is based in part on technology you license from IBM. So are you basically saying that you’d be able to …Next Page »

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[Story Updated 4:40 p.m. 6/18/06; see below]

If a Texas district court grants an injunction sought by Burlington, MA-based Nuance Communications (NASDAQ: NUAN), it could force Yahoo to shut down the voice-enabled version of its mobile search platform. The search tool is powered by software from Vlingo, a Cambridge, MA-based startup Nuance sued yesterday for alleged patent infringement.

The Yahoo (NASDAQ: YHOO) platform, called oneSearch with Voice, works on Blackberry Pearl, Blackberry Curve, and Blackberry 8800 series smartphones, and allows users to enter Web search queries such as “Boston Red Sox scores” or “United Airlines Flight 541″ simply by speaking them into the device. Vlingo’s deal to get its speech recognition technology included in oneSearch was seen as a major coup for the Harvard Square startup, which has about 35 employees and recently closed a $20 million Series B financing round led by Yahoo.

Nuance filed its lawsuit in the United States District Court for the Eastern District of Texas, a jurisdiction famous for favoring plaintiffs in patent-infringement cases. Xconomy obtained a copy of Nuance’s complaint. It alleges that Vlingo’s speech recognition software—including “without limitation, products and services Vlingo is supplying to Yahoo! oneSearch”—infringes on U.S. Patent No. 6,766,295, which was issued to Nuance engineers Hy Murviet and Ashvin Kannan in 2004. The patent covers a technique for making computerized transcription of a users’ speech more accurate over time using audio samples from multiple sessions such as phone calls.

The suit seeks unspecified monetary damages and attorney fees, and also asks the court to “preliminarily and permanently restrain” Vlingo and its business partners from making, using, and selling the allegedly infringing software. Those partners would presumably include Yahoo.

“Nuance has invested significant resources in developing technologies, building solutions and acquiring intellectual property,” Jo-Anne Sinclair, vice president and general counsel of Nuance Communications, said in a press release announcing the lawsuit. “These inventions and the intellectual property protecting those inventions are a cornerstone of our business. We take great pride in and place significant value on our patents and will aggressively protect our intellectual property rights through all available means.”

A spokesperson for Vlingo said that company executives were still reading through the lawsuit and were not ready to comment publicly.

While their technologies may or may not be similar, Nuance and Vlingo have definitely shared personnel. Vlingo’s chief technology officer and co-founder, Michael Phillips, is a former Nuance employee; he landed there in 2003 when Nuance (called Scansoft at the time) acquired Speechworks, a Boston-based MIT spinoff where Phillips was principal scientist. After Phillips left Nuance, he waited a year for his non-compete agreement with the company to expire before starting Vlingo, according to the Boston Globe.

(Full disclosure: Mike Phillips is brother-in-law to Greg Huang, Xconomy’s Seattle editor. Greg was not involved in the reporting, writing, or editing of this story.)

Update 4:40 p.m. 6/18/06:

Vlingo sent Xconomy the following response to Nuance’s lawsuit from Vlingo CEO Dave Grannan:

“We believe this lawsuit is unfounded. Nuance has referenced a patent that has serious limitations in its coverage. The patent does not apply to vlingo-developed technology nor the third-party licenses we employ; moreover, we have significant doubts regarding the patent’s validity. Industry observers will recognize this as typical counterproductive behavior of filing frivolous lawsuits in an attempt to stifle competition.

Vlingo will fight the lawsuit aggressively to its conclusion, while continuing to build on our tremendous momentum we’ve gained in less than one year since our public launch.”

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A federal jury in Boston ruled today that Limelight Networks of Tempe, AZ, infringed on a key MIT patent licensed to Akamai Technologies (NASDAQ: AKAM) of Cambridge, MA. Akamai also won a damage award totaling more than $45 million. But the verdict was not the huge win Akamai hoped it would be, as much of the company’s case against Limelight had been thrown out weeks earlier, and Akamai acknowledges it felt that the evidence called for an award of at least $100 million.

Nevertheless, Jeff Young, Akamai’s director of corporate communications told Xconomy this afternoon, “We’re extremely pleased with the jury’s verdict. We have an obligation to our shareholders to protect the unique assets of our technology. Today’s ruling recognizes the strength of our patent portfolio and is a tangible reflection of our resolve to vigorously defend the company’s intellectual property.”

Akamai and Limelight both operate global content distribution networks used by media companies and other Web publishers to speed delivery of video, music, software, games, and other rich media to end users. Both companies’ networks do this in part by caching copies of the most-requested content on networks of servers that, in effect, bring the content closer to end users and dilute traffic.

Akamai sued Limelight in the U.S. District Court of Massachusetts in Boston in June 2006, alleging that Limelight was infringing on two key patents covering various aspects of its content distribution network. The patents, U.S. patents 6,108,703, and 6,553,413, are owned by the Massachusetts Institute of Technology and licensed exclusively to Akamai. In a summary judgment in early February, the court ruled that Limelight was not infringing on patent 6,554,413. That narrowed the case to patent 6,108,703, which was issued in August 2000.

The patent describes a “global hosting system” that includes a method of copying content from a web server to a network of caching servers around the world and directing browsers to the cached content by “prepending” a modified URL for the caching server to the URL for the original file. The jury ruled that Limelight is infringing on this “prepend” method and another so-called “CNAME” method claimed in the patent.

The essence of the jury’s thinking is captured in a seven-page form signed and presumably also filled out by foreperson James Ranieri. On the form, “X” marks indicate that the jury decided that Limelight infringed on four claims involving the prepend and CNAME methods and rejected all of Limelight’s claims that the patent was invalid. The form also includes hand-written notes detailing damages to be awarded to Akamai. These include $40,102,000 to compensate for profits lost as a result of Limelight’s infringement, to which the jury affixed a royalty of $1,424,946, and a further $4 million in price erosion damages suffered by Akamai—accounting for the total award of $45,526,946. You can see the Akamai verdict form here.

Akamai had hoped for a much larger damage award, according to Young. “I can’t really comment on the specific amount, but we believe the evidence showed at least a nine-figure damage number,” he said. The company said it will return to court to seek a permanent injunction prohibiting Limelight from selling services that infringe on the ‘703 patent. “We anticipate that there will be a series of post-trial motions before the court,” Young said.

For its part, Limelight issued the following statement from Phil Maynard, the company’s chief legal counsel: “We are disappointed with the jury’s verdict in this matter. We strongly believe that, like other companies that follow long-established Internet standards, we do not infringe the patent in this case. We will continue to remain a competitive choice in the marketplace as we pursue all appropriate legal avenues.”

Akamai has pursued perceived patent infringers aggressively in the courts. In fact, this is the second (by some counts the third) time the company has successfully asserted the ‘703 patent against a competitor. The first suit came shortly after the patent was issued and was brought against Digital Island, a content distribution company later bought by Cable & Wireless. In 2002 Akamai won a permanent injunction forcing Exodus, the Cable & Wireless business unit to which Digital Island belonged, to stop using its Footprint content distribution service.

Also in 2002, Akamai sued Speedera Networks of Santa Clara, CA, again alleging infringement of the ‘703 patent. A drawn-out legal battle finally ended in 2005 when Akamai bought Speedera.

(Here’s another link to the Akamai-Limelight case’s filled-in jury verdict form.)

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