Monday, 26 September 2011

Network Signature and 37 C.F.R. PART 404 – The case of exclusive License

Network Signatures Inc, a corporation existing under the laws of Delaware with its principal place of business in California has sued Visa Inc, Novartis Corporation, The Coca-Cola Company, MasterCard International Inc. and The Hershey Company (the defendants) for infringement of US patent 5,511,122 (the ‘122 patent).

The ‘122 patent is assigned to “The United States of America as represented by the Secretary of the Navy” and was filed on June 3, 1994 and issued on April 23, 1996. The ‘122 patent, titled “Intermediate Network Authentication”, discloses technology related to transfer of sensitive information via the Internet. The technology disclosed in the ‘122 patent was invented by The United States of America as represented by the Secretary of the Navy and not by Network Signatures. The ‘122 patent was exclusively licensed to Network Signature under 37 C.F.R. PART 404.

Background information about 37 C.F.R. PART 404: The terms and conditions under which inventions owned by the government of United States can be licensed are described in part 37 C.F.R. PART 404. Specifically, 37 C.F.R § 404.5 (b) (2) states “Any patent license may grant the licensee the right of enforcement of the licensed patent without joining the Federal agency as a party as determined appropriate in the public interest.” The US government had granted an exclusive license to Metrix Services, which in turn with the approval of the government, had granted an exclusive license to Network Signature for the ‘122 patent. Network Signature currently markets NetSig, which is a cloud-based two-factor authentication solution and EasyConnect protected and covered by the various embodiment disclosed in the ‘122 patent. Network Signature also enjoys the right to enforce the ‘122 patent and sue other parties to protect the intellectual property of the US government under the exclusive license. In the past, Network Signature has sued many other parties for infringing the ‘122 patent. A few such companies which have been sued by Network Signature in the past include Scottrade, Virgin Mobile USA, FedEx, AstraZeneca, 3M, Pfizer, Glaxosmithkline, Colgate-Palmolive, Goldman Sachs, and Johnson & Johnson.

It is not clear as of now whether any specific products owned/used by defendants have been disclosed in the complaint filed by Network signature on September 23, 2011 in the California Central District Court. Further, it is highly unlikely that Network Signature would target individual developers or small companies that may be involved in creation of products covered by the ‘122 patent.
Analysis of the first independent claim reveals that any action or article that involves authenticating a sending host at a receiving host using cryptographic signature as covered by the scope of the independent claim would lead to infringement of the ‘122 patent.

Claim 1 of the ‘122 patent:

A method for authenticating an originating host at a receiving host, said method comprising the steps of:
(a) obtaining a network address and a public key of said receiving host;
(b) utilizing said public key from said receiving host in combination with a private key from said sending host to generate a cryptographic signature;
(c) transmitting said cryptographic signature along with data through a first subnetwork in at least one packet;
(d) receiving said at least one packet at said receiving host; and
(e) said receiving host utilizing a private key of said receiving host and a public key of said originating host to verify said cryptographic signature.

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