Microsoft is succumbing to patent trolls today, as they're being ordered to pay over $140 million for, get this, asking for two passwords. The original award was ordered in April last year by a federal jury in Marshall, Texas, widely known as the friendliest court for patent trolls. There Microsoft and Autodesk were saddled with $158 million (plus attorney fees) for asking users to "input two passwords during the process of activating newly installed software with the aim of deterring piracy."

Somehow, two weeks ago, the U.S. Court of Appeals for the Federal Circuit upheld the lower court's decision in its entirety. This begs two questions in particular.

Did Microsoft Save Money? Just setting aside the inestimable losses they took with their corporate attorneys, did they really stop the piracy of their software with the addition of an additional password? I'm guessing not. I can spend five minutes digging through Google and various crack sites and find a way to get a free copy of just about any version of Windows or any Microsoft product. The extra password isn't fooling anyone.

The obvious answer, is no. Not that I'd ever pirate a Microsoft product, but from what I hear, its pretty rampant. Need further proof? Look at Vista's Chinese sales numbers.

Evidently, adding layers of annoyance doesn't really prevent piracy, then... which leads us to the other question:

Should the two password process of DRM be patentable? I'm not a patent law expert, it seems to me that if the process is something a pre-schooler would come up with, it isn't exactly something particularly cutting edge. As such, it shouldn't be patentable.

Microsoft spokesman David Bowermaster said, "Windows Vista and Office 2007 are not affected by the appeals court decision" and that "the company does not have to make any technical changes to Windows XP or Office 2003." Clearly Microsoft came to the conclusion, based on the levels of piracy of previous software products, that asking for a second password didn't do much to curtail piracy; they don't even use that technology any longer (if you want to use the term technology charitably here).

Z4 Technologies, the patent holder in this case, does not even offer any actual services or products that utilize their patents, making them a patent trolling company (that is, a company who creates or acquires patents for the express purpose of suing companies that later use the ideas). As such, they are a perfect illustration of why the patent and intellectual property system is completely broken in America. Patents are supposed to encourage and promote technological advancement, not curtail them.

By granting fines payable companies that troll through the patent system in America, the barrier to entry for new technological participants is raised. Part of what truly cutting edge tech companies must account for now is the legal fees they must pay to either defend their products or pay the patent extortionists who come behind them and try to milk them with overly broad patents.

[via Silicon Valley]