Patent Office Rejects Blackboard's E-Learning Patent in Preliminary Ruling

By KATHERINE MANGAN

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The U.S. Patent and Trademark Office has issued a preliminary decision that rejects all 44 claims Blackboard Inc. made regarding the controversial patent it was granted for an online-learning system. If upheld, the decision could have sweeping ramifications for Blackboard's competitors and universities that use course-management software.

The "nonfinal" decision was made public on Friday, and both sides will have a chance to comment before a final order is issued. Blackboard can also appeal the final decision.

It was unclear over the weekend how, if at all, the decision might affect the outcome of the legal battle between Blackboard and its smaller Canadian rival, Desire2Learn Inc., whose course-management system was found in February to have infringed the patent.

A federal jury in Lufkin, Tex., awarded Blackboard $3.1-million after rejecting Desire2Learn's position that the patent was invalid (The Chronicle, March 7, 2008), and the judge in that case later issued an order banning Desire2Learn from selling its course-management software in the United States, pending a 60-day stay (The Chronicle, March 12).

Last week, Desire2Learn appealed the jury's decision, and the company's president said he was optimistic that the verdict would be overturned.

"Our hope is that at the end of the day, we don't have to pay Blackboard anything," John Baker, president and chief executive of Desire2Learn, said in an interview on Friday.

Desire2Learn, which is based in Kitchener, Ontario, posted a copy of the patent office's action on its blog on Friday.

"We're thrilled that the patent office rejected all 44 claims of Blackboard's patent," Mr. Baker said. "It's great to finally be on the offensive instead of the defensive."

The Canadian company recently released an updated version of its education software that Mr. Baker said does not infringe the disputed patent.

Meanwhile, Blackboard officials expressed confidence that the patent office's procedure would only serve to strengthen its patent claim.

Single Log-On System

The patent in dispute involves a course-management system in which a single user with a single log-on could have multiple roles in multiple classes. For example, someone who was a student in one course and a teaching assistant in another could log on once and get different levels of access to all the course materials.

Desire2Learn and its supporters have argued that the patent should not have been granted because similar technology existed in 1999, when Blackboard applied for the patent.

The patent office awarded the patent in 2006, and within months, Blackboard sued Desire2Learn for infringement. However, the patent office, in its re-examination, cited several examples of "prior art," or previously available technology, that was similar to what Blackboard claimed to have invented.

Not surprisingly, Blackboard downplayed the significance of the preliminary decision on Friday. In a written statement, it called the patent office's determination "the first step in a re-examination process that often takes years to complete."

The office's action "has no effect on the validity of the patent, the lawsuit between Blackboard and Desire2Learn, or the pending injunction against Desire2Learn that will go into effect on May 10th, 2008," the statement said.

In an interview on Saturday, Matthew Small, Blackboard's general counsel, said the patent office often rejects patent claims when new evidence is introduced. "We look forward to the review, and feel it will make the patent stronger," he said.

However, the head of an advocacy group that challenged the patent said that as far as he was concerned, "the patent is dead."

"It's never going to come back to life," said Eben Moglen, founding director and chairman of the Software Freedom Law Center, an advocacy group for open-source software. "It was a bad patent in the first place, and the patent office knows it." Mr. Moglen is also a professor of law at Columbia University.

Several experts interviewed, including Mr. Baker and his company's staff counsel, Diane M. Lank, said it was too early to tell what effect the decision might have on damages Desire2Learn has been ordered to pay and royalties the two parties are negotiating.

One knowledgeable source in the higher-education technology field said the decision, if upheld, could end up helping Blackboard's other competitors more than it helps Desire2Learn. They would have a reasonable assurance that Blackboard wouldn't sue them for infringement, but would not have to spend millions fighting the case in court, as the Canadian company did. "This is one reason many companies, when sued, will settle with a company suing them. If they fight the patent and get it overturned, they've essentially given their competitors a free ride at their expense."

Mr. Baker said that Desire2Learn had spent several million dollars on its two-year legal battle with Blackboard, but that if others in the industry ultimately benefited free, he was not worried. Some observers are concerned that if Blackboard's patent is ultimately upheld, competition in the market could be limited, and universities would have limited options for obtaining online-learning technology.

"We were fortunate that we have great clients and were financially able to stand up and help others in the industry," Mr. Baker said. "But if anyone wants to send us a check ...," he trailed off, laughing.