“Microsoft Seeks Federal Court Intervention in Patent Dispute with Former Employee”

The ongoing contractual dispute between Microsoft and a former employee, ATM Shafiqul Khalid, has taken a new turn as it was moved from the State Court of King County to the Western District of Washington on Wednesday. Microsoft has also requested the federal court for a declaratory judgment of patent non-infringement. However, according to Mark Walters, the attorney representing Khalid, the case is not about patent infringement but rather about breach of contract and patent ownership.

Walters, of Lowe Graham Jones, expressed his frustration with the situation, stating, “Microsoft has known about our damages theories since we had a mediation in February. This is an alternative damages theory about what his patents are worth and you have to look at Microsoft’s licensing revenue to determine that. It’s just really, really frustrating.”

Microsoft, represented by Heidi Bradley, Erin Bernstein, and Gina Elliott of Bradley Bernstein Sands, and Irene Yang of Sidley Austin, countered that they only became aware of Khalid’s claims on March 15. The tech giant argues that without a declaration of non-infringement, Khalid will continue to wrongfully allege that Microsoft’s technology infringes his patents and unjustifiably seek damages, causing injury to Microsoft.

This is not the first dispute between Microsoft and Khalid. Previously, Khalid sued Citrix, another former employer and a Microsoft vendor, over patent ownership. Citrix had withheld Khalid’s severance until he surrendered his patent applications. However, a King County court ruled in favor of Khalid, entering a $5.8 million judgment against Citrix and declaring that the company did not own the rights to the disputed patents.

Khalid has also previously sued Microsoft, alleging that the company’s employment agreement violates antitrust, forced labor, racketeering, civil rights, and fraud laws. The court granted summary judgment in favor of Microsoft in that dispute.

Walters believes that Microsoft’s move to have the case removed from state court is a strategic one, aimed at avoiding a trial and an adverse ruling on summary judgment. He predicts that the case will likely be returned to state court and then proceed to trial.

The current action against Microsoft was brought by Khalid after he encountered difficulties securing funding for an incubation business based on a patent he held for a mini cloud host and terminal. According to his complaint, potential investors were deterred after learning that Microsoft demanded a free license to the present and future patent family.

Microsoft claims it has ownership of the patent because Khalid did not submit a patent disclosure when he signed his employment agreement. Khalid, however, contends that he disclosed his patents in multiple copies of the employment agreement. He also offered to license the patent to Microsoft for a “reasonable royalty fee,” which the company declined.

In response to the ongoing dispute, a Microsoft spokesperson stated, “Microsoft hires the most talented engineers globally to innovate with us. The innovations they develop related to our business belong to Microsoft, which is consistent with the law and is standard practice across technology companies.”

As the case continues to unfold, it remains to be seen how the courts will rule on this complex issue of patent ownership and contractual obligations.