March 23 (Bloomberg) -- Microsoft Corp., the world’s largest software maker, is using a Singapore company’s patented invention to deter piracy and should pay as much as $600 million, a lawyer told federal jurors today.

“We’re not talking about an infringement that takes an apple or a bushel,” Paul Hayes of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo in Boston, the lawyer for Uniloc Singapore Private Ltd. and Uniloc USA Inc., told the jury in Providence, Rhode Island. “We’re talking about taking the whole orchard.”

Microsoft, based in Redmond, Washington, contends that it uses a different method to prevent the use of unauthorized copies of its software. It also challenged whether Uniloc’s patent covers a new invention.

“If Uniloc thought there was a problem here, they could have come to Microsoft,” said Microsoft lawyer Frank Scherkenbach of Boston’s Fish & Richardson. “That didn’t happen. Microsoft didn’t hear about this until the day the lawsuit was filed.”

The case is directed at Microsoft’s Windows XP operating system and some Office programs. Windows Vista, the current system used to run personal computers, isn’t part of the case. Microsoft still sells XP in some cases, such as cheap laptop computers. Windows runs about 95 percent of the world’s PCs.

$2.50 for Each Activation

Uniloc said in a court filing it is entitled to $2.50 for each activation of a product that has Windows XP, Office XP, Windows Server 03 and Office 03 sold since October 2003, when the suit was filed. Microsoft, while challenging the patent and infringement claims, said that if it lost, the most Uniloc would be entitled to is $7 million.

The dispute is over programs to deter piracy, a sensitive subject for Microsoft and other software makers. Unauthorized copies of software account for about 35 percent of programs installed globally in 2007, according to the Business Software Alliance, the trade group for Microsoft and other software makers. North America has the lowest rate of piracy, at 21 percent, a BSA study estimated.

The patent -- first issued to Australian Ric Richardson, based on work he did in the early 1990s -- covers a software registration system. According to court filings in the case, Richardson was working to eliminate “casual copying,” in which a person installs a single program on more computers than is permitted.

Microsoft Pledge

Uniloc claims Richardson showed the software program to Microsoft in 1993 under a pledge that Microsoft wouldn’t try to break down the code in order to duplicate it. Uniloc claims that Microsoft did that and, in 1997 or 1998, began pilot programs with a similar software program.

“Microsoft went into the code, opened up the hood, and lo and behold, the process they had previous to contact with Richardson automatically changes,” Hayes told jurors.

Microsoft proceeded to sell 260 million “pieces of software” that use Richardson’s invention without paying anything to the inventor, Hayes said.

Microsoft countered that it developed its own system that works differently from Uniloc’s, and that the Uniloc patent doesn’t cover a new invention. The company also said it first learned of Uniloc’s patent and infringement claims when the suit was filed.

Scherkenbach acknowledged that Microsoft engineers evaluated Richardson’s software, but decided it was of no use to them. At least three other engineers had patents on similar software that predated Richardson, leaving the patent invalid, he said.

‘Minimal’ Security

“The results were that security was minimal at best,” Scherkenbach said. “We didn’t use it. It didn’t work.”

Microsoft had won the case in 2006, when U.S. District Judge William E. Smith ruled that the software maker used a different type of encryption technology from that covered by Uniloc’s patent. An appeals court overturned the judge, saying there was a “genuine issue of material fact” and Smith shouldn’t have decided the case without the benefit of a jury’s findings.

The trial before Smith is scheduled to end before April 2.

The case is Uniloc USA Inc. v. Microsoft Corp., 03cv440, U.S. District Court for the District of Rhode Island (Providence).

To contact the reporters on this story: William McQuillen in Washington at bmcquillen@bloomberg.net; John Larrabee in Providence, Rhode Island, at larrabeemail@aol.com.

Last Updated: March 23, 2009 16:58 EDT