You could call it, simply, "Round One" for Blackboard Inc.

At least, that’s the term that people in the Kitchener, Ontario, offices of Desire2Learn Inc. (D2L) were using after a federal district-court jury in Texas hit their small Canadian company with a $3.1 million judgment for infringing the patent rights of Blackboard, a much larger American company that dominates the commercial market for course-management software.

D2L President and CEO John Baker told reporters he was shocked by the jury’s decision.

In a related matter, District Court Judge Ron Clark, who presided at the trial, ruled against a D2L claim that Blackboard’s patent could not be enforced because the company had withheld information from the United States Patent and Trademark Office (USPTO), which approved Blackboard’s patent application in January 2006.

"I think we’re all disappointed," Diane Lank, a D2L lawyer, said on Monday, "but this is Round One. I don’t think that anyone looking at this thought the case would end at the jury level."

The implication from D2L is that the fight is not over by a long shot. But from Blackboard’s perspective, the verdict vindicates its argument that the methodology of its software–allowing individual users to access multiple courses through a single log-in procedure–constitutes a unique invention whose patent its smaller competitor improperly violated.

Matthew H. Small, Blackboard’s chief counsel, said Monday that his company had proved its case before "a very sophisticated jury" whose members included well-educated people with experience in academic computing.

Lank said, however, that D2L was "quite likely" to appeal the verdict, which the jury reached on Feb.22 after several hours of deliberation at the end of a two-week trial.

In addition, D2L has vowed to press ahead with claims that the patent itself was invalid to begin with and should not have been approved by the USPTO because of the existence of previous products known as "prior art." The agency agreed last year to reconsider the matter, but based on the usual pace of such reviews, a final decision could be nearly a year away.

More immediately, the federal court in Texas has scheduled a follow-up hearing for March 10 to determine whether Blackboard will be granted an injunction against future sales of D2L products in the United States. Blackboard has repeatedly said it would not challenge products that were already in use–a stance that Small reiterated yesterday in an interview.

[Update: Blackboard has, indeed, been granted an injunction against future sales of D2L’s product in the United States. After Blackboard won its injunction, D2L CEO Baker said his company continues to insist that Blackboard’s patent is invalid but has been redesigning its product “so that it falls well outside the boundaries of the asserted claims of the patent.” He added: “We expect to release the redesigned product in the next few weeks, and well before the end of the 60-day grace period that the court has granted.”]

With all those elements at work, a cloud of uncertainty that users and developers of course-management systems have felt they were under ever since the patent dispute began about 18 months ago seems unlikely to be dispelled for quite a while. Many officials in higher education and the open-source community have strongly supported D2L, fearing that a final judgment against it–let alone the lawsuit itself–could end up curbing competition in the development of eLearning software.

Blackboard, which is based in Washington, D.C., has sought to reassure critics that it would not use its patents against the "development, use, or distribution of open-source software or home-grown course management systems anywhere in the world, to the extent that such systems are not bundled with proprietary software."

The company called that statement, which it issued about a year ago as its suit against D2L was gathering momentum, a "legally binding" pledge.

For its part, D2L also made an attempt after last week’s verdict to assure users of its products that they faced "no immediate threat," as Baker put it in an online notice to clients.

"We will work with you to ensure there are no future issues," Baker wrote. "We are financially sound and are confident of our ability to work through this matter."

Baker went on to say that, despite the trial’s outcome, "we were able to present a strong case," and he said that D2L would "continue to challenge the patent’s validity and Blackboard’s charges of infringement."

One measure of the consternation that the case has generated among educators and software developers can be found at e-Literate, a personal blog by Michael Feldstein, a former academic administrator who now works at Oracle Inc., as a principal product manager for academic enterprise solutions.

"I’m still trying to understand what all of this means," Feldstein writes of the protracted conflict between Blackboard and D2L. "I don’t think anybody involved with this has changed their position or reduced their level of concern while this fight has dragged out, so the questions are really about what the legal ramifications are and what the various community members (including but not limited to D2L and [Blackboard]) will do next."

Feldstein adds that, as he sees it, "so far nobody has benefited financially from this," and he concludes: "Tell me again how software patent assertion is going [to] reward and enhance innovation in higher education?"

Links:

Blackboard

Desire2Learn’s Patent Information Blog

Michael Feldstein’s e-Literate Blog