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Australian Story -

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PROGRAM TRANSCRIPT: Monday, 9 April , 2012

CAROLINE JONES, PRESENTER: Hello, I'm Caroline Jones. Tonight we are revisiting the story of a
Byron Bay inventor whose battle with Microsoft has made headlines around the world. We first
brought you the story of Ric Richardson three years ago, when an American court has just awarded
him damages of nearly $400 million US, over anti-piracy software which he'd invented. But Microsoft
fought back, and that's meant more twists and turns for Ric Richardson and his family. This is
their continuing story.

KAREN RICHARDSON, WIFE: I call him "Dick", so I call it the "Dickmobile". He has a desk in the van
and a chair, so he can sit there with his laptop. So he can get out, have a swim or he can just
look out and enjoy the beauty and then he can work. He's constantly thinking up things, inventing

JIM REVITT, FRIEND AND MENTOR: It's not Orange County California and a big office full of computer
whizzes. It's sitting in the van on the headland at Byron Bay.

RIC RICHARDSON: Everybody loves a big battle and the fact is in big business you do have big
battles, it's just unusual for the guy at the centre of it to be an Aussie inventor. People just
loved the David and Goliath thing. Microsoft and even a medium-sized company, let alone a
smaller-sized company, is a David and Goliath type story.

NEWS BROADCAST: A Sydney born I.T. entrepreneur has become an overnight multi-millionaire after his
company won a long-running patent infringement against Microsoft.

RIC RICHARDSON: In 2009, it seemed like a resounding win. But it was never going to be that easy.
It was too good to be true.

NEWS BROADCAST: An Australian inventor is now set to get nothing after the US judge hearing the
case decided to ignore the jury's decision and hand victory to Microsoft.

RIC RICHARDSON: This was going to be a long, arduous, task and there is a risk, of course, that
you're not going to get anything and end up with a large bill after the fact.

STEVE COX, FRIEND: Once again he stuck in and kept going with it. But it was going to be another
long haul from that point.

(Excerpt from 'Australian Story' - 2009)

RIC RICHARDSON: Inventing, to me, is solving a problem. In my heart, I kind of feel that the
problems I want to solve are not the rocket science problems, they're things that are a little bit
more accessible. As a kid, I was always trying to do things to solve my own problems. Like, for
example, I used to take bicycle parts and pull them together to try and make my own BMX bike. I
suppose you could call that invention. Inventing must be in my genes. My dad was a bit of an
inventor. He worked as a cameraman. Dad used to take my brother and I on film jobs. I remember
doing a music video for Johnny O'Keefe in Hyde Park in Sydney. In one of the shots was us lying on
the grass and playing with the plane as part of his song, you know.

JIM REVITT, FRIEND AND MENTOR: He'd left school and didn't quite know which way to head until he
found a niche in sound and digital work with computers.

RIC RICHARDSON: When I started Computrix, which was the music computer business, Steve would come
and work with me.

STEVE COX, FRIEND: We had our own software that we had the rights to publish in Australia and we
were wondering how to get this piece of music software straight into people's hands.

RIC RICHARDSON: At the time, software piracy was a major problem. We had to come up with some way
to allow people to copy software from person to person - but still end up getting paid for it. We
were looking at different ways of locking the software to a specific machine. No computers are
perfect; there must be some way of being able to see those imperfections and then use them as a
kind of fingerprint to lock the licence to that machine. It was the most fun those few months, and
we're doing tests and the thing was actually working and that whole exciting time. Next thing we're
on the television, and we're off.

(Excerpt from '7.30 REPORT', ABC TV - 1992

REPORTER: The key to the protection of this software is the registration number. It provides a sort
of "technical intelligence". which means the software will only work on the machine for which it's

(End of excerpt)

STEVE COX, FRIEND: The revolutionary idea was If they copied it to another computer, it would lock
itself up again, realising that it was on a new machine by checking the environment. He was so
excited by the idea, I don't even think he slept for a few nights after that.

RIC RICHARDSON: And that's where the beginnings of Uniloc started.

JIM REVITT, FRIEND AND MENTOR: You didn't have to be a genius to see the genius of that idea.

STEVE COX, FRIEND: It was great having more experienced people as mentors at that stage because
they, very early on people like Jim Revitt told us to look into patenting the idea quickly.

JIM FITZSIMONS, PARTNER, CLAYTON UTZ LAWYERS: Ric rang me I guess, in '92, and I was blown away by
his invention. The idea of being able to distribute software legitimately in the means that he had
with his fingerprint on the hard disc was, I thought, was world breaking, ground breaking, and he
was going to change the world. So that's why he filed the patent, which Uniloc still holds.

RIC RICHARDSON: $40,000 was just really what had been quoted to me really to just get the patent
through to the main review stage. In the end, it cost probably ten to twenty times that.

JIM FITZSIMONS, PARTNER, CLAYTON UTZ LAWYERS: Software patenting was relatively new then, and so
for Ric to apply for and be granted a patent that was purely on software would have been one of the
first in this country.

JIM REVITT, FRIEND AND MENTOR: If that patent hadn't been firmly and legally established way back
when he first conceived the idea, Ric's world would be entirely different.

STEVE COX, FRIEND: We had offers in the millions, I think, in the first few months of coming up
with the idea. But the issue wasn't really money. As far as success goes, we weren't interested in
that. Well, I was, at first. I thought, well, of course, grab your attention with a million
dollars, that's, that's a big thing for us. But Ric, really he quickly dismissed the idea. He
wanted to get it going on his own.

JIM REVITT, FRIEND AND MENTOR: Success with Uniloc depended on opening the doors of big business.
Corporations with international connections, and IBM provided the warmest reception

RAVI MARWAHA, FORMER IBM MARKETING MANAGER: And so Ric comes over and I took one look at him - and
there was this guy who looked as if he was a hippie. And I said, "Oh my goodness, well that's
interesting." And we sat down and then we talked about it for some time and I was very impressed.
What Ric had done was perhaps more advanced than what our development division had done in this
area, which was really something from a young guy, inventing something that gets our development
division people saying, "Wow".

RIC RICHARDSON: IBM really respected our wishes to try and keep the ownership of the software we
developed, so they gave us an advance on royalties, so that we could get our development efforts
going. They ended up giving us $300,000 US, which was about half a million Australian at the time.

JIM REVITT, FRIEND AND MENTOR: It happened in early 1993 and it was very, very exciting. He
suddenly had a bigger office, more staff and it was all go, go, go.

RAVI MARWAHA, FORMER IBM MARKETING MANAGER: Ric used his technology in many other ways, and he was
successful in taking it out into the world beyond IBM.

STEVE COX, FRIEND: Microsoft were one of the many vendors that we approached. To us they were the
dragon, you know. They were... going into the dragon's den. Ric had just read a book about Bill
Gates and the whole Microsoft technology and the way they acquired things. If they were looking at
new technology they would have you sign a paper that basically gave them permission look into your
code, and they would rip out the guts of whatever they wanted.

RIC RICHARDSON: I read the book Hard Drive, and even though the book takes a pretty negative slant
on things, it was very insightful in helping me get some idea of what I was dealing with.

STEVE COX, FRIEND: And he said, "No, we're not signing that paper. No way, we're not doing that."
And it's a good thing we did that too. It was thinking ahead, because if we'd given them permission
that day, we could very well have lost all of our... all of our rights.

RIC RICHARDSON: Microsoft's a big company and you can't force people to take our software, so move
on, go on to other prospects. You know, everybody was interested.

STEVE COX, FRIEND: Around '96 we started having a struggle and when the IBM relationship started to
fail we lost momentum. Really I think the weight of all those things was starting to just show
pressure and cracks on us.

RIC RICHARDSON: All the big software publishers are in the US. Without IBM, all of the
opportunities started to dry up. So obviously we had to start thinking about moving to the States.
Steve had had enough of corporate life and he decided to go back to his music.

KAREN RICHARDSON, WIFE: I met Ric at a party just about the time Uniloc was slowing down. And
within a week he had decided to marry. My daughter Lilly loved him and he loved her, and it was
just lovely. Right after we were married, Ric had announced that we're packing up and we're going
to America for three months. We just packed up and we went to America for three months - but it
turned into 12 years. He goes off into his own world, but now and again, when he gets really
intense and I'm really tired, I just want to say "Will you just shut up?" (laughs) But I get this
look on my face and he says, "I'm sorry".

STEVE COX, FRIEND: Ric and I kept in contact while he was over there. He took me to the new Uniloc
offices. There was about 30, 40 people working there at the time, and he got that going pretty

RIC RICHARDSON: In the early 2000's, I started to suspect that our patent was being infringed.

STEVE COX, FRIEND: And it looked like they were infringing the patent, not just a little bit but
had actually taken the technology and put it in a whole range of their products, including even
Windows, I think.

RIC RICHARDSON: Enforcing your patent rights is a very heavy decision to make. You have to make it;
you can't have a patent and then just let it flap in the wind - you've got to follow through on it.

KEVIN RIVETTE, US PATENT ADVISORY COMMITTEE: A case like this is really a David and Goliath battle.
Large corporations have got tremendous resources that they can bring to bear - they have lots of
money, they have great lawyers - and lots of them! - and they have media access. What do small
inventors have like we have in this case? They've got good patents. They've got good innovation
that has been used by the larger corporation. That's what they've got .

STEVE COX, FRIEND: I think Ric was protecting his rights as a creator of the technology and the
principle of someone stealing that off him was the biggest issue with him. It was the principle.

JIM FITZSIMONS, PARTNER, CLAYTON UTZ LAWYERS: After Uniloc filed their claim, Microsoft then sought
to have the case thrown out on the basis that there was no way Uniloc could win, and the judge
agreed. He threw the case out.

STEVE COX, FRIEND: The case was an ongoing thing that was taking up a lot of energy and a lot of
time from Ric who I'm sure would be rather doing things, being back in the garage inventing stuff.

KAREN RICHARDSON, WIFE: America was not my cup of tea. And I joke and call it the prison sentence -
the 12 year prison sentence. It's a stressful place to live and it really affected our health.

RIC RICHARDSON: And during that time, my whole body system got out of whack. And so I started to
ease out of management at Uniloc, realising more and more that my strengths lie in invention. I
felt comfortable to be able to start thinking about getting home. It took us eight years to get
back to Australia. The court case was being handled by real professionals in the US. The guys did
their job well. It seriously looked as if we'd actually been successful.

NEWS BROADCAST: A Sydney-born I.T. entrepreneur has become an overnight multi-millionaire after his
company won a long-running patent infringement against Microsoft.

THE WORLD TODAY, ABC RADIO (2009): An American jury has now found that the technology was actually
devised by Australian Ric Richardson in 1992.

PETER CAVE, THE WORLD TODAY, ABC RADIO (2009): It's ordered Microsoft to pay more that $500 million
dollars in damages.

JIM FITZSIMONS, PARTNER, CLAYTON UTZ LAWYERS: The major findings of the jury are that the patent
was valid, that it was infringed by Microsoft. They've also found, as an additional thing, that
Microsoft's breach of that patent was willful, so the judge has the option now of adding to that
$388 million because of the wilfulness that was found by the jury. So that would be interesting to
see the outcome of that.

KAREN RICHARDSON, WIFE: The day the jury's verdict came in, I was blown away - $338 million! And I
was excited for Ric, and Ric came out, got the news, but he just sat there like a stunned mullet.

JIM FITZSIMONS, PARTNER, CLAYTON UTZ LAWYERS: It's an enormous case. This is $388 million US. I
mean, that is an enormous sum, and if it's the fifth biggest in the US you've got to say it'd be
the biggest in Australian history.

KEVIN RIVETTE, US PATENT ADVISORY COMMITTEE: I think Microsoft was probably very surprised that
they lost this case. So what happened afterwards? Probably, "We're going to appeal it", and in a
bit of a quandary on how they're going to deal with this if they lose the appeal.

(End of 'Australian Story' - 2009 excerpt)

(Byron Bay last month)

RIC RICHARDSON: It was about four months after the last Australian Story. We thought we were in the
clear, and next thing you know Judge Smith decides the jury didn't know what they were talking
about. It was so heartbreaking. You know when the judge completely overturned the jury decision,
that was a pretty heavy blow.

STEVE COX, FRIEND: When I got that news that it was turned over again, I just thought "Oh no". I
wasn't sure if Ric would keep on going with it at the point, because I knew it had been going on
for a long time. I wouldn't be surprised if he said, "I'm bailing out, and that's it."

LILY RICHARDSON, DAUGHTER: The whole case - it was very stressful, especially on Dad and on the

KAREN RICHARDSON, WIFE: We were never counting on the money and I remember saying that to Ric,
"Good thing we weren't counting on the money, otherwise we'd be in a pickle."

RIC RICHARDSON: When we were talking about this situation, back in the previous episode, I had no
idea that something like that could happen. It was so disheartening.

JIM FITZSIMONS, PARTNER, CLAYTON UTZ LAWYERS: It's a little-known feature of American jurisprudence
that a judge can examine the jury's verdict and if he or she so chooses, overrule it, and that's
what the judge did in this case.

RIC RICHARDSON: So he overturned the judgment and gave it to Microsoft. So straight away we went
into appeal.

JIM FITZSIMONS, PARTNER, CLAYTON UTZ LAWYERS: The court of appeal said "No. Jury got it right" -
certainly in terms of infringement, although the question of damages did need to be re-examined.

RIC RICHARDSON: So they sent us back to court to get our money. So we're up on the high again, but
then we've had so many false starts with Microsoft that I didn't know that it was actually going to
happen. And then next thing you know, there's an SMS: "We settled, it's over". The best thing in
that situation is not to have knocked out the Goliath, because it's Microsoft. It could have been
years still for it to be resolved So now we have, as a customer, the biggest software company in
the world who we were just, you know, a few days ago at war with.

(Excerpt from 'Today Tonight', Channel 7 - March 18 2012)

REPORTER: An Aussie inventor has had a massive legal victory worth hundreds of millions of dollars
against computer giant Microsoft .

(End of excerpt)

STEVE COX, FRIEND: I guess you could say "Well, it took you a while, Microsoft, but you've finally
come around". That was the way it was supposed to happen in the first place, you know.

RIC RICHARDSON: So the highs and lows, there's been actually three or four serious swings until
this happened with the settlement - that even after the settlement, it still took a while for it to
settle down and actually understand it's over.

JIM FITZSIMONS, PARTNER, CLAYTON UTZ LAWYERS: The parties have chosen to settle, and the basis on
which they settled and the amount is not published and so we don't know how much that was.

RIC RICHARDSON: The deal that's been done means that the net result is that it'd be worth more than
if we had of got that $388 million. It was a fantastic result.

LILY RICHARDSON, DAUGHTER: You can't picture that amount of money at all. You know, I find it hard
to picture $1,000, so, you know, to me I'm thinking, "That can't be right, that can"t be right",
but obviously it is true, but I can't wrap my head around it - and I don't even know how dad wraps
his head around it, you know.

KAREN RICHARDSON, WIFE: The most important thing that has come out of this whole Uniloc Microsoft
thing is that I have the chook house that I wanted and my girls need. It's called Secret Chook
Headquarters, and it"s a lovely big kids cubby house.

LILY RICHARDSON: Dad's very generous, but I think sometimes he can be too generous. Like, he leaves
himself last, and sometimes that can be a bad thing.

KAREN RICHARDSON, WIFE: Unfortunately it can get him into a pickle because some people start
wanting to take advantage, but generally it's been all good. Out of the roughly 2000 people that
contacted Ric after the first Australian Story, only about six asked for money. That's fantastic!
But people closer to us have expected us to look... to take care of their problems. It's usually
financial, unfortunately.

STEVE COX, FRIEND: I don't think they're used to that, you know. Ric and Karen... I don't know if
they've ever really thought about having the kind of money that people will come after them for.

RIC RICHARDSON: When you start dealing with large amounts of money it gets very complicated, and
suddenly it becomes like a community decision, when it's not. It's Karen and I, you know. So those
kind of things have added a weight unnecessarily, but the fact is that people do - they can't help

KAREN RICHARDSON, WIFE: Well, there are family members, sometimes people employed... friends,
sometimes... just become presumptuous and want to take. I really want it to stop. We can't continue
having this stress on our marriage. It's deeply hurtful.

STEVE COX, FRIEND: And really, I think with Ric, the money is something that gives him a means to
get on with what he's been doing - inventing and helping other people to get their ideas out there.

RIC RICHARDSON: After the last Australian Story, I just felt a real pressure to kind of give back a
bit, especially because so many people asked for advice.

JIM FITZSIMONS, PARTNER, CLAYTON UTZ LAWYERS: Ric is very much the expert now - Ric, I know, writes
patents for many other people, and including he's written one for me.

RIC RICHARDSON: I got this routine where I would spend every Friday morning in a local cafe and sit
down with them - sometimes actually write a patent for them on the spot.

KAREN RICHARDSON, WIFE: And they're very grateful. We're not asking for anything or expecting
anything. Ric just enjoys helping. Well, in the shed is a project that people ask me about, and I
can't explain it. I, in fact, just call them the "lightning bolt people", because that's the limit
of my understanding.

RIC RICHARDSON: You know, I have 120 or so inventions that I'm interested in and some of those are
pretty important. One of them is this Tesla project, which is basically taking Nikola Tesla's 1900
patent for underground wireless transmission of power and making it work with new technology.

KEITH HOWARD, INVENTOR: What he's done mainly for us is to actually get us into the public forum
and he's done it all pro-bono which we actually find quite amazing, 'cause it's, it's almost an
enigma that someone would go out and help inventors just for the love of it, I suppose.

KAREN RICHARDSON, WIFE: I have seen Ric dream about doing something, but then make it come true
again and again and again and not every project works out, but so many do. So people can poo poo
Ric, he has a great track record. People say he's a dreamer - yeah, but he makes the dreams come
true, so get lost.

RIC RICHARDSON: I have a charitable cause which we care very deeply about. Karen and I have decided
to keep it very simple and just support that one cause, which we keep to ourselves.

KAREN RICHARDSON, WIFE: Our spiritual life is of great importance to us, and there's a worldwide
work going on that we want to contribute to. In fact, the majority of funds that we would get would
be contributed this way, which makes us comfortable. We don't want a big lifestyle. We don't need
all of this money, it can be put to better use.

RIC RICHARDSON: Being able to do a job you love is, to me, a lot more than having a lot of money or
anything, you know. The idea is for us to not change what we've enjoyed these last three years -
which is, I'm an inventor. I'm not a philanthropist, I'm not an investor, I'm an inventor, and I
only just started to learn how to do it after 20 years. So I would like to just go for a few years
and work out how to do this invention thing and actually see how to get things done quickly. Uniloc
was invented in 1992. I'd like to do the next one a bit faster than that.