British Telecommunications plc v. Prodigy Communications Corp. was a patent infringement case which determined whether a patent related to communications between central computers and their clients was infringed by Internet service providers through hyperlinks. Judge Colleen McMahon of the United States District Court for the Southern District of New York ruled that Prodigy Communications Corporation had not infringed the patent held by British Telecommunications plc through its use of hyperlinks. On summary judgment, McMahon held that there were substantial differences between British Telecommunications' patent and the method of operation of the Internet. The decision limited patent protection for Internet service providers' use of hyperlinks, protecting the providers from licensing fees related to this integral part of Internet technology.

British Telecommunications plc (BT) developed technology related to computer networking. BT was granted the "Sargent Patent (U.S. Patent No. 4,873,662)" by the United States Patent and Trademark Office on October 10, 1989. The patent application had been filed 12 years prior, in July 1977, and underwent many changes during the ensuing years. The patent described a system in which multiple users, each located at a remote terminal, could access data stored at a central computer. A user at a remote terminal would be able to access information stored in a central computer via telephone network. Information would be stored and transmitted in the form of blocks, with each block divided into two parts: a first portion including information to be displayed, and a second portion, not intended for display, which contained the complete addresses of other blocks of information linked to the current display page.^[1]

In June 2000, BT sent letters to Prodigy Communications Corporation ("Prodigy") and 16 other Internet service providers (ISPs), asking them to pay licensing fee for BT's hyperlink patent; all refused.^[2] BT sued Prodigy, the oldest ISP in the U.S., for patent infringement on December 13, 2000.^[3] In suing, BT claimed that the Sargent patent covered hyperlink technology, one of the building blocks of the World Wide Web. BT argued that not only had Prodigy directly infringed the Sargent patent, but that it was also liable for inducing its users to infringe BT's patent. Prodigy submitted a motion for summary judgment of non-infringement, arguing that the technology it used to provide Internet access to its consumers was not covered by the claims of the Sargent patent.

To resolve this case, the US District court conducted through analysis on terms specified in claims of the Sargent patent and analyzed if the patent covered the hyperlink technology. The court decided that there were no disputed issues of material fact in this case, since the Sargent patent was by no means the same as internet and Web-based technology, and, therefore, granted Prodigy's request for summary judgement. British Telecom lost this case.^[4] In determining whether Prodigy had indeed infringed BT's Sargent patent, the court separated the patent trials into two phases: a Markman hearing constituted the first phase, with infringement analysis following. After issuing an opinion and order following the Markman hearing on March 13, 2002, the court conducted the infringement analysis to determine whether the claims of the patent, as interpreted by the Markman analysis, infringed upon the Sargent patent.

The court held that the Sargent patent did not protect the hyperlink technology used by Prodigy and other ISPs. Additionally, since Prodigy had not directly infringed BT's patent, Prodigy could not be held liable for contributory infringement and active inducement of infringement. The court held that there were no disputed issues of material facts, since the Sargent patent was dissimilar to the Web technology used by ISPs including Prodigy. Thus, the court granted Prodigy's motion for summary judgement to dismiss the patent infringement claims.^[8]