I'm not a patent lawyer but does the fact that Neil Stephenson basically described the same thing in The Diamond age in anyway affect the validity of the patent?
I am not a lawyer at all, but people were asking the same question with regards to features from the iPhone and the movie Minority Report, and someone (who may have not even been a person: probably they were a dog) said that fictional representations do not count: you must have concrete and operational implementations (even though the actual thing you are discussing is just a relatively simple idea; one so simple, you might have gotten it while watching a movie or reading a book published years earlier).
The software on the Myhrvold side could not be placed into the processor on the prior art and vice versa. That means they are not interchangeable. That changes everything right there.
