Eolas Patent Ruling Could Save Microsoft $521 Million

Microsoft has won an important victory in its patent dispute with Eolas and the University of California, which claim the software giant is profiting from a patented browser technology.

While a lower court had found that Microsoft infringed on the patent and upheld a jury penalty of US$521 million, the U.S. Court of Appeals remanded the case and cleared the way for Microsoft to try to prove that prior art exited for the browser plug-in technology, thus nullifying the patent. Microsoft, which also won a U.S. Patent and Trademark Office (USPTO) review of the Eolas patent a year ago, said the decision was a “clear affirmation” of its position that the patent is invalid.

Some legal experts questioned whether the ruling — which means a U.S. District Court will consider evidence of prior art that was previously excluded — provides any indication of the patent’s validity. Microsoft, however, has backing from many players in the tech industry, including some of its usual foes.

‘What We Sought’

“The potential enforcement of the Eolas patent further created confusion that could have impacted the use of the World Wide Web,” said a Microsoft statement responding to the ruling. “This concern was shared by others in the industry — including the W3C — who have also maintained that the patent is invalid and have requested a reexamination by the U.S. Patent Office.”

Microsoft spokesperson Jim Desler told TechNewsWorld the reversal affirmed the company’s position that the patent is invalid.

Microsoft also indicated it may try to show that Eolas and its founder Michael Doyle “knowingly withheld” information about the prior art in question — work by Pei-Yuan Wei of O’Reilly and Associates that occurred prior to the Eolas patent application — from consideration by the U.S. Patent Office.

“It’s a legal option,” Desler said. “It relates to an issue we brought up and wanted to pursue [with the District Court] over a year ago, and that is the issue of inequitable conduct. People in the industry knew about Pei-Yuan Wei’s progress in this area. Mr. Doyle and Eolas did not present it when applying for the patent.”

Getting a Chance

Jeff Berkowitz, a partner with the intellectual property law firm Finnegan Henderson, stopped short of calling the appellate court’s ruling an affirmation of Microsoft’s position, but he did indicate the software giant will have another shot at invalidating the patent.

“Decisions like this happen,” Berkowitz told TechNewsWorld. “The court is now allowing [Microsoft] to submit prior art and to get a decision on that.”

Berkowitz, who read the appellate court ruling, called Microsoft’s charges of inequitable conduct a serious allegation, adding that if such behavior is proved, it would invalidate the Eolas patent.

“The defendant will have a chance to provide evidence of inequitable conduct now,” he said.

Patent Particulars

Berkowitz also noted that the calculation of damages in the case was based on software sold outside of the U.S.

That decision led the bulk of the U.S. technology industry to back Microsoft, which argued its software sales outside of the U.S. should not be subject to U.S. court decisions or damages.

“It’s an interesting decision and it’s being closely watched,” Berkowitz said. “I expect we will continue to read and see a lot more about the case.”

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