Microsoft has settled a long-running and expensive lawsuit with Eolas Technologies, a start-up backed by the University of California that alleged Internet Explorer infringed a patent.
"We're pleased to be able to reach an amicable resolution in this long-running dispute with Eolas and the University of California," the company said in a statement Thursday, but declined to share further details. Eolas couldn't immediately be reached for comment.
The suit concerned technology that lets Web browsers call up separate applications or plug-ins such as Flash or Java within a Web page. While at the University of California at San Francisco, Eolas Chief Executive Michael Doyle led a team that worked on the technology in the patent, and he spun off Eolas to help commercialize it, according to Eolas. Microsoft revamped Internet Explorer to work around the patent in 2005.
Eolas prevailed earlier in the case, with a court awarding damages of $521 million in 2003 and the U.S. Patent Office upholding the validity of the Eolas patent in 2005. However, a Supreme Court decision this year weakened Eolas' case, and Microsoft said it expected the damages in the case to be revisited.
The Seattle Post-Intelligencer reported the settlement Thursday and published a Monday letter from Eolas Chief Operating Officer Mark Swords to shareholders that said, "We are very pleased that we can now focus our resources on commercializing our existing intellectual property portfolio and developing new technologies." It didn't offer details of the settlement, but said Eolas anticipates paying shareholders a dividend by the end of 2007.
Although Microsoft has been a target in several intellectual property cases, the company affirmed its support for the concept in the computing industry. "Microsoft values intellectual property and believes that the proper protection and licensing of IP enables companies and individuals to obtain a return on investment, sustain business and encourages future innovations and investment in the IT industry," the company said.
CNET News.com staff writers Anne Broache and Tom Krazit contributed to this report.
In a move that could shape an upcoming retrial, the U.S. Patent and Trademark Office has agreed once again to revisit Web browser plug-in patents at the heart of a dispute between Microsoft and University of California spinoff Eolas Technologies.
Microsoft associate general counsel Andy Culbert told CNET News.com in a telephone interview on Friday that the Patent Office agreed last week to undertake what is known as an interference proceeding.
An interference proceeding occurs when the Patent Office has determined that two separate patent holders hold patents covering the same subject matter. A five-judge panel within the office weighs evidence presented by both sides and determines whether the patents in question are valid, and if so, who is the rightful owner.
The Eolas patent describes a system that allows external applications to load in Web browsers. After several years of generally unfavorable decisions for Microsoft, the Patent Office concluded that an application to reissue an existing Microsoft patent with broader claims covers identical subject matter to the Eolas patent and also predates it, Culbert said. Now the board is supposed to determine whether Eolas president Michael Doyle or Microsoft engineers were the first to invent the technology at issue.
"We think this is a hugely favorable development for us," he told CNET News.com. "We felt all along that the technology involved here was technology that we had developed."
In August 2003, a federal jury ordered Microsoft to pay $521 million to the University of California, which owns the disputed patent, and to Eolas, which licensed it. But an appeals court in 2005 partially reversed that ruling and ordered a new trial, which is currently scheduled to begin in federal court in Chicago on July 9.
Meanwhile, later that year, the Patent Office upheld the Eolas patent's validity after conducting a different kind of reexamination process, initiated by the director of the Patent Office, in which only Eolas was allowed to submit materials. The same patent is also currently undergoing another separate reexamination process within the Patent Office.
That earlier rulings about patentability most likely won't matter if the interference board decides differently, Culbert said. Microsoft has also asked the federal judge in Chicago to delay the start of the trial since it believes the outcome of the interference proceeding is deeply intertwined with the court case. The Patent Office board is expected to rule within a year, Culbert said.
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