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Microsoft Could Save $521M - PTO Preliminary Ruling Finds Eolas Patent Invalid

Microsoft Could Save $521M - PTO Preliminary Ruling Finds Eolas Patent Invalid

Microsoft may not have to pay Eolas Technologies upwards of a half-billion dollars in damages for patent infringement after all, or, for that matter, change its Internet Explorer browser and gum up the inner workings of the web because of Eolas' far-reaching patent claims.

Microsoft yesterday also settled part of a patent infringement complaint made by AT&T that had just gone to trial and was looking for somewhere $90 million and $300 million charging because Microsoft's NetMeetings and TrueSpeech widgetry allegedly tread on a 1981 patent AT&T had on digital voice.

The amount of money Microsoft is paying AT&T is being kept quite.

The two are going to take the unsettled part of the case to the federal court of appeals.

Anyway, getting back to Eolas. The US Patent and Trademark Office yesterday made a preliminary finding that the 1994 Eolas-University of California at Berkeley plug-ins/applets patent was invalid by virtue of prior art.

Eolas now has 60 days to protest the PTO's decision and get it reversed. Eolas's lawyers claim that PTO backflips are common and that Eolas will ultimately prevail.

Eolas can also appeal to the Board of Patent Appeals and Interferences or to the federal courts.

The jury verdict against Microsoft last August provoked the computer industry to unusual solidarity with Microsoft when it became clear that, in the words of one lawyer, Eolas was "screwing with the whole world" and that everybody had some skin in the game.

Tim Berners-Lee, the esteemed director of a spooked World Wide Web Consortium, wrote to the director of the PTO asking that the Eolas patent be reviewed.

Berners-Lee told the PTO that Eolas' patent would do "substantial and technical damage" to the Web and force "cascades of incompatibility to ripple through" it.

W3C's web specifications like the web touchstone HTML would have to be rewritten and Berners-Le said that even a small redesign of the Microsoft browser "would render millions of web pages and many products of independent software developers incompatible with Microsoft's product."

He was thinking of plug-ins like RealNetworks' RealAudio and RealVideo streaming, Apple's QuickTime video, Macromedia Flash and Shockwave players, Adobe's PDF Reader and Sun's Java not to mention Microsoft's own Windows Media Player, now made controversial by the European Commission trustbusters.

Berners-Lee also claimed that without plug-ins, "The cycle of innovation on the Web would be substantially retarded."

The PTO immediately granted his petition.

The Chicago trial court has stayed its injunction forbidding Microsoft to distribute any more offending code until the PTO and a promised Microsoft appeal to the federal court of appeals sorted things out.

Microsoft has already paid Eolas $45.3 million in interest on the $521 million award. Eolas wanted $110 million, but the judge went with Microsoft's formula, which was based on Treasury Bills and not the prime rate.

Unfettered, however, the trial court is making noises that would expand how long Microsoft has been infringing the Eolas patent and double the award, already one of, if not the biggest award ever made.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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