Microsoft Wins Appeal in Eolas Suit

An appeals court has overturned a $565 million decision against Microsoft in the patent lawsuit brought on by the University of California and Eolas. Microsoft heralded the reversal as a victory not only for Redmond, but for all Internet users. A UC spokesperson, however, claimed victory on some issues as well.

The University of California granted Eolas exclusive rights to a patent that covers a mechanism used by developers to embed interactive programs within a Web browser. Eolas claims that Microsoft's Internet Explorer infringed on this patent through its loading of plug-ins such as Macromedia Flash or Apple's QuickTime.

Eolas initially won the case and was awarded a $521 million judgment, which was later upped to $565 million. Microsoft vowed to appeal but agreed in late 2003 to modify its plug-in architecture - potentially breaking millions of Web pages and aggravating developers.

Early last year, however, Microsoft backed away from the decision following a stay of the injunction until an appeal was heard. In June 2004, Microsoft filed a 174-page brief claiming "prior art" invalided the 1994 patent and asked the U.S. Court of Appeals to overturn the ruling.

Redmond also found itself with support from friends and foes alike, including the Electronic Frontier Foundation, which launched a project to strike down dubious patents where prior art is said to exist and has zeroed in on Eolas in particular.

Following the appeals court's decision, the case will be sent back to a lower court, where Microsoft plans to prove that Eolas did not invent the technology, and knowingly withheld information from the United States Patent and Trademark Office.

"We have maintained throughout this process that the Eolas patent is not valid, and today's ruling is a clear affirmation of our position," Microsoft said in a statement. "The potential enforcement of the Eolas patent further created confusion that could have impacted the use of the World Wide Web. This concern was shared by others in the industry -- including the W3C -- who have also maintained that the patent is invalid."

Microsoft claims that, "Pei-yuan Wei and his colleagues at O'Reilly and Associates...are the true pioneers of this technology." The U.S. Patent and Trademark Office is currently re-examining Eolas' patent.