Eolas Settles Microsoft Dispute, Was Likely Paid Cash

As first reported by the Seattle Post-Intelligencer's Todd Bishop, the retrial of the long-running Eolas v. Microsoft case has come to an abrupt end. Eolas shareholders were notified on Monday, Bishop learned, to expect a very special dividend of between $60 and $72 per share.

Since Eolas is not a public company, it isn't possible to do the math to see how much that represents, but that still sounds like a very significant sum. It's indicative of a payout by Microsoft, though probably less than the $565 million it would have had to pay had an appeals court not overturned a judgment against it in March 2005.

Eolas represents the interests of developers from the University of California who hold patents on the concept of Web pages that trigger the execution of binary code. The organization filed suit against Microsoft in 1999, and appeared likely to emerge victorious until two years ago, when the existence of very similar sounding Microsoft patents emerged.

Last May, after the Supreme Court made landmark rulings that changed the concept of patentability of code, Microsoft won a motion allowing it to argue the invalidity of Eolas' patents, even though the USPTO declared those patents valid prior to the high court rulings. That event may have pushed Eolas to finally find a way to wrap this up.

It doesn't appear Eolas shareholders will be too disappointed about it having prohibited itself from discussing the terms of its settlement. In its shareholders' letter, company COO Mark Swords wrote, "We believe that the end of the litigation with Microsoft is the beginning of an exciting new stage in the growth and development of Eolas."

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