Microsoft, Eolas Ready to Rumble on Browser Case

Microsoft is trying to reverse the $521 million verdict that startup Eolas won in the patent-infringement case.

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Oral arguments are set to begin on Thursday in Microsoft Corp.s appeal of a $521 million verdict against it in a Web-browser patent lawsuit.

The U.S. Court of Appeals for the Federal Circuit in Washington will hear arguments from Microsoft and Eolas Technologies Inc., which holds the license to a patent on the embedding and invoking of interactive applications, such as plug-ins and applets, in Web browsers.

Eolas, of Chicago, prevailed in its patent-infringement lawsuit with a favorable verdict in 2003. The verdict triggered an outcry from the Webs main standards body, which said the patent could undermine the way the Web operates.

But Microsoft appealed the verdict earlier this year, and Thursdays hearing is the main event for Microsoft and Eolas to present their cases and answer questions from the justices, said Microsoft spokesman Jim Desler. Following the hearing, the appeals court will deliberate and return a decision, but there is no set timeframe for when the court will issue its decision.

"Weve maintained throughout these proceedings that the Eolas patent is invalid and that Microsoft did not infringe, and we believe the lower court ruling should be reversed," Desler said.

The disputed patent, No.5,838,906, was issued in 1998 to the University of California, and Eolas has licensed it from the university. The attorney for Eolas could not be reached for comment on the upcoming hearing.

/zimages/2/28571.gifWhy did Eolas battle Microsoft? Click here to read an interview with the companys founder.

Outside of court, the patent has undergone another battle. The World Wide Web Consortium and other parties persuaded the U.S. Patent and Trademark Office to review the patents validity.

The office agreed to a reexamination a year ago and so far has issued two so-called office actions, both of which found the patent to be invalid because of prior art. "Prior art" is the legal term referring to whether an invention existed prior to the filing of a patent.

/zimages/2/28571.gifClick here to read more about the most-recent patent office finding.

While the appeal and patent reexamination are separate processes, the early findings from the patent office could impact the appeal, according to intellectual-property attorneys.

In particular, the invalidation finding could bolster Microsofts argument that the jury wrongly was barred from considering the validity of the patent during the lower-court trial, said attorney Glenn Peterson of McDonough Holland & Allen PC, in Sacramento, Calif.

One of Microsofts main arguments is expected to be that jurors were not permitted to consider its evidence of prior art in rendering their decision, according to the companys appeals court brief.

"Although Eolas has expressed confidence in the verdict, I would be very concerned about the fact that the patent office granted reexamination and later rejected the patent," Peterson said. "I would expect some really pointed questions from appellate panel directed at legal team for Eolas."

If Microsoft were to win the appeal, Eolas faces a tough fight, Peterson said. Because the patent offices reexamination so far has found the patent invalid, a lower court would be unlikely to try the case again, he said.

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