Eolas Browser Verdict Against Microsoft Stands Despite Patent Review

UPDATED: A federal judge on Wednesday issued an order agreeing with a jury's $521 million award against Microsoft in the Web browser patent infringement case and said that a pending re-examination of the patent

A federal judge on Wednesday upheld a jurys $521 million verdict against Microsoft Corp. in a high-profile Web browser patent infringement case, despite an ongoing reexamination of the patents validity.

Judge James B. Zagel, in an order issued in U.S. District Court in Chicago, found that Microsoft had infringed on Eolas Technologies Inc.s patent on the embedding and invoking of interactive applications, such as plug-ins and applets, in Web browsers. He denied Microsofts motion to suspend a decision until the U.S. Patent and Trademark Office completes a reexamination of the patent, No. 5,838,906 (or 906), that began in November.

The jurys verdict in August has rattled the Web community, leading its major standards body to consider changes to HTML and seek the patent offices review of the 906 patent.

Zagel wrote that the reexamination was not reason enough to delay his decision or the appeals process and that such a delay would more significantly hurt Eolas if the patent ultimately remains valid.

"There are cases in which courts have stayed ongoing proceedings pending reexamination," he wrote. "However, there is little support, if any, for staying entry of judgment when reexamination is ordered well into the briefing period for post-trial motions."

Zagel also granted Eolas an injunction against future sales of IE that contain technology based on its patent but put it on hold pending the outcome of any appeal of the verdict. That means that Microsoft, for now, can continue to sell IE without making any changes to the browser.

The Redmond, Wash., software maker has been planning to release an altered IE early this year to work around the 906 patent. Microsoft spokesman Jim Desler said the company is still reviewing Wednesdays decisions to determine whether or not to proceed with changes to IE.

/zimages/5/28571.gifClick here to read more about Microsofts alterations to its IE browser.

The judges final judgment now opens the way for an appeal from Microsoft, something the company plans to file within the next 30 days, Desler said.

"We feel good about our prospects on appeal, and we remain steadfast in our belief that the Eolas patent is not valid," Desler said.

Eolas Founder Michael Doyle viewed the judges order as another victory for his company and noted that the amount Microsoft must pay Eolas could rise substantially. Thats because Zagel awarded Eolas prejudgment interest totaling $45 million and ruled that, after an appeal, Eolas could be due further royalties and interest for products sold since October 2001.

"If Microsoft cant read the writing on the wall now then they need a new eye doctor," Doyle said.

Zagels order moves the case "closer to an ultimate resolution," though the appeals process is likely to take another year, said Eolas attorney Martin Lueck of Robins, Kaplan, Miller & Ciresi LLP, in Minneapolis.

While the final judgment largely went Eolas way, the judges decision to delay the injunction benefits Microsoft, said intellectual property attorney Richard Horning of Tomlinson Zisko LLP in Palo Alto, Calif. An immediate injunction would have required Microsoft to stop shipping its current version of IE and put pressure on it to settle the case.

"It would have been a driver to get parties to work out a reasonable accommodation," he said.

The case remains far from over now that it heads toward an appeal. The U.S. Court of Appeals for the Federal Circuit hears appeals of patent infringement cases and consists of experts in patent law that are known to reverse district court decisions, Horning said.

Once it appeals, Microsoft also could ask the Court of Appeals to delay its hearing until the patent offices reexamination is completed in hopes that the patent review will go its way and bolster its appeal, he said.

"Statistics would show that the plaintiffs are not necessarily assured of sleeping soundly at night until the Court of Appeals rules," Horning said.

Officials at the World Wide Web Consortium, the standards body that had requested the patent reexamination, were not available for comment. But the groups HTML Patent Advisory Group charged with examining the 906 patent is planning to discuss the judgment at its Jan. 23 meeting, a W3C spokeswoman said.

Editors Note: This story was updated to include forther information and comments from the company and experts.