Eolas Patent Invalid

A federal patent examiner's initial review has found the Web browser patent at the center of a major verdict against Microsoft Corp. to be invalid.

A federal patent examiners initial review has found the Web browser patent at the center of a major verdict against Microsoft Corp. to be invalid.

Eolas Technologies Inc. won a $521 million jury verdict last year in its patent-infringement lawsuit against Microsoft, prompting an outcry from the Webs major standards body. The World Wide Web Consortium (W3C) asked the U.S. Patent and Trademark Office to re-examine the patent, which it did starting in November.

This latest twist in the ongoing patent struggle came Feb. 25 with the patent examiners initial finding rejecting the patent. The patent holder now has 60 days in which to contest it. The University of California holds the patent, which it licenses to Eolas, and plans to contest the filing, a university spokesman said on Friday.

The examiner agreed that substantial "prior art" existed to reject the patents claims. Prior art is the legal term referring to whether an invention existed prior to the filing of a patent. The patent, No. 5,838,906, was issued in 1998 and covers a method for the embedding and invoking of interactive applications, such as plug-ins and applets, in Web browsers.

Officials with the W3C, which raised concerns that the patent could undermine the Webs operation, could not be reached for comment on the patent office finding. Microsoft officials called it "a positive step."

"This decision, while welcome, is not surprising," said Microsoft spokesman Jim Desler, in a statement. "We have maintained all along that, when scrutinized closely, this patent would be ruled invalid."

Both Eolas attorney and the University of California, though, said the initial finding against the patent was not surprising since they had yet to provide any rebuttal of the prior art arguments to the examiner. Eolas lead counsel Martin Lueck said that much of the prior art claims had already been considered during the trial and during the original review of the patent.

"Our point of view is that on the merits were in good shape," said Lueck, of Robins, Kaplan, Miller & Ciresi LLP, of Minneapolis.

But the patent offices finding could be a coup for Microsoft in its appeal of the Eolas court case. A federal judge in January had upheld the jurys verdict, and Desler said that Microsoft on Feb. 18 filed an appeal with the U.S. Court of Appeals for the Federal Circuit.

Desler declined to comment on Microsofts next legal move but said the company "is considering all our legal options."

While the patent reexamination is a separate process from the court case, legal experts say that Microsoft could use the public finding as ammunition in its appeal of the verdict, especially if the final decision from the patent office goes it way.

"These are separate paths…(but)sooner or later the paths will meet," said Richard Horning, an intellectual property attorney with Tomlinson Zisko LLP in Palo Alto, Calif. "Microsoft is going to make a big deal about the fact that subsequent to the trial there was a patent reexamination (that) found it to be invalid."

But Lueck said Microsoft can make "limited use" of the patent offices initial reexamination finding in the court case and does not expect it to affect the appeals process.

"The reexamination process is not intended to benefit someone going through a trial," he said.

The patent offices director initiated the Eolas patent reexamination, a fairly rare type of review. Only 2 percent of about 7,000 reexaminations are ordered by the director, a patent office spokeswoman said.

Those types of reexaminations result in about 68 percent of the patents requiring changes to their claims. Only 13 percent are completely upheld, while 19 percent are completely cancelled, the spokeswoman said.