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Women in Tech

Microsoft Wins Round in Eolas-UC Patent Decision

By Jay Lyman
Mar 9, 2004 10:59 AM PT

After a rough start to the year, with serious security problems and European antitrust regulators aiming to separate Windows from the company's media player, Microsoft got a win this week as the U.S. Patent and Trademark Office (USPTO) rejected the patent claims of Eolas and the University of California.

Microsoft Wins Round in Eolas-UC Patent Decision

The news also is good for Microsoft independent software vendors (ISVs) and even competitors that rely on plug-ins to provide everything from media player functionality to rich-media advertising on the Internet.

Microsoft even had the support of its usual enemy -- the open-source community -- as well as Internet pioneer Tim Berners-Lee, who is credited at least in part with bringing about the reexamination of the Eolas patent by writing to USPTO Under Secretary of Commerce for Intellectual Property Jim Rogan and complaining of the patent's negative impact on technology growth and innovation.

While an attorney representing Eolas denied to TechNewsWorld that the patent has been rendered moot by the USPTO, the reexamination action may save Microsoft from a half-billion-dollar judgment upheld earlier this year. The ultimate invalidation of the patent, still to be determined by a USPTO examiner, also could save a bulk of technology companies from reworking products that rely on plug-in browser technology, according to industry observers.

Plug-In Win

Yankee Group senior analyst Laura DiDio said that in addition to avoiding a US$521 million damages claim from Eolas that resulted from its patent suit against Microsoft, the software giant also has a cloud lifted from its future plans.

"It does clear the way for Microsoft to go forward with its Net strategy of embedding many applications in the browser -- the plug-ins," DiDio told TechNewsWorld.

DiDio added that Microsoft rivals, such as RealNetworks, Macromedia and Apple, as well as the software company's usual open-source foes, are actually in a position of goodwill toward Microsoft and stand to gain from its potential victory and the invalidation of the Eolas patent.

"The Microsoft ISVs have to be happy," DiDio said. "Anybody who had a plug-in, which is everybody."

Common, Expected Step

However, attorney Martin Lueck with Robins, Kaplan, Miller & Ciresi LLP -- who is representing patent holders Eolas and the University of California -- told TechNewsWorld that reports indicating the patent has been annulled, rejected or invalidated are false.

"The patent, as it stands today, is valid and enforceable," Lueck said. "The patent has not been invalidated. Something very mundane has actually happened. It's an 'office action,' a common and expected step in the reexamination process and the same thing that happens when you are applying for a patent in the first place."

Lueck said the record of the patent's first round of scrutiny included five similar patent-claim rejections before the patent was actually issued in 1998.

"This is the first step in the process of reexamination," Lueck said. "We don't appeal; we go through the process of examination with the examiner. We will respond as appropriate. The examiner will take some action, which is unknown at this time."

Chalk One Up for Redmond

Nevertheless, the USPTO action was widely viewed as a victory for Microsoft, which along with other software makers was forced to contemplate changes to its browser and other products.

"Can you imagine RealMedia having to reengineer their software or rip things out in order to comply with a Microsoft ruling?" DiDio asked. "It would have been far too prohibitive for many companies to do it."

DiDio argued that the Eolas patent in question was so vague as to be unenforceable and indicated that "nebulous terms and conditions" could stifle innovation rather than encourage it.

DiDio added that Eolas and the University of California are likely to fight hard for the patent, with potentially billions of dollars in future licensing revenue on the table. Eolas-UC attorney Lueck said his clients disagree with Microsoft's characterization of the patent's impact and feel Microsoft is profiting from a technology created by the University and by Eolas.

"The University invested resources in developing the technology," Lueck said. "On the other hand, Microsoft is making money here while using the innovation of someone else. They should be sharing the profit with the owner of that innovation."

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