MS Wins Right to Challenge Patent’s Ownership

The U.S. Patent & Trademark Office (USPTO) has ruled that Microsoft can argue that it is the rightful owner of a patent lying at the center of an expensive lawsuit. A 2003 verdict in the case had resulted in a tiny competitor being awarded $521 million for patent infringement. The case ultimately drove the software giant to change how Internet Explorer works – although the ruling was later partially overturned.

Now, the massive jury award is in doubt.

“[The latest ruling means that the USPTO] is allowing Microsoft to challenge the ownership of the patent,” a Patent Office spokesperson told internetnews.com.

Eolas Technologies, a Chicago-based spin-off of the University of California (UC), sued Microsoft in 1999 regarding U.S. Patent No. 5,838,906, which was issued to the start up in 1998. (Since Eolas was spun-off by UC, the suit was filed under the UC’s aegis.)

The patent deals with the way a Web browser opens plug-ins, Java applets, scriptlets and Microsoft’s ActiveX Controls.

Microsoft lost the case in August 2003 and subsequently modified IE to exclude the contested technology in December 2005. Siding with Microsoft, the World Wide Web consortium petitioned the USPTO to re-examine the patent in October 2003.

However, in March 2005, a Federal Appeals Court tossed out part of the 2003 jury verdict on the grounds that the lower court should have considered whether Eolas’ patent was invalid. In September 2005, the USPTO ruled that the patent was valid and owned by Eolas and UC.

Then, in January 2006, Microsoft’s lead law firm asked for a second re-examination of the patent by the USPTO, citing the existence of “prior art” that purported to show that Eolas’ claim to the technology was invalid.

On May 24, the USPTO ruled that Microsoft can indeed challenge the ownership of the patent. “Microsoft is asserting they got there first,” the Patent Office spokesperson said.

Obviously, the latest ruling came as good news to Microsoft.

“We are pleased that the Patent Office has decided to give us the opportunity to establish we are the original inventors [and] we look forward to establishing our claims are valid and that the Eolas patent is invalid,” Andy Culbert, Microsoft associate general counsel said in a statement e-mailed to internetnews.com.

However, as in many legal maneuvers, the drama is far from over. Now, both parties need to submit a new round of filings, including proof and arguments, to the Patent Office regarding who invented the technology in the first place and then the process may drag on for another year or two. The process – called an “interference” — has been assigned to senior administrative patent judge Fred E. McKelvey.

According to the Patent Office spokesperson, the bulk of similar cases are usually settled without further litigation.

“If not, it will be [likely] two years before it’s decided,” the spokesperson added.