On Tuesday, the USPTO issued a "Notice of Intent to Issue a Reexam Certificate" to Eolas Technology, the tiny University of California spin-off that received U.S. Patent No. 5,838,906 in 1998.

"There are three things that can happen following a re-examination," Crouch told

Crouch said the Eolas patent now would be treated as a new patent and likely given a new number. In cases where no changes to the patent were required, the certificate is simply stapled to the back of the original patent. (Although the USPTO has begun to digitize some documents in order to make them publicly available on its Web site, it still works on paper; the Notice of Intent has not yet been published.)

The Eolas patent covers "a system allowing a user of a browser program on a computer connected to an open distributed hypermedia system to access and execute an embedded program object."

Eolas claims the patents cover the embedding of small interactive programs, such as plug-ins, Java applets, scriptlets or Microsoft's ActiveX Controls, into online documents that are triggered when the page loads or when a user clicks.

A spokesperson for Eolas and the University of California said he couldn't comment until he had received a copy of the USPTO's notice. Microsoft did not immediately respond to a request for comment.

The re-examination began in October 2003, following a petition by the World Wide Web Consortium. The organization offered prior art, including early e-mails by Dave Raggett, who led the W3C's early HTML specification work.

While the examiner originally rejected eight of the 10 claims, Crouch said that was standard operating procedure.

"Nine times out of 10, the Patent Office will issue a rejection in the initial re-exam, so it's not considered a bad thing for Eolas," Crouch said. "Eolas sent in its responses, several affidavits making their arguments. It turned out the patent office accepted those."

Meanwhile, Microsoft and Eolas are wrapped up in litigation that began in February 1999 with a patent infringement suit filed by Eolas, alleging that Microsoft's ActiveX infringed the patent. Microsoft lost the first round, and was slapped with a $520.5 million judgment.

On appeal, the Circuit Court upheld the lower court's interpretation of the Eolas patent on browser plug-ins, but said the jury in the Eolas' patent infringement suit against Microsoft should have considered whether the patent itself is valid.

The case was sent back for another trial on that issue.

"The battle is being fought by Microsoft on two completely separate fronts, and Microsoft only has to win one of them," Crouch said. The USPTO decision weakens its case somewhat, but the courts are not bound to follow what the patent office says.

"The court can even now invalidate the patent," Crouch said. "Nobody wants bad patents out there, so there are all these checks and balances."

On Sept. 14, Microsoft petitioned the U.S. Supreme Court, asking it to rule on whether software code qualifies as a component of a patented invention, according to Crouch.

Part of the damages awarded to Eolas in the original suit was for royalties on the worldwide distribution of gold masters of Windows software that included the Internet Explorer browser.

If software code isn't a component, then Microsoft couldn't be held liable for infringing the Eolas patent by shipping code for Internet Explorer to foreign OEMS for installation in machines sold outside the U.S.

In its petition to the Supreme Court, Microsoft argued that what it supplies to OEMs is "design information," not an actual component of their computers.


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