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updated 10/4/2004 8:21:36 AM ET 2004-10-04T12:21:36

In a preliminary ruling, the government rejected Microsoft Corp.'s 1996 patent on technology for saving files on computers using easy-to-remember names.

Microsoft vowed Thursday to appeal the U.S. Patent and Trademark Office's decision, setting the stage for what could be long-running negotiations.  The office could eventually decide to reject it outright, let it stand or change its scope.

The patent covers technology widely used on computers running Microsoft's Windows operating system.  In more recent years, it has also been used for naming files from devices that work with Windows, like digital cameras and portable music players.

The patent is part of what Microsoft says is its implementation of a broader system used to store computer files, called File Allocation Table, or FAT.  But Microsoft does not claim control over the entire FAT system.

"We have some rights, but no one person has firm, strong control over all aspects of FAT," said David Kaefer, director of business development for Microsoft's intellectual property and licensing unit.

(MSNBC is a Microsoft-NBC joint venture.)

Late last year, Microsoft began asking companies to buy licenses to use its implementations of the FAT system, including licensing the patent that was preliminarily rejected.

The move raised concerns that the company would discriminate against those who develop open-source technology, restricting their ability to compete on the widely used Windows platform, said Daniel Ravicher, head of the Public Patent Foundation.  His organization, backed by the open-source movement, asked that the patent be re-examined.

Kaefer said Microsoft would grant the licenses to those who use open-source technology, albeit with slightly different terms.

Greg Aharonian, a patent critic who runs the Internet Patent News Service, believes the patent will likely end up rejected given so much evidence the technology in question is widely used.

"It's like getting a patent on cheesecake," he said.

But he doesn't believe a rejection would have any major business or financial impact on the company because it doesn't pose a serious threat to cash cows like Windows or the Office business software.

Nonetheless, in cases like this, where an outside group initiates the re-examination request, the most common outcome is that the patent is ultimately changed but not rejected outright, patent office spokeswoman Brigid Quinn said.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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