updated 3/2/2005 10:20:30 PM ET 2005-03-03T03:20:30

A federal appeals court reversed parts of a $521 million patent ruling against Microsoft Corp. Wednesday, giving the world’s largest software maker another chance to prove that its widely used Web browser didn’t illegally copy a key piece of technology.

Redmond, Wash.-based Microsoft hailed the U.S Court of Appeals’ 29-page decision ordering a new trial as a “clear victory” for Internet users as well as the company.

Wednesday’s decision, issued in Washington D.C., also upheld portions of the lower court decision.

Martin Lueck, a Minneapolis attorney representing patent holders Eolas Technologies Inc. and the University of California, predicted Microsoft ultimately will have to pay the damages previously awarded by jury, plus interest. “We believe we will prevail on this issue as we have throughout this process,” Lueck said.

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The complicated case revolves around the computer coding that enables a variety of software applications to work seamlessly with Web browsers.

Eolas’ founder, cellular biologist Michael Doyle, says he invented the technology while he was working at the University of California more than a decade ago and then watched Microsoft capitalize on the breakthrough by including the features in its Internet Explorer browser.

Microsoft has denied the allegations since Doyle and the university sued him in 1999.

Web pioneers worry about precedent
The stakes in the case extend beyond the protagonists.

A group founded by World Wide Web inventor Tim Berners-Lee is worried Eolas’ patent claims will require force widespread — and possibly expensive — revisions to millions of online documents. In a worst case scenario, the World Wide Web Consortium, or W3C, fears potentially valuable material will be wiped out from sites that are no longer active.

The concerns prompted the U.S. Patent and Trademark Office to take the rare step of reviewing the validity of the patent granted to Chicago-based Eolas Technologies and the University of California in 1998. That review remains unresolved.

Doyle and the university filed for their patent in 1994, a year before Microsoft’s Internet Explorer hit the market.

In their suit, Doyle and the university alleged that Explorer browser pilfered their patented plug-in technology. A jury agreed in 2003, ordering Microsoft to pay $521 million, or $1.47 for each of the more than 350 million units of the Windows operating system that shipped between November 1998 and September 2001. A federal judge in Chicago upheld the jury award last year and ordered Microsoft to pay $45 million in interest.

In its decision, the appeals court concluded the lower court had erred in its approach to a key issue in the case. Microsoft contends the Eolas patent is invalid because the technology had already been developed and showcased in a May 1993 demonstration by another inventor, Pei-Yuan Wei.

Microsoft also says Doyle was aware of Wei’s pioneering work in the Viola browser, but concealed the knowledge when he applied for a patent.

The appeals reversal “gives Microsoft the opportunity to tell the whole story of how this technology was developed,” the software company said Wednesday in a statement.

Lueck said he will present evidence proving Doyle’s browser invention was “truly revolutionary.”

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