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You probably heard that last August, Microsoft Corp. was hit with a juryverdict for over $500 million for infringing a patent for browserplug-ins owned by Eolas Technologies. You may have then also heard somerumblings about the director of the U.S. Patent and Trademark Office(PTO) ordering a reexamination, and, most recently, that Microsoft mightdodge the bullet because the patent has been rejected. What’s going onhere is an example of several ways that the patent system, includingboth the courts and the PTO, cope with challenges to the validity ofpatents. A little history of the patent is in order. The Eolas patent is for aWeb browser that can execute a remote program, like Flash or MediaPlayer, so that content from the remote program will be displayed in thebrowser window. The trial court in the Microsoft case decided that the”reduction to practice,” or the point in time when the invention wasfirst workable, was on Jan. 27, 1994. The inventors of the Eolaspatent then filed their application in October 1994, and the patent wasissued over four years later, on Nov. 17, 1998. Eolas sued MicrosoftCorp. less than two months later, on Feb. 2, 1999. The case wasfinally tried in 2003 with the jury deciding that the patent was bothvalid and infringed and awarding Eolas a royalty of $1.47 per unit sold,for a total of over $520 million. The trial court then refused to setaside the verdict in January 2004. So, although it might at firstappear that this is just another case of someone trying to claim oldtechnology in a patent, at the time the Eolas patent was filed the mostpopular browser was the rudimentary Mosaic and the invention was fairlyinnovative. But a basis principle of patenting is that only the first to invent canget a patent, regardless of whether an inventor had knowledge of others’work in the field. As a consequence, most patent litigation will involvea concerted effort by the party being sued to uncover “prior art,”evidence that the same or similar inventions were known before thepatentee created his or her own invention. One hurdle, though, for thechallenger in a patent litigation is that it has to prove by “clear andconvincing evidence” that the patent is invalid, a very difficultstandard to meet. And Microsoft did not meet the standard in its trial.But a court is not the only one who can decide whether a patent isvalid. It is also possible for someone to request a “re-examination,”asking the PTO to take another look at a patent based on prior art thatthe PTO might not have had when the patent was first examined. If theparty requesting the re-exam shows that there is a “substantial newquestion” of patentability, the PTO will order the re-examination and thepatenting process will start all over again. While the re-examination ofpending, though, the original patent remains valid and enforceable. In the case of the Eolas patent, the verdict against Microsoft rousedthe World Wide Web Consortium (W3C), the standard-setting body for theWeb. After the verdict in the Microsoft case, the W3C submitted priorart to the PTO and asked for a re-examination. The director of the PTOagreed with the W3C that this material presented a substantial newquestion of patentability and granted a re-examination last October2003. In light of the re-examination, the court in the Microsoft casedecided that, for now, Microsoft could also continue to sell theinfringing Web browser. And, just like in most patent applications, last month the PTO issued anon-final office action rejecting the claims of the Eolas patent. Eolasnow has the opportunity to explain to the patent examiner why the patentclaims are nevertheless valid or rewrite the claims to avoid claimingwhat is described in the prior art. Any declarations that the Eolaspatent is doomed are premature, though, since there is still a long wayto go in the process. Meanwhile, Microsoft is also appealing the court decision, including thetrial court’s exclusion of some of its prior art evidence. The FederalCircuit, which hears all patent appeals, is well-known for reversingjury verdicts, so Microsoft has a reasonably good chance that the juryverdict will be set aside. The battle over $520 million, and the use ofplug-in technology, is far from over and will probably take several moreyears to be decided. Michael Cantor and Pamela Chestek are attorneys at Cantor Colburn ( www.cantorcolburn.com ) in Bloomfield, Conn. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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