Appeals court revisits Eolas decision

update Microsoft claims victory in high-profile Web browser patent dispute; $565 million verdict may fall.

updateA federal appeals court partially reversed a lower-court decision that had exposed Microsoft to $565 million in damages.

The patent infringement case, brought by the University of California and its Eolas Technologies spinoff, had riled the Web over potential ripple effects that could have forced changes in millions of Web pages that use plug-in applications like Macromedia Flash and Adobe Acrobat that run inside the browser.

Both sides claimed victory in the mixed ruling, which reversed part of the lower-court ruling, affirmed other parts of it, vacated the decision as a whole and sent it back for a new trial.

"We cleared most of the serious issues, so I would consider this a victory for the university," UC spokesman Trey Davis said. "On the issues that would have mattered most to Microsoft, they lost."

Microsoft said that, on the contrary, the company had won on the most important points, particularly its claim that UC's patent was predated by similar technology by artist and software engineer Perry Pei-Yuan Wei.

"It's a huge victory," said Andy Culbert, Microsoft's associate general counsel for patent litigation. "The essence of our defense was that this patent was invalid, based on the good work done by Pei Wei, and the court of appeals has completely vindicated our assertions. We are looking forward to establishing the invalidity and unenforceability of this patent when the case is remanded."

The appeals court said the lower court had incorrectly kept Microsoft from showing the jury the Viola browser. That browser was written by Wei in 1993, a year before the filing date of the UC patent, when he was a student at the University of California at Berkeley.

According to Microsoft, Viola constituted "prior art," or technology both older than the patent and similar to what it claims. A finding of prior art can invalidate a patent.

But the jury in the lower court didn't hear about Viola because district court Judge James Zagel ruled that Wei had "abandoned, suppressed or concealed" his browser, therefore invalidating it as prior art.

The appeals court on Wednesday ruled that because he showed the browser to a group of Sun Microsystems engineers, Wei couldn't be said to have suppressed or concealed his work. The appeals court also said Wei's posting of a new version of Viola did not constitute "abandonment," as the district court had ruled.

The appeals court reversed the lower court's decision that Viola didn't anticipate the UC patent, sounding a testy note in sending the issue

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