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Patent Office board to revisit Microsoft-Eolas spat

Panel of internal judges has agreed to launch a proceeding to determine whether Microsoft or Eolas is the rightful owner of a patent related to Web browser plug-in technology.

In a move that could shape an upcoming retrial, the U.S. Patent and Trademark Office has agreed once again to revisit Web browser plug-in patents at the heart of a dispute between Microsoft and University of California spinoff Eolas Technologies.

Microsoft associate general counsel Andy Culbert told CNET in a telephone interview on Friday that the Patent Office agreed last week to undertake what is known as an interference proceeding.

An interference proceeding occurs when the Patent Office has determined that two separate patent holders hold patents covering the same subject matter. A five-judge panel within the office weighs evidence presented by both sides and determines whether the patents in question are valid, and if so, who is the rightful owner.

The Eolas patent describes a system that allows external applications to load in Web browsers. After several years of generally unfavorable decisions for Microsoft, the Patent Office concluded that an application to reissue an existing Microsoft patent with broader claims covers identical subject matter to the Eolas patent and also predates it, Culbert said. Now the board is supposed to determine whether Eolas president Michael Doyle or Microsoft engineers were the first to invent the technology at issue.

"We think this is a hugely favorable development for us," he told CNET "We felt all along that the technology involved here was technology that we had developed."

In August 2003, a federal jury ordered Microsoft to pay $521 million to the University of California, which owns the disputed patent, and to Eolas, which licensed it. But an appeals court in 2005 partially reversed that ruling and ordered a new trial, which is currently scheduled to begin in federal court in Chicago on July 9.

Meanwhile, later that year, the Patent Office upheld the Eolas patent's validity after conducting a different kind of reexamination process, initiated by the director of the Patent Office, in which only Eolas was allowed to submit materials. The same patent is also currently undergoing another separate reexamination process within the Patent Office.

That earlier rulings about patentability most likely won't matter if the interference board decides differently, Culbert said. Microsoft has also asked the federal judge in Chicago to delay the start of the trial since it believes the outcome of the interference proceeding is deeply intertwined with the court case. The Patent Office board is expected to rule within a year, Culbert said.