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Supreme Court Spurns Microsoft Patent Appeal

At issue is how much money Microsoft should have to pay for infringing on a researcher's patent and whether the monetary award should count global or just domestic sales.
The Supreme Court Monday refused to hear an appeal by Microsoft in a long-running patent infringement case where a jury has awarded a California company and university more than half a billion dollars in damages.

The case, which involved alleged patent infringement by Microsoft's Internet Explorer, had been bounced to the Supreme Court by the Redmond, Wash.-based developer, which argued that the damage award should be based only on domestic, not global, sales. Microsoft's contention was that basing the award on worldwide sales was an expansion of the scope of U.S. patents.

In August 2003, a federal court jury sided with the University of California and Eolas, a school spin-off, in the patent-infringement case. The patent, number 5,838,906, covers how browsers interact with other code, such as Macromedia's Flash, Abobe's Acrobat, or even RealNetworks' Real Player, to display content in a page. At that time, the jury awarded UC and Eolas $521 million in damages.

In March, 2005, a federal appeals court agreed to give Microsoft another chance to prove it didn't infringe on the patent, and that it shouldn't have to pay more than $520 million.

In late September, the U.S. Patent and Trademark Office upheld the patent and rejected Microsoft's request that it be nullified. Several trade groups and other organizations, including World Wide Web Consortium (W3C), joined Microsoft to lobby for the patent revocation.

Microsoft can work the case in U.S. District Court in Chicago, where it will be given the opportunity to argue that the UC/Eolas patent is invalid. Microsoft claims that the technology covered by the patent was developed by Pei-yuan Wei and colleagues at O'Reilly and Associates, and implemented in an early browser dubbed "Viola."

"We will continue with the trial of the remanded case before the district court," said a Microsoft spokesperson. "And [we] are confident that our position will ultimately prevail."

However, if Microsoft fails in this second trial, it will be required to pay UC/Eolas the $521 million. According to the W3C, other effects of a final judgment could range from "an impact on millions of historically important Web pages" to forcing "Web page authors who have followed Web standards [to do] additional work as browsers are re-engineered to avoid the patented features."

The Supreme Court denied Microsoft's hearing without comment.