Microsoft, Eolas Settle: It's Still Cheaper To Pay Up Than Fight Bogus Patents

from the such-is-life dept

Thu, Aug 30th 2007 6:11pm — Mike Masnick

Microsoft and Eolas have been involved in a patent infringement lawsuit for many years. Eolas claims a patent on the concept of embedding other applications within browsers -- basically for the concept of plugins. This patent was questioned by many people who note that plugins are a pretty common concept and it hardly seems reasonable to give a monopoly over that idea to one company. In fact, none other than web inventor Tim Berners-Lee showed prior art for browser plugins, and the Patent Office suddenly started saying that it may have made a mistake in granting Eolas the patent. Unfortunately, due to the ridiculously complicated process to get the USPTO to review a patent, it was eventually ruled that the patent could be valid. However, it recently had agreed to review the patent again.

Of course, as we've learned time and time again, since this process is so long, and the risk of losing gets costlier and costlier the longer you wait, it appears Microsoft has given up invalidating this highly questionable patent and has simply paid off Eolas in a settlement. The amount isn't defined, but Eolas is gleefully telling its shareholders to expect a dividend shortly. Once again, this highlights nearly everything wrong with the patent system and why it needs to be changed. A very broad and vague concept with plenty of prior art gets patented by a small firm that doesn't actually do anything. Then it holds up a large company that is actually offering a product to the market, and forces them to change their product, taking away functionality, while trying to collect hundreds of millions of dollars that could have gone towards further innovation. On top of that, it highlights how difficult, slow and convoluted the patent review process is that makes it so difficult to actually contest these questionable patents. In the end, it's often just cheaper to pay up, diverting money from actual innovation into the legal system. What a shame.

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Filed Under: patent infringement, settlements
Companies: eolas, microsoft

18 Comments

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Joshua, 30 Aug 2007 @ 6:38pm

How to stop litigation on bogus patents:
It's really simple, if any patent you have is invalidated, you must refund all licenses for that patent with interest (something like 50% per year).

If you litigate against a company that claims your patent is not valid, you better be damned sure you are not just trolling because that $10,000,000 profit you got could be turned into a $20,000,000 debt.
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davidm, 30 Aug 2007 @ 7:54pm

or else
if you own a patent, you want to sue a large company. once they pay up, the patent is validated, and the patent owner's claims are stronger in court. this is also a win for the company that caves (MS in this case); there may even have been some sleazy back room agreement. they now own the right to use a 'proven patented technology,' while others will have to go through the pain and suffering or perhaps get shut down.
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boomhauer (profile), 30 Aug 2007 @ 8:48pm

where
oh where has my america gone to?
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slimcat (profile), 30 Aug 2007 @ 8:52pm

Re: or else
there may even have been some sleazy back room agreement. they now own the right to use a 'proven patented technology,' while others will have to go through the pain and suffering or perhaps get shut down.
Certainly would be a cheap and easy way to get rid of that pesky mozilla-firefox.
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angry dude, 30 Aug 2007 @ 9:23pm

Mike, just give it up already !!!
As usual Mike is full if it

Eolas patent is actually owned by the University of California

Evil evil patent trolls - US universities

Poor poor MicroShit

Mike said so
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Anonymous Coward, 30 Aug 2007 @ 11:10pm

Re: Mike, just give it up already !!!
By reading the links to seatlepi, Eolas is stated as being a privately held company, a University of California SPIN-OFF... which is not exactly "The University of California" as you call it.
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Anonymous Coward, 30 Aug 2007 @ 11:44pm

Patent is owned by the University of California
from Cnet news:
"...The patent in question, owned by the University of California and licensed exclusively to its Eolas software spinoff,..."
So the patent is most likely owned by the University of California. I would be ashamed if I were representing the University.
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Mike (profile), 31 Aug 2007 @ 1:10am

Re: Mike, just give it up already !!!
Evil evil patent trolls - US universities

Did I call them patent trolls? No. I just pointed out that there's plenty of prior art on a fairly common idea, and the patent never should have been granted.

You're the first one to suggest that they might be trolls.
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Anonymous Coward, 31 Aug 2007 @ 6:17am

now with MS help they can go after other browsers
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DAR, 31 Aug 2007 @ 6:23am

Re: How to stop litigation on bogus patents:
It's really simple, if any patent you have is invalidated, you must refund all licenses for that patent with interest (something like 50% per year). If you litigate against a company that claims your patent is not valid, you better be damned sure you are not just trolling because that $10,000,000 profit you got could be turned into a $20,000,000 debt. ... at which point you just put your little company into bankruptcy (since it doesn't actually have any legitimate business other than patent trolling anyway) and start a new patent troll business - without having ever had to pay a dime in damages or penalties. Problem solved. Face it - patent trolling is a business with all upside and no downside. Maybe I should have gone to law school ...
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fact checker, 31 Aug 2007 @ 8:17am

Re: Patent is owned by the University of Californi
According to the PTO's own records, the patent in question, U.S. Patent 54383096 is owned by the University of California.
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John Bergman, 31 Aug 2007 @ 8:56am

Re: Mike, just give it up already !!!
Evil trolls my ass! if the technology was not developed by the University or the federal government the tech world would be in slow motion. Thousands of hours were spent developing plug-in and applets so large programs can function with the limited power of the computer. The developer deserves to get paid for their effort. Because of this effort billions of dollars have been earned by those who use it. Why don't you create something.
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John Bergman, 31 Aug 2007 @ 9:10am

If your ever sick, it works
The Eolas technology is a working product. It was developed for the imaging human body. It allows doctors to click onto image and view it from different angles. If you need it, it works.
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Joe Smith, 31 Aug 2007 @ 11:37am

prior art
One of the disturbing things about the Eolas case is the fact that the judge at the first trial excluded the evidence of the prior. In NTP v. RIM prior art was also excluded. The exclusion in the RIM case is justified on the basis of what was viewed as wrongful conduct by RIM (but was probably just a mistake / misunderstanding). The result in both cases was that the jury decided on the basis of a pretend set of facts and not on what really happened.
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angry dude, 31 Aug 2007 @ 12:10pm

Joe Smoe
Joe, you shoul sell used cars - you are so good at lying

In NTP vs. RIM case judge specifically instructed the jury to disregard the court demo by RIM attorneys because the whole demo was falsified

Unfortunateluy patent cases are not like criminal cases - nobody goes to jail for contempt of court
Too bad
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Joe Smith, 31 Aug 2007 @ 1:03pm

Blind anger
In NTP vs. RIM case judge specifically instructed the jury to disregard the court demo by RIM attorneys because the whole demo was falsified

That is not what happened and you should know it.
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Anonymous Coward, 31 Aug 2007 @ 4:08pm

What a bunch of crap. Its stupid stuff like this that puts America at a disadvantage against developing nations. I bet you wouldn't find bullshit like this in India. One day they will surpass us... and then probably fall into this kind of crap.
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Cimarron Taylor, 2 Sep 2007 @ 7:05pm

Disappointing
Pei Wei and a few students at UCB (mostly people from the XCF, the same group that created the Gimp) created Viola - the first browser that supported plugins. Given that earlier non-internet browser-like programs had supported the same concept for years nobody who saw it thought of it as something worth patenting.

Michael Doyle and a different group of UCB students saw the opportunity and created an overly broad patent which the USPTO granted when they should not have and gave the UCB a piece of the action to lend ligitimacy to their bogus claims.

None of the actual technology any of these people is significant. What did matter is they made their claims at a critical moment when the browser "platform" was beginning to be adopted by businesses, and they made those claims in a manner which convinced our government to grant them a overly broad monopoly (aka a patent).

Snookering the government in this way is nothing new.
Lehland Stanford and others in an earlier era became enormously wealthy by convincing the government to grant the land they needed well before they did any actual development. Michael Doyle and the Eolas gang were just trying to do same thing.
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