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[JimIvey]

I'm sure this is old news for some, but the $520.6 million award to Eolas for Microsoft's infringement of their patent is being sent back for reconsideration  by the trial court.

http://biz.yahoo.com/law/050303/24b3e0964930bfac388c6646ceb5cbc7_1.html
[TinyURL: http://tinyurl.com/4ow5q]

These appear to be the main points:

1.  Another person demonstrated a browser to two Sun Microsystems employees more than a year prior to Eolas's filing.  The main issue here is whether that use qualifies as prior art.  To what degree it anticipates the Eolas claims is still undecided.  The Federal Circuit suggests the district court confused prior use under Section 102(b) and prior invention under 102(g) in declaring the use not prior art.  Point for Microsoft.  In addition, if the use is prior art, the district court should reconsider Microsoft's allegation of inequitable (unfair) conduct by Eolas for not reporting it to the Patent Office.  Another point for Microsoft.

2.  The Federal Circuit affirmed to the district court's interpretation of "executable application" as not requiring a stand-alone program but can refer to plugins and such.  Point for Eolas.

3.  The gold "master disks" sent overseas by Microsoft to have their software pre-installed overseas for reimportation here represents infringing activity -- for each installation overseas.  The idea is that you can't make all the parts here and the send final assembly off-shore to avoid infringement.  The Federal Circuit upholds the district court's ruling.  Huge point for Eolas (in terms of the damages due Eolas by Microsoft).

However, all this is overshadowed by the fact that the patent in question is currently undergoing re-examination in the US PTO.  If  the patent doesn't survive, Microsoft wins.

If I read this right, it looks like the stakes will stay about about a half billion dollars with winner take all.  The main issues appear to be (i) whether showing something to two people without an NDA is a "public use" within Section 102(b) and, if so, (ii) whether any of the Eolas claims are anticipated by, in obvious in view of, the publicly used browser and (iii) whether Eolas's failure to inform the Patent Office of that use was inequitable conduct rendering the patent valid but unenforceable.

If Eolas wins on (i), it's all over for Microsoft unless the Supreme Court decides to hear an appeal.  If Microsoft wins on (i), I believe Eolas will have to win both (ii) and (iii) to stay on top.

Regards.

[clarklawyer]

The way I read the CAFC's opinion, some prior art was dismissed
on far shakier grounds than on whether or not a couple of
people did not sign an NDA.  I suspect the fight is going to
be about (ii) and (iii).

[eric_stasik]

good post mr. ivey.

if i remember correctly, it was the W3C (and maybe also the EFF) and not Microsoft that requested the re-examination.

but this was a very strange thing to do.

as we all know, the absolute best use of prior art is in the US front to the jury.

US ex-parte reexamination is very much a patentee-friendly process. MSFT might even end up with a stronger patent with claims slightly amended to avoid whatever prior art tim berners lee was able to find and even more clearly infringed. there are good reasons why reexamination is commonly requested by the owner of a patent.

it is very curious why tim berners-lee chose to challenge the eolas patent by filing a re-examination instead of working with MSFT.

unquestionably, by not working with MSFT he substantially undermined the value of any prior art he has.

it doesn't make any sense to me. the irony of all of this is that if Eolas prevails against MSFT, Firefox is dead.

MSFT won't design this out, they will take a license and then it will be in Eolas interest to increase the market share of MSFT's royalty paying IE by shutting down the alternative coming out of Mozilla.

there is a lot at stake here for all parties.

[JimIvey]

Interesting thoughts re the "big picture".  I have no idea why the reexam was thought to be a good idea.  I see a fair amount of naivete re patents in the open source/software development community.  The community is very sophisticated, but it's swimming with lore and legal legends (akin to urban legends) and steeped in distrust of traditional sources of legal information.  But, I suspect the real reason for pursuing reexam over an amicus brief is cost.  I suspect the reason for avoiding buddying up to MSFT is based on emotional factors tied to MSFT.

While reexam can be seen as very favorable to the patent holder, it can also be the cheapest route to invalidity if it works.

I wouldn't go so far as to join your speculation that Firefox is next on Eolas's hit list.  One of the benefits of open source communities is that they appear judgment proof.  If Eolas wins even only $100million from the Mozilla foundation, how are they going to collect?  And what does Eolas stand to gain from shutting down all web browsers?  And, wouldn't half a billion dollars seem like plenty for a company with a single employee?

I'm not saying they won't go after other browsers -- just that the same incentives aren't there.

Lastly, I'll have to admit I'm really pulling for Eolas on the inequitable conduct issue.  Here, we have Eolas's failure to cite the demonstration of another's browser to a couple of Sun employees without an NDA.  Of course, it would have been better to cite the demonstration just to avoid the issue entirely.  But, the interesting point here is that the district court ruled by JMOL (not letting the jury decide) that it wasn't prior art.  If the district court feels so strongly that it wasn't prior art, then it seems that it's certainly reasonable for Eolas to think the same thing.

But it really comes down to the subjective intent of Eolas.  I suppose that, if Eolas subjectively believed that the demonstration was material prior art and withheld it in an attempt to deceive the Patent Office, that's inequitable conduct -- even if Eolas was clearly wrong in thinking that the demonstration was either prior art or material.

Regards.

[eric_stasik]

I wouldn't go so far as to join your speculation that Firefox is next on Eolas's hit list.  One of the benefits of open source communities is that they appear judgment proof.  If Eolas wins even only $100million from the Mozilla foundation, how are they going to collect?  

this is the point, because there is nothing to collect from firefox, the only way for eolas to maximize their revenue is to increase IE's (and perhaps Netscape's) market share. what eolas will want from the court is an injunction against firefox.

since this is congruent with MSFT's interst, it does not seem unreasonable that this could be part of a tacit settlement agreement between eolas and MSFT.

And what does Eolas stand to gain from shutting down all web browsers?  And, wouldn't half a billion dollars seem like plenty for a company with a single employee?

as bruce springsteen observed, "poor man wanna be rich, rich man wanna be king, and a king ain't satisfied till he owns everything."

Lastly, I'll have to admit I'm really pulling for Eolas on the inequitable conduct issue.  Here, we have Eolas's failure to cite the demonstration of another's browser to a couple of Sun employees without an NDA.  Of course, it would have been better to cite the demonstration just to avoid the issue entirely.  But, the interesting point here is that the district court ruled by JMOL (not letting the jury decide) that it wasn't prior art.  If the district court feels so strongly that it wasn't prior art, then it seems that it's certainly reasonable for Eolas to think the same thing.

But it really comes down to the subjective intent of Eolas.  I suppose that, if Eolas subjectively believed that the demonstration was material prior art and withheld it in an attempt to deceive the Patent Office, that's inequitable conduct -- even if Eolas was clearly wrong in thinking that the demonstration was either prior art or material.

totally agree. i note, however, that because inequitable conduct is
always pursued as a challenge, it is my understanding that US courts are rather demanding on this.

[JimIvey]

what eolas will want from the court is an injunction against firefox.

as bruce springsteen observed, "poor man wanna be rich, rich man wanna be king, and a king ain't satisfied till he owns everything."

I understood that as a potential motivation, but I don't see the return being worth the effort.

And, while I believe such extreme levels of greed exist, I don't see it that often.  Perhaps I'm a little slower to impugn that sort of greed to someone without a little more evidence.  Here, I've never met the principals, so I'll believe they'll go after other browsers when I see it.

Thanks for the perspective.

[JimIvey]

i note, however, that because inequitable conduct is always pursued as a challenge, it is my understanding that US courts are rather demanding on this.

The one fact that looks kinda bad is that one of the principals had a folder full of information on the earlier-demonstrated browser -- showing (i) that he was aware of it and (ii) that he thought it was important enough to keep a folder on it.

Oh well.... we'll see how it plays out.

Regards.