The transition from 2003 to 2004 was busy for Microsoft's legal team, which not only faced a new private antitrust lawsuit from RealNetworks (see "RealNetworks Files Antitrust Suit") but also garnered an unfavorable decision in the Eolas patent infringement suit over Internet Explorer (IE), settled a patent infringement claim with industrial equipment manufacturer SPX, and faced a trademark claim from video game maker Mythic Entertainment.

Eolas Technologies won another round in its patent infringement case against Microsoft, as a federal judge refused to suspend an earlier jury verdict and ordered Microsoft to pay more than US$45 million in "prejudgment interest" as it mounts an appeal.

The original verdict, reached in Aug. 2003, found that IE infringed an Eolas patent covering the ability of a Web browser to automatically launch and execute interactive programs in a Web page, and awarded Eolas more than US$520 million. If upheld, it would force Microsoft to change IE to avoid patent infringement; Web developers would then have to make changes to certain Web pages or else visitors to their sites would face a cascade of dialog boxes. (For details, see "Lawsuit Drives Browser Changes" on page 7 of the Nov. 2003 Update.) As a consequence of this broad impact, the W3C has joined Microsoft in asking the U.S. Patent Office to invalidate Eolas's patent based on prior art. In Dec. 2003, the Patent Office agreed to review the patent—an unusual event, suggesting that it sees some validity to the challenge.

Microsoft asked Judge James Zagel of the U.S. District Court of Northern Illinois to suspend the jury's verdict until the Patent Office had a chance to finish its review of the patent, which could take a year or more. In Jan. 2004, however, Zagel denied Microsoft's request, ordered Microsoft to pay Eolas US$45 million in "prejudgment interest," and imposed an injunction that would prevent Microsoft from continuing to distribute the offending versions of IE (something the jury did not do), although he allowed the injunction to be stayed until after an appeals court rules on the case.

SPX and Microsoft have settled a patent infringement claim over shared whiteboard technology, which enables users on multiple networked computers to view and modify documents and applications simultaneously, and which Microsoft first used in its NetMeeting conferencing software. SPX sued Microsoft in the U.S. District Court for Eastern Virginia in Oct. 2002, alleging that NetMeeting’s whiteboard feature infringed an SPX patent owned by SPX’s Imagexpro unit. A jury agreed and found Microsoft liable for US$62.3 million in damages in Nov. 2003.

However, the two companies reached an agreement in Dec. 2003 under which Microsoft will pay SPX US$60 million to end the case. The settlement allowed Microsoft to avoid the possibility of having to pay triple damages; the court could have levied this penalty because the jury found that Microsoft willfully violated SPX's patent. Terms of the settlement were private, and Microsoft has not admitted to any wrongdoing nor indicated that it has now licensed the patent in question. NetMeeting 3, released in Oct. 2003, does not include the whiteboard feature, and Microsoft is slowly phasing out NetMeeting in favor of newer collaboration products, such as the Windows Messenger client (which includes similar whiteboard functionality), Live Communications Server, and Live Meeting conferencing service.

(For more information on Microsoft’s evolving patent strategy, see "Patent Licensing Broadened" on page 23 of the Jan. 2004 Update. To read SPX’s patent, run a search on number 5,206,934 at patft.uspto.gov/netahtml/srchnum.htm.)

Mythic Entertainment has filed a trademark infringement claim against Microsoft over an upcoming PC game from Microsoft Game Studios called Mythica. The suit, filed in the U.S. District Court for Eastern Virginia, alleges that Mythica contains numerous similarities to Mythic’s Dark Age of Camelot series, including similar names for levels in the game, and that the title Mythica is likely to confuse consumers.