Eolas v. Microsoft On Appeal

Eolas Microsoft

Eolas v. Microsoft (04-1234)(On appeal at the Federal Circuit)

At the district court level, Eolas won a $500 million+ verdict for Microsoft’s alleged patent infringement.  The technology at issue involves a method of using a web browser to open third-party applications using plug-ins.  Now, the case is on appeal at the Federal Circuit, with oral arguments being held today, December 9, 2004. Microsoft is expected to argue both improper claim construction and error in including Microsoft’s foreign sales in damage calculations.

The foreign sales portion of the case falls under 35 U.S.C. 271(f).  271(f)(1) provides for liability for causing components of a patented invention to be supplied for assembly abroad.  In Eolas, however, no physical component of the patented invention had shipped from the U.S.  However, the District Court ruled that Microsoft’s shipment of information on a "golden master" disk created a sufficient nexus with the U.S. 

The foreign damages are expected to be overturned by the Federal Circuit appeals court based on its holding in the recent case of Pellegrini v. Analog.  In Pellegrini, the Federal Circuit essentially held that there is no liability for patent infringement unless components of a patented invention are physically shipped from the United States.  Two weeks ago, the Supreme Court denied Pellegrini’s petition for writ of certiorari.

The asserted patents are also undergoing a reexamination at the United States Patent Office.

Parties Involved:

The asserted patents are owned by the University of California but exclusively licensed to Eolas.  The two reportedly have an agreement that Eolas will pay the University 25% off the top of any award.  Microsoft is the defendant.  In addition to the parties, a number of amicus briefs were filed by interested parties.  These parties include: AOL; Association for Competitive Technology; Autodesk; Bentley Systems; Intel; Macromedia; Netscape; Oracle; Professor Joe Miller; Sun Microsystems; and Wacom Technology. 


Although I have not reviewed these amicus briefs, I expect that they generally support Microsoft’s contention that the Eolas patents are invalid and that the reach of the patents should not extend beyond the borders of the U.S.  Paul Festa at cNet has written a brief article on the appeal.