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Defense of U.S. Patent No. 5,838,906
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"Microsoft Corp. improperly put patented Web browser technology into
its Internet Explorer, helping the computer giant to win critical
market share from rival Netscape Navigator, according to a verdict
handed down today by a federal jury in Chicago. In the U.S. District
Court in the Northern District of Illinois, Eastern Division, the
12-member jury found that Microsoft infringed a patent owned by the
University of California and licensed by Eolas Technologies Inc., and
awarded the two $520.6 million in damages." 1 |
The Technology
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"Doyle [an inventor] was working on the embryo project while
running a research lab at the University of California in San
Francisco in 1993 when he and two colleagues enhanced and early
version of an Internet browser, using the browser to summon and
operate computer programs. Roseman, [a colleague of Doyle's], recalls
that Doyle showed up at his office, toting a laptop to demonstrate
their invention. Doyle pulled up a Web page with an image of a mouse
embryo, then manipulated the image as if it were three-dimensional,
rotating and slicing it. "I got extremely excited," recalls
Roseman. "This was a fundamentally better way." While the
university filed for a patent, Roseman and Donahue [another colleague
of theirs] helped Doyle recruit investors to start a company to
develop and market the technology." 2 |
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The company they formed, which has an exclusive license to the patent
at issue, is called "Eolas (pronounced e-OH-luhs), [which] stands
for "embedded objects linked across systems" and means
"knowledge" in Gaelic." 3 |
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"The patent, No. 5,838,906, which was granted in November 1998,
describes a system that allows a software browser to execute a
remotely stored program." 4 |
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"The patented technology is a key component of the interactivity
available on the Internet today. It allows web page developers to
embed interactive programs in Web pages. A browser, equipped with the
University of California's patented technology, is able to deliver
that interactivity to the user. For example, the technology is used
often with stock information, video players, games, virtual real
estate tours and other interactive content on the Web. The patent
allows the Web to be a platform for fully interactive embedded
applications." 5 |
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"Those features, such as altering data or viewing objects from
different angles, are central to the way Web browsers now operate,
particularly enabling online commerce." 6 |
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"In 1995, the patented technology's features began appearing in
commercial Web browser programs; and interactivity has become a
hallmark of the Internet ever since." 7 |
The Trial
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"Eolas originally filed suit against Microsoft in 1999, alleging that
the Redmond, Wash.-based software giant infringed on it patents when
enabling the Internet Explorer Web browser to use plug-ins and
applets. A federal court in Chicago found that IE violated Eolas'
intellectual-property rights. Eolas has one formal employee, Mike
Doyle, who is a former University of California researcher." 8 |
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"In opening statements, Doyle's lawyer, Martin Lueck, portrayed
Doyle and his two co-inventors as Web pioneers who, while working at
the University of California in 1993, invented a way to turn the
browser into a platform to deliver applications over the Internet,
making the computer's operating system less important." 9 |
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"Facing competition from Netscape Navigator in the mid-1990's,
Microsoft updated its Explorer browser by using Eolas' technology and
subsequently bundled it with all of its Windows operating systems
since 1995, said Eolas' lead trial attorney, Martin R. Lueck, of
Robins, Kaplan, Miller & Ciresi
LLP." 10 |
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"Internet Explorer controls 96 percent of the browser market after
Microsoft successfully crippled Netscape. A U.S. Appeals court in
2001 upheld findings that Microsoft had bundled Internet Explorer into
its Windows operating system as part of a strategy to thwart
competition from Netscape." 11 |
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"Microsoft used [the plaintiffs'] invention without their
permission to save its Windows empire and to make literally billions
of dollars in the process," Lueck told the jury." 12 |
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"During the month long trial, Microsoft argued that Internet Explorer
is fundamentally different from the university's invention and uses
technology invented by Microsoft programmers." 13 |
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"One of the turning points in the case came when a key Microsoft claim
was thrown out by the Illinois court. The corporation said the patent
was invalid because a man called Pei Wei had invented the technology
before the University of California." 14 |
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"About two weeks into the trial that resulted in the second-biggest
patent verdict in history, Microsoft Corporation's key defense witness
took the stand. Pei-Yuan Wei had invented a technology in the early
1990s, according to Microsoft, that allowed developers to embed
interactive programs, called "plug-ins," in Web pages." 15 |
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"Microsoft's lawyers from Sidley Austin Brown & Wood and Leydig, Voit &
Mayer, both of Chicago, were claiming that Wei had demonstrated the
technology for Sun Microsystems, Inc., in 1993, and they wanted him to
re-create the demonstration. If Microsoft could show that Wei ran a
working model of the technology in 1993, it would be a fatal blow to
plaintiff Eolas Technologies Inc., which was claiming that Microsoft
was infringing a patent it filed in 1994." 16 |
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"Eolas's lawyers, Martin Lueck, Jan Conlin, and Richard Martinez
of Minnesota's Robins, Kaplan, Miller &
Ciresi, were confident that Wei hadn't figured out how to make
plug-ins work in 1993. They were sure that his demonstration, if it
duplicated what was doable in 1993, would fail. They suspected
Microsoft's lawyers might tinker with the technology before playing it
for the jury in order to "conceal technical deficiencies,"
as Lueck puts it... So a few days before Wei was expected to testify,
they asked their experts to "ping" the server belonging to
Microsoft's expert. (Pinging is a way of diagnosing a remote computer
by sending electronic signals, or pings.) Sure enough, they found that
the server software had been changed since the 1993
demonstration." 17 |
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"One day last July, Wei took the stand, along with a vintage
computer. Could he download a Web page using the early 1990s
technology, asked a Microsoft lawyer? "Well, I'd have to make an
adjustment, and I'm not actually sure, positive, that it would
work," said Wei, who proceeded to tinker with the server's code
from the courtroom in Chicago. After a few minutes, he said,
"Okay. Now it works. Hey, it works. Great."" 18 |
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"Wei's enthusiasm didn't last long. Lueck was easily able to show that
the file on display was not traveling across the Internet but was
simply stored on the computer in the courtroom. "Doesn't that
show 'local file' down at the bottom?" asked Lueck on
cross-examination." 19 |
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"Then Lueck delivered the coup de grace- he forced Wei to admit that
the server software had been changed since 1993, thus destroying both
the premise underlying the demonstration and Microsoft's credibility."
20 |
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"Following presentation of that evidence by Microsoft at trial, the
judge determined that as a matter of law, no jury could find for
Microsoft on that issue." 21 |
The Verdict
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"The award was based on the jury's calculation that $1.47 per unit
represented reasonable royalties for the 354 million copies of Windows
sold from the time the patent was granted in November 1998 until
September 2001. Eolas and the university had been asking for $3.50
for each unit. The average price of Windows during the period was
$61, attorneys said." 22 |
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"The cash award is the largest U.S. jury verdict this year, according
to Bloomberg data. Microsoft has $49 billion in cash and short-term
investments, and no debt." 23 |
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"Eolas and the university will ask U.S. District Judge James Zagel to
extend royalties to include sales over the past two years as well,
Eolas lawyer Jan Conlin said." 24 |
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""This verdict is a significant landmark in defining and protecting
Internet technology whose benefits literally reach the whole
world," said James E Holst, the university's general counsel.
"As a public institution that reinvests its licensing revenue in
its larger research mission, we are gratified by the jury's
recognition that UC and Eolas must be fairly compensated for use of
its patented technology."" 25 |
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""We are very satisfied," said Eolas attorney Martin R. Lueck.
"It shows the jury system works. Patents need to be respected
regardless of the size and the market power of the company
involved."" 26 |
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"Assuming the Eolas decision stands, the fact that Microsoft apparently
could produce no prior art will only serve to strengthen the patent,
according to attorney Douglas Kline, chairman of the patent and
intellectual property group at Boston law firm Testa, Hurwitz &
Thibeault LLP." 27 |
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""Microsoft would know better than anybody what they were working on
when the patent was filed," Kline said." 28 |
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""We think the verdict is vindication that Microsoft has made
extensive use of Eolas' technology to make its Internet Explorer
the best-of-breed browser," Lueck told Reuters." 29 |
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"[Robins, Kaplan, Miller &
Ciresi's] litigation team included partners Martin R. Lueck, Jan
M. Conlin and Richard M. Martinez. Associates included Munir
R. Meghjee, Emily M. Rome, and Keiko L. Sugisaka." 30 |
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