Microsoft defeat stirs patent concerns

Eolas Technologies, a University of California spin-off with one employee, no products, a handful of patents and 100 investors, on Monday prevailed in its $521m (£324m) patent-infringement suit against Microsoft.

Eolas originally filed suit against Microsoft in 1999, alleging that the software giant infringed on its 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.

Since applets and plug-ins are also a key feature of other Web browsers, the Eolas decision could affect Microsoft's competitors in the browser market, such as Norway-based Opera Software and bands of volunteer developers contributing to open-source groups like Mozilla.org and KDE (K Desktop Environment).

Other potential targets include companies that redistribute open-source browser software or base products on such programs. Red Hat, SuSE, Apple and Hewlett-Packard are among the companies that fall into one or another of those categories.

Applets and plug-ins are fundamental elements of Web browsing. They let Web surfers view multimedia or real-time content within a Web browser without having to jump to a separate software application.

Patent experts are quick to point out that patent-infringement verdicts are frequently overturned on appeal, and Microsoft is busy preparing for the next -- and probably last -- legal round at the US Court of Appeals.

But should the jury's decision be upheld, Eolas' attorneys promise that browser makers and distributors around the world had better be prepared to pay up.

"Anybody who's making a product that infringes a valid US patent needs to conduct themselves in accordance with the patent laws," Eolas' lead trial attorney, Martin Lueck of Robins, Kaplan, Miller & Ciresi, said in an interview.

"It doesn't matter whether they're making, using, selling or offering to sell the product -- they have to come to grips with the reality of the patent... I think anybody who's in the browser business should be taking a look at this verdict, and obviously, if they need a licence, they should get one," Lueck said.

Clearly, should Eolas decide to make good on its threats, the more likely targets would be those companies that generate revenue from browser sales, such as Apple, HP, Red Hat and Opera. Browser users themselves and open-source efforts that generate little if any profit don't likely have much to fear, said a legal expert.

"You can't get blood out of a turnip," said Larry Rosen, of Rosenlaw.com, a law firm.

Open-source groups could suffer the indirect effects of litigation if their corporate contributors of software expertise and money are turned away by patent threats. But Rosen notes that for most big companies, patent hazards come with the territory.

Apple bases its Safari browser on KHTML, the open-source browser engine from KDE. HP bundles the Mozilla browser with its HP-UX operating system. Red Hat and other Linux distributors also bundle the Mozilla browser. Opera sells its browser software and offers an advertising-sponsored version as well.

The first open-source project with a major corporate sponsor -- the Netscape Communications-founded Mozilla project -- in recent weeks has lost that backing, potentially making it less of a target for a lawsuit. Mozilla is in the process of being spun off by Netscape parent AOL Time Warner as an independent foundation.

Apple, HP, Red Hat and Mozilla.org did not immediately respond to requests for comment. Opera said it was unfamiliar with the patent and did not respond to subsequent queries.

The threat of litigation prompted an immediate reaction from KDE developers.

"Since KHTML is open-source software (and) it is not possible for us to license patents in exchange for money, KDE does not have a way to recoup such costs from its users," wrote Waldo Bastian and David Faure in an email exchange.

"If this would be demanded from KDE, the only course of action that we can take is to remove the patented functionality from KHTML," the developers continued. "That would make a sad example of how software patents are harming innovation, competition and standards compliance in the Internet age."

Follow the money
Eolas wouldn't be the first company to pursue legal action against a technology maker selling products based on open-source software. Recently, SCO has pressed its intellectual-property claims against IBM for Big Blue's implementation of the open-source Linux operating system.

"I think it's fairly typical in these sorts of IP (intellectual property) cases that people go after people who have the money," said Tim O'Reilly, founder and president of computer-media company O'Reilly & Associates and a veteran of both anti-Microsoft and anti-patent abuse crusades. "They hope they can extort a little bit if they can."

Like many open-source advocates more used to fighting Microsoft than rooting for it, O'Reilly finds himself on the side of the software giant in this case.

O'Reilly's vice president of online business, Dale Dougherty, testified on behalf of Microsoft in the trial, arguing that an O'Reilly project called the Global Network Navigator, released in 1993, included instances of "prior art," to the Eolas patent. Prior art is a legal term that indicates an earlier invention similar enough to what's described in a patent to invalidate it.

O'Reilly speculated that Microsoft -- because of its size and legal strength, and its reputation for having crushed then-upstart Web browser pioneer Netscape in the late 1990s -- suffered by playing the part of a software Goliath to Eolas' David.

"This is one of the cases where I think Microsoft is getting a bum deal, and I bet at least part of the jury voted against them just because they're Microsoft," O'Reilly said. "It's a shame they went after Microsoft, because (with any other defendant) the jury would have had sympathy on the other side."

Other patent experts noted that whatever Microsoft's corporate image or reputation, its Windows operating system juggernaut makes it a perpetual magnet for patent-infringement lawsuits.

Necessity, mother of invention
Patent claims have sometimes resulted in creative solutions from open-source software developers, who typically cannot afford to defend their software in court.

One example is the PNG ("ping") format for image compression, which developers created to bypass the ubiquitous GIF format after Unisys started pressing its patent claims on the GIF technology.

"Sometimes we look at the patent and say, 'this doesn't bear on us,'" said open-source expert Bruce Perens. "And sometimes we just remove the stuff, like in the case of GIF file compression."

One attorney said that technology groups faced with patent litigation should consider engineering their way around the patents in question, regardless of their opinion of the claim's merit.

"There may be no design-around, but if there's one possible, they ought to consider doing it," said Michael Barclay, a partner with Wilson Sonsini Goodrich & Rosati. "You don't want to get enjoined, so at a minimum, have that in place as a contingency plan."

O'Reilly and others see the gathering storm around the Eolas case as an indictment of software patents in general.

"Once again we see the tragedy that software patents represent for the industry, because they allow legal opportunists to capitalise on the work of others," said O'Reilly. "That's why software patents are a really bad idea -- they encourage a kind of land-grab mentality."

But though Microsoft presumably welcomes the support of open-source advocates in the Eolas case, it would no doubt beg to differ strenuously with O'Reilly on that last point. Microsoft has in the past attacked the open-source approach as a threat to innovation, arguing that without patents and the potential for financial gain, there's no incentive to invest the time and effort necessary to create breakthrough technologies.

Although the Eolas patent bomb could fizzle on appeal, lawyers nonetheless point to it, along with SCO's Linux licensing campaign, as an illustration of a potential emerging patent crisis for the open-source programming model.

"This is a fundamental problem," said Rosen. "I think that the open-source community has to deal with patents head-on. The patent system is kind of broken for software. In many ways it's too easy to get a patent, and too expensive to fight it."