Microsoft Nailed With $520M Award

Microsoft engineers contained a hidden and sneering password in their Internet software.
AP
A federal jury awarded a software company and the University of California more than $520 million in damages Monday after finding that Microsoft Corp.'s popular Internet Explorer browser infringed on a patent.

Microsoft attorney Andy Culbert said that the jury's finding would be appealed.

The jury could have awarded as much as $1.2 billion to the university and Eolas Technologies Inc., based in Chicago.

"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."

Eolas was launched in 1994 to market technology that allows users to access interactive programs embedded in Web pages. Eolas chairman Michael Doyle along with two others developed the technology while at the University of California at San Francisco.

Eolas and the university say Microsoft made their technology part of Internet Explorer and bundled it with Windows.

Microsoft attorneys argued that the patent was invalid and said that in any case their client had never infringed on it.

Eolas says the patent Microsoft was found to have infringed upon is the first browser system that allowed for the embedding of small interactive programs such as "plug-ins" or "applets," into World Wide Web documents. Such programs are central today to online commerce as they power everything from banner ads to interactive customer service.

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.

Attorneys said Eolas would receive the lion's share of any damages that are eventually paid, but declined to provide the specifics.

Microsoft shares rose 3 cents to close at $25.61 in trading Monday on the Nasdaq Stock Market.

  • David Hancock

    David Hancock is a home page editor for CBSNews.com.