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14 August 2003 Microsoft has been ordered to pay $521 million to software start-up Eolas Technologies and the University of California for patent infringement.

The lawsuit, which was filed in 1999, centres on a patent granted to the University of California and licensed to Eolas, a company owned and run by the inventors of the technology.

The Eolas patent describes "a system allowing a user of a browser program... to access and execute an embedded program object." Eolas and the University of California claimed that the ActiveX technology included in Microsoft's Internet Explorer browser software performs the same task — and was implemented without Eolas' permission.

Microsoft attorneys argued that Eolas' patent was invalid because its technology was based on "prior art", a legal term used to refer to a broad body of public knowledge. However, the court dismissed this argument before the case reached the jury.

In an official statement, Microsoft says it will appeal against the decision: "We believe the evidence will ultimately show that there was no infringement of any kind, and that the accused feature in our browser technology was developed by our own engineers based on pre-existing Microsoft technology."

However, if the decision is upheld it amounts to one of the largest patent verdicts on record. The University of California will receive one quarter of the proceeds. The remainder — minus legal fees and costs — will go to Eolas' CEO and sole employee, Michael Doyle, a former University of California professor.

Twelve patent suits launched against Microsoft during the past three years have failed. Others, however, have been settled out of court and the company currently faces about 30 more outstanding patent infringement lawsuits.