The US Patent and Trademark Office (PTO) has issued a preliminary rejection of two patents key to Microsoft's control of the FAT file system.

FAT has been in use since the 1970s, and is widely used in removable media such as USB memory sticks and cameras. Microsoft claims it developed FAT in 1976, and was granted a patent on the system in 1996. It began licensing the system to third parties in late 2003 and has signed up several major licensees, including Rockwell International, Creative Technology and Seiko, according to the company.

Last spring the Public Patent Foundation (Pubpat), a small New York organisation, launched a challenge to the patent and met with initial success when the USPTO initially rejected Microsoft's application for patent 5,579,517, known as the '517 patent, in September 2004. "The patent office has simply confirmed what we already knew for some time now: Microsoft's FAT patent is bogus," said Dan Ravicher, Pubpat's executive director, in a statement at the time.

The initial rejection meant Microsoft had to submit further materials supporting its claims. This week the USPTO moved a step further along in the process, rejecting the '517 patent and another known as the '352 patent, both dealing with FAT's long-filename technology.

The decision still isn't final, however, and Microsoft said the details of the USPTO's decision were in its favour. The patents were not rejected on the grounds of prior art, but on what Microsoft characterised as a technicality related to inventorship. Meanwhile the USPTO ruled in Microsoft's favour on all the prior art issues in question.

"The examiner has requested evidence that all six of the named inventors are properly named as inventors on the patent," Microsoft said in a statement, adding that it is optimistic the final decision will go in its favour.

The status of FAT may have a significant impact on open-source software such as the GNU/Linux operating system and Samba, which allows other operating systems to communicate with Windows. Open-source leaders say if Microsoft is able to confirm the patent, it could force any software able to read and write FAT to license the technology and pay royalties.

The GPL licence governing Linux and Samba prohibits the inclusion of patented technology that requires royalty payments. That means these technologies wouldn't be able to, for example, read and write on typical memory cards without licensing add-on software, according to open-source developers.