Microsoft has been given a second chance to prove that Internet Explorer does not violate patents owned by Eolas Technologies.

Just when it seemed certain Microsoft had lost its eight-year-old patent dispute with Eolas, the US Patent and Trademark Office (USPTO) has reopened the case, giving Microsoft a chance to prove that Eolas' browser plug-in patent is invalid.

Microsoft has confirmed that the USPTO will consider its argument that it was the first to invent the technology the Eolas patent covers, declaring "interference" in the case and scheduling a rehearing. There now will be a separate proceeding in the USPTO on the question of who owns the patent claims, said Jack Evans, a Microsoft spokesman.

Andy Culbert, Microsoft associate general counsel, said the company is pleased to have another chance to show that it is the inventor of the disputed technology.

The news is the latest twist in a case that began in 1999, when Eolas filed suit against Microsoft for infringing on its patent for embedding interactive content in a website. Eolas said Microsoft violated its patent in its implementation of ActiveX in IE.

Eolas, a spin-off of the University of California, was awarded a $520.6 million judgement in August 2003. However, an appeals court threw out that ruling in March 2005 and ordered a new trial to determine the patent's validity. In September 2005, the USPTO upheld Eolas' patent.

Disputes over US patents appear to be coming to a crucial crossroads, with patent litigation running rampant and increasing polarisation between those who seek strong software patents and those who think that software should not be patentable. Microsoft recently heated up the debate when company executives said in a magazine article that it would aggressively seek royalties for patents the company says it holds for technologies in open-source software. Some think US lawmakers should enact patent reform laws to minimise litigation or prevent patent cases from dragging on for years.

The Supreme Court recently made it a little more difficult for companies to prove that their patents are valid in an instance where there could be many competitors trying to solve the same problem. In an April ruling in the case KSR v. Teleflex, the Court weakened the position of a patent-holder if it created a technology that another company may have invented previously or around the same time, but did not yet file for a patent.

Eolas representatives could not be reached for comment.

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