Microsoft has had its FAT patent overturned by the US patent authorities.

After re-examination, the US Patent and Trademark Office (PTO) rejected the seven-year-old Microsoft patent for the FAT file system. The patent, which Microsoft started licensing to third parties in December, was contested by a small New York group that argued other patents already covered the technology.

The Public Patent Foundation was, naturally, delighted. Its appeal to the PTO in April of patent 5,579,517, kicked the review off. "The patent office has simply confirmed what we already knew for some time now: Microsoft's FAT patent is bogus," Dan Ravicher, the organisation's executive director, said in a written statement.

Microsoft was granted the patent in November 1996, but the file system covered by it has been in use since the 1970s. The FAT file system is used in computers and devices such as digital cameras and detachable storage media. Lexar Media, for example, has licensed Microsoft's FAT technology for use in its memory cards.

"I hope those companies that chose to take a licence from Microsoft for the patent negotiated refund clauses so that they can get their money back," Ravicher said. Other companies that have signed licence agreements with Microsoft for the technology include Rockwell International, Creative Technology and Seiko, according to Microsoft.

Microsoft contends that the PTO's decision has no bearing on the licensing program at this time. The software maker plans to appeal the decision and believes that the patent office will find its patents valid. "The PTO has not revoked the patent, it has simply put the claims in question and requested that Microsoft provide arguments supporting our initial claims or amending our claims. We are looking forward to having our first opportunity to weigh in with Microsoft’s side of the story," said a spokesman.

There is some good patent news for Microsoft however. A two-week jury trial has ended with a decision in its favor. The jury found that Microsoft's Office Smart Tags feature does not infringe on the 6,323,853 patent granted in 2001 to Norwegian Atle Hedloy of Arendi Holdings.

The specific Smart Tag feature in question recognises when a user types the name of a person in a Word document. Once the name is recognised, the user can select a Smart Tag icon and then choose among options to create a new contact in Outlook, send an e-mail message to the person, or look up the person’s address from Outlook.

Hedloy sued Microsoft in 2002. The patent is for a method "whereby a single click on the function item in a window or program on a computer screen, or one single selection in a menu in a program, initiates retrieval of name and addresses and/or other person or company related information, while the user works simultaneously in another program, eg, a word processor."

Who knows, the patent madness that has overtaken US corporate culture for the past decade may be being redressed with some commonsense decisions at last.