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Last Updated: Thursday, 3 March, 2005, 13:40 GMT
Court stays $521m Microsoft fine
Windows 98 on the production line
Microsoft had been fined $1.47 for every copy of Windows sold
A US appeals court has ordered a retrial in a case which could have cost software giant Microsoft a $521m fine.

The software giant had been sued by Eolas Technologies and the University of California for allegedly infringing patents with its web browser.

A lower court had fined Microsoft $521m (272m) and threatened changes both in Internet Explorer and other browsers.

But the appeals court has reversed part of the judgement, giving Microsoft the chance to make its case once more.

The case revolved around a patent held by Eolas and the University of California (UC) which claimed to cover ways of making other software work seamlessly with web browsers.

The most common example of such "plug-ins" allow the viewing of audio or video through the browser.

The lower court had said the patent predated Microsoft's insertion of such capabilities into Internet Explorer, and said it had to pay $1.47 for each unit of the Windows operating system shipped between November 1998 and September 2001.

New hearing

The furore triggered a review by the US Patent Office of Eolas' claim, a step rarely taken.

And now the appeals court says the initial court ruling ignored two key arguments in Microsoft's favour.

The company had suggested the existence of "prior art" - the technical term used when there is evidence that someone else came up with an application of the patented idea first.

Microsoft had wanted to show the court another browser called Viola, designed by a student at UC a year before the patent was filed in 1994.

It had also suggested that Mike Doyle, Eolas' founder and a former UC researcher, had intentionally concealed his knowledge of Viola when filing the patent claim.

The case will now go back to court, with Microsoft allowed to make both arguments anew.

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