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IP, Patent

Eolas–Beaten But Not Defeated

Few patent owners are more reviled by the tech community than Eolas, the company formed by Michael Doyle, inventor of US Patent 5,838,906. The patent–filed in 1994, and reexamined by the patent office not once, but twice–purportedly reads on technologies like web browsers, that parse and format “hypermedia” documents. Back in 2003, with attorneys from Robins Kaplan–one of the few majors willing to fight for inventors and small companies like Eolas–a Chicago jury agreed that Microsoft infringed the ‘906 Patent, awarding $500 M in damages. An appeals court later overturned the verdict, but Eolas nevertheless negotiated a likely 9-figure license agreement with Microsoft, resulting in a $30 M payday for the University of California–the patent’s original owner.

Eolas later moved the base of its licensing operations from Chicago to Tyler, Texas, and hired another champion of patent owners–the lawyers at McKool Smith. In 2009, Eolas kicked off another round of patent enforcement actions, successfully negotiating settlements with several companies, including JC Penney, JP Morgan Chase, Oracle, Texas Instruments, Office Depot and eBay. A trial held this past week was the first step in what was to be consecutive, back-to-back trials with remaining defendants. As it turns out, the remaining trials are unnecessary (at least for now) because the East Texas jury–unlike the Chicago jury–agreed that the claims should never have issued in the first place.

Companies looking to avoid licensing the Eolas patent, along with many writers in the tech community, likely balked at the seemingly gaudy licensing revenue Eolas sought. Meanwhile, reporters continued to fuel the vitriol with by suggesting that Eolas claimed to “own” the web. Of course, if the latter statement is true, then “ownership” of the web (whatever that means) would certainly be a valuable piece of property. In reality, however, Eolas never owned the web–not even if it’s patent claims had held up. Granted, Eolas presumptively owned rights to practicing a very important process used to distribute and format information, but own the web it did not.

After announcement of the verdict, the tech community celebrated the news, and simultaneously mocked companies who negotiated–or, in their words, caved–and already licensed the patents from Eolas. Somehow, when East Texas juries uphold patent rights, they’re mocked as being simple-minded and out-of-touch. But in this case, where they parted views, not only with a northern, Chicagoan jury, but also two separate re-examination panels at the US Patent and Trademark Office, everyone is immediately convinced the jury got it right.

But no matter what, Eolas as a patent owner and licensing company simply doesn’t end here. The Tyler, Texas jury invalidated discrete claims of two Eolas patents. In December, the patent office awarded Eolas two additional patents in the same family as the ‘906. In addition, Eolas picked up several other, unrelated patents along the way–including some targeted in one way or other on hypertext applications. And none of that takes into consideration Eolas’ opportunities on appeal, farfetched though they may be. With all of the patents trading on the secondary market these days, however, one has to wonder whether an appeal, or investing the cost in legal fees to acquire new patents represents the bigger return in the long run.

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  1. Pingback: How Much Is The Internet Worth? Another Eolas Post Mortem « Gametime IP - February 16, 2012

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