Internet companies are considering the implications of the recent judgment against Microsoft for infringing a patent regarding interactive content on Web sites.

The court awarded $520 million to Eolas Technologies and the University of California (UC). The litigation began in 1999 when Eolas and UC accused Microsoft of infringing on a 1998 patent owned by the university and licensed to Eolas.

That patent covers technology that enables small computer programs, often referred to as "applets" or "plug-ins," to be embedded in Web pages and interacted with through Web browsers like Internet Explorer.

Microsoft to change IE Responding to the judgment, Microsoft said last week that it will be making changes to Internet Explorer (IE) that may affect a "large number of existing Web pages," according to a statement by the World Wide Web Consortium (W3C). The company is also preparing to appeal against the ruling.

Microsoft insists that it did not infringe on the Eolas patent, but will work to minimize the effect on customers of changes to IE and is cooperating with the W3C to coordinate that effort.

Computer security experts initially welcomed Microsoft's defeat in the case, speculating that it may usher in the end of Microsoft's ActiveX controls, notoriously insecure software components that allow software developers to integrate specialized functionality with Web pages.

Multimedia companies in danger But technology and legal experts agree that the ruling could affect a wide range of technology companies with products that interact with Web browsers, or services that rely on customer interaction through Web browsers.

"Fundamentally, (the Eolas patent) describes a way of implementing plug-ins in a Web browser," said Richard Smith, an independent technology expert in Boston. "People who use plug-ins like (Macromedia Inc.'s) Flash or Java applets are covered by the Eolas patent," he said.

Macromedia, which distributes a free plug-in to view Macromedia Flash files, did not respond to requests for comment. Multimedia software developer Real Software also declined requests for comment.

The W3C is concerned about the implications of the case, according to Janet Daly, the organization's head of communications: "There certainly are concerns whenever patent issues appear to be relevant to basic technology. That gets the attention of the W3C membership," she said.

Past patent claims, such as those affecting the P3P (Platform for Privacy Preferences ) standard, have stopped development or the implementation of development standards, she said. The organization has legal and technology experts analyzing the Eolas patent. The group is trying to ascertain if any of its published standards infringe on that patent.

Meanwhile, companies with products that could be affected by the patent are watching with interest, and are hoping for word on how Eolas and UC plan to proceed.

Legal advice: "Be on notice".
Hector Santos, president and chief technology officer of bulletin board system developer Santronics Software is concerned: "As I learned more about it and understood more about what these guys patented and what it means, the more I felt like 'This claim is pretty broad!'" Santos said.

"The idea of remote client-server applets activated by a remote hosting server has been around for a while and we do it with our own technology," he said.

A "chat" feature in Santronics' Wildcat software uses a Java application (or applet) that may violate Eolas' patent, he said. Santos is reviewing his product's code and functionality carefully in light of the suit, as his lawyer advised him to.

Douglas Kline, chairman of the patent and intellectual property group at Boston law firm Testa, Hurwitz & Thiebeault warned that companies like Apple, Real and Macromedia should be on notice following the ruling: "If they didn't know about this patent before, they do now. And they have guidance about what one court thinks (the patent) means," he said.

Under patent law, Eolas and the University of California are free to go after technology companies as well as "end users" of that technology, according to attorney Jim Gatto, co-head of the intellectual property group at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo.

Typically, however, small companies will target one or two large companies, collecting significant damages and enforcing their patent rights, he said.

The University of California is not aware of plans to pursue parties other than Microsoft, but spokesman Trey Davis referred questions about legal strategies to Eolas' attorney, Martin Lueck, who did not respond.