Setback for Microsoft Ripples Through the World Wide Web

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September 17, 2003


Setback for Microsoft Ripples Through the World Wide Web

By STEVE LOHR


	

 W <http://graphics7.nytimes.com/images/dropcap/w.gif> atching Microsoft
be sued - by the federal government, states, class-action plaintiffs and
aggrieved rivals - has become a common pastime in the computer industry.
The enjoyment of the industry spectators is usually all the greater if
the world's largest software company loses, and loses big, in court. 

Last month, Microsoft suffered a stinging setback in a
patent-infringement case when a federal jury awarded $521 million to a
former University of California researcher. But this time, the rest of
the industry is not smiling. 

To comply with the court ruling, Microsoft has informed a handful of
software companies and the World Wide Web Consortium, the leading Web
standards organization, that soon it will probably make changes in its
Internet browser, the on-ramp to the Web for 90 percent of computer
users. The impact, according to industry executives and Web experts,
could be disruptive and costly for other Internet software companies and
big commercial Web sites. 

``The ripple effect of this could be very dramatic,'' said Daniel
Weitzner, director of technology and society activities at the Web
consortium. ``What you have here is the adjudication of a private
lawsuit between two companies, and no one thought about the rest of the
Web.'' 

The technology in question enables a browser to summon programs
automatically over the Internet. The programs that use this technology
include those for playing music, videos and animations and exchanging
documents over the Internet. The technology was not only used by
Microsoft in its Internet Explorer browsing software, but has become a
standard feature in the software for coding Web pages, called hypertext
markup language, that has been ratified by the Web consortium. 

The court ruling and its potential impact, according to Mr. Weitzner,
points to the larger issue of the need to keep the basic software of the
Web free of patent royalties. 

The consortium, which includes representatives from the major software
companies and many university researchers, adopted a royalty-free patent
policy in May after three years of debate. ``If you try to charge
individual companies for patents on Web standards, you risk balkanizing
the Web and breaking it,'' Mr. Weitzner said. 

Indeed, Microsoft and I.B.M.coei are expected to emphasize their
commitment to the royalty-free patent approach to certain security and
transaction software for Web services, an emerging beyond-the-browser
technology that supports machine-to-machine communication over the
Internet. The two companies, which are often rivals, are demonstrating
their cooperation on Web services at an event today in New York where
Bill Gates, the Microsoft chairman, and Steven Mills, a senior vice
president in charge of I.B.M.'s software business, will act as hosts. 

Last month's court decision came in a suit filed in 1999, well before
the recent industry consensus on keeping the Web's basic technology open
and free of royalties. The plaintiffs' allegation in the suit was that
Microsoft illegally appropriated their technology, so it was not
Microsoft's to contribute to an open standard. 

A federal jury in Chicago found that Microsoft's technology infringed on
work done by Michael Doyle, the founder of Eolas Technologies in
Chicago, while he was an adjunct professor at the University of
California at San Francisco. The University of California is the other
plaintiff in the suit. 

In the trial, Microsoft asserted that its technology, called Active X,
was developed internally and tried to show that similar research
predated Mr. Doyle's work. The jury was not convinced. 

Microsoft has vowed to appeal the ruling, but the appeals process could
take 18 months or more. In the meantime, the court ruling says that
Microsoft should pay Eolas $1.47 for every copy of the Windows operating
system containing the browsing software that is shipped. Microsoft ships
more than 100 million copies of Windows a year. 

``It would not be prudent for us to sit back and let the meter run by
just having the legal process play out,'' said Michael Wallent, a
general manager in Microsoft's Windows division who testified in the
Eolas case. 

The jury's decided on its award on Aug. 11; the next day, Mr. Wallent
called Tim Berners-Lee, the director of the Web consortium, to say that
the action meant Microsoft might well have to change its browser. He
said the company wanted to work with the Web community to make sure any
changes it carried out would cause as little trouble as possible for the
rest of the industry. 

The consortium organized a four-hour meeting on Aug. 19 at the San
Francisco offices of Macromedia, a producer of software for showing
animations on the Web. Those invited were the leading producers of
multimedia Internet and Java applications, including Real Networkscoei,
Sun Microsystemscoei, Apple Computercoei and Adobecoei, as well as
Macromediacoei. 

Microsoft proposed three possible design tweaks to its browsing software
to ensure compliance with the court ruling. These include having
personal computer users approve a ``click to proceed'' box to run
multimedia programs from the browser and modifications that other
software companies and Web page designers can make. All would require
some adjustments from companies, executives say, but should not affect
ordinary PC users significantly. 

``We're working to make sure that whatever we do does not have a big
impact on users or the industry,'' Mr. Wallent said. 

Other industry executives seem to agree. ``This has the potential to be
broad in scope,'' said Al Ramadan, an executive vice president at
Macromedia. ``If anything has to change, we are confident we can manage
around the problem with some straightforward fixes.'' 

For their part, the Eolas plaintiffs are keeping the pressure on. Every
day that Microsoft ships Windows with Internet Explorer, the company's
potential liability increases. ``Yes, Microsoft has continuing
liability, it continues to infringe,'' said Martin R. Lueck, a partner
in Robins, Kaplan, Miller & Ciresi, who represents Eolas. ``Microsoft
gets paid for Windows. Why shouldn't Eolas get paid for its invention.''


There are, of course, other options besides a forced change in the
Microsoft browser and a continuing legal fight. As is so often the case
in legal disputes, the fierce stands of high-minded principle on each
side tend to be swept away quickly if the settlement price is agreeable
to both sides. In the last year or so, Microsoft has settled a number of
private suits. 


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