Microsoft and Eolas settle, ending patent battle over plug-ins, ActiveX

The Microsoft/Eolas patent battle over ActiveX controls appears to be over. Finally. Eolas announced this week in a letter to shareholders that it settled out of court with Microsoft, and the settlement came with an undisclosed cash payout.

The Seattle Post-Intelligencer broke the story after obtaining a copy of the Eolas letter. The companies have yet to issue any official statements, but the settlement agreement closes the long-running court case between them over an Eolas patent that was said to apply to Microsoft's method of handling ActiveX controls on web pages.

The Eolas patent was provisionally invalidated by the USPTO years ago, and some observers thought that the case was all but over. But when the USPTO actually concluded its re-examination, it upheld the patent. Eolas continued to press its claims for cash against Microsoft.

In late May of this year, the USPTO gave Microsoft another chance to overturn the patent. The entire situation was made murkier by the fact that a Microsoft patent covering similar concepts was also approved by the agency.

At that point, it looked like the two companies were finally prepared to pack it in. The dispute was scheduled for a retrial in Chicago at the beginning of August, but both parties asked the judge for a one-month extension. Now, the case has been settled and won't proceed to trial. Given the way things have gone for Microsoft recently, the company probably paid out far less than the $520 million that Eolas won during the first court case in 2003, though we may never know.