Microsoft has settled a long-running patent infringement suit with Eolas and the University of California in a case which has been running since 1999. Microsoft will make an undisclosed payment to Eolas.

Eolas had claimed that Microsoft's internet browser Internet Explorer violated a patent held by it. The dispute centred on the embedding of items within a web page. Microsoft has since changed that element of its browser.

Eolas won $521m in 2003 but Microsoft appealed and won the right to a retrial. It said that it expected the damages to be changed.

The patent involved is part-owned by the University of California, which will receive part of Microsoft's payout. Eolas has written to its shareholders saying that it believes the payout will be worth $60 to $72 per share to them. It is not known how many shareholders the privately-held Eolas has.

"The litigation with Microsoft has taken a great deal of management time and effort and significant financial resources," said Mark Swords, Eolas's chief operating officer in his letter to shareholders (pdf).

"We are very pleased that we now can focus our resources on commercializing our existing intellectual property portfolio and developing new fundamental technologies," he said. "During the next several weeks, the management team will complete planning the Eolas post-litigation strategy and budget."

In the court case over the patent Microsoft claimed that the technology covered by the patent had existed before the patent did. The US Patent and Trademarks Office said earlier this year that it would reopen an investigation into the patent and whether or not it is valid.

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