The U.S. Patent and Trademark Office has upheld the University of California and Eolas Technology's claims to patents surrounding the mechanisms used to embed interactive programs in a Web browser. The decision strikes a blow to Microsoft's charges that the patent is invalid.

Eolas had sued Microsoft alleging the plug-in architecture in Internet Explorer infringed on its intellectual property. A federal court agreed, and awarded Eolas $521 million in damages. Initially, Microsoft said it would alter IE and how the browser implemented ActiveX as a result of the ruling.

But in the end Microsoft backed away from the switch, saying that changes could potentially break millions of web sites. The company even got support from unlikely allies like the Electronic Frontier Foundation, which supported Microsoft's claims that "prior art" invalidated the patent.

In June 2004, Microsoft filed a 174-page brief asking the U.S. Court of Appeals to overturn the ruling. In March, the appeal was granted, sending the case back to a lower court, where Microsoft plans to prove that Eolas did not invent the technology, and knowingly withheld information from the USPTO.

However, with this week's decision, it appears the USPTO will be offering no help to Microsoft.

The Redmond company still has some hope of success as the appeals court could invalidate the patent on legal grounds. In a statement, Microsoft said that it plans to see the case through to a "successful resolution."