The patent in question was held by Eolas chief executive, Michael Doyle, and covered technology that he had developed with the backing of the University of California which allows internet users to access "plug in" applications embedded in web pages.

Following various court decisions, partial reversals, and the refusal of the Supreme Court to hear the case, Microsoft in 2005 developed a 'workaround' which did not necessitate the use of the disputed technology, distributing new code in its regular updates to update the way in which IE interacted with sites which contain Active X content.

However, the dispute between Microsoft and Eolas continued to rumble through the courts, and a retrial following appeal was scheduled to commence soon, prompting the two firms to reach an agreement.

The exact terms of the settlement have not yet been made public, but the $521 million damages figure awarded by a jury to Eolas in 2003 is likely to be scaled down.

According to a Seattle Post Intelligencer report on the settlement, Eolas chief operating officer Mark Swords told shareholders that:

"We are very pleased that we can now focus our resources on commercialising our existing intellectual property portfolio and developing new technologies."