Microsoft and Eolas Technologies Inc. have settled their high-profile patent dispute over technology in Internet Explorer, according to a letter to Eolas shareholders from Mark Swords, the company's chief operating officer. The agreement resolves a case in which Microsoft was previously hit with a judgment of more than $500 million.

"We are pleased to inform you that Eolas Technologies Inc. and Microsoft Corporation settled all claims between them in the Eolas Technologies Inc. and The Regents of the University of California v. Microsoft Corporation litigation on August 24, 2007," Swords wrote in the Aug. 27 letter, which was obtained Thursday by the Seattle P-I.

However, the cost of the settlement to Microsoft isn't clear. In the letter (PDF, 2 pgs) Swords explained that the Eolas board anticipates paying a dividend to shareholders of between $60 and $72 per share. However, he wrote that the agreement prevents Eolas and Microsoft from disclosing the terms of the settlement. Eolas is privately held, and the letter does not disclose the total number of shares outstanding in the company.

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