A federal jury ordered Microsoft Corp. to pay $521 million to a Chicago area start-up and the University of California, which jointly sued the software company for patent infringement over technology used in Internet browsers.

The 12 jurors in the U.S. District Court for the Northern District of Illinois decided Monday that Microsoft's Internet Explorer browser infringed a patent granted in 1998 to the university and Eolas Technologies Inc., a closely held company. The patent covers a method for interactive content to be embedded in a Web page. Jim Desler, a Microsoft spokesman, said the software company will appeal the decision.

Unless reversed, the jury award is likely to rank among the largest patent verdicts on record. It is only the second patent case that Microsoft has ever lost, Mr. Desler said. In 1994 the company lost a case against Stac Electronics Inc. over a patent on data-compression technology.

The verdict could be a worrying sign of Microsoft's future risks, even as it has made substantial progress in resolving most of its antitrust problems. The software company has about 30 other patent-infringement suits outstanding against it, some of which involve large damage claims. InterTrust Technologies Corp., a company purchased in January by units of Sony Corp. and Philips Electronics NV, recently won preliminary rulings in a high-profile case filed in federal court in Oakland, Calif.

Microsoft has prevailed with courts to throw out 12 patent suits during the past three years, and has moved to settle others. Most recently, the company late last month agreed to pay $26 million to Immersion Corp. in an agreement that resolves a patent-infringement suit and gives the software company a 10% stake in Immersion.

Eolas, founded in 1994 by a former University of California professor, Michael Doyle, filed its lawsuit against Microsoft in February 1999 alleging that Microsoft had used technology developed at the university in its Internet Explorer software. Microsoft, based in Redmond, Wash., maintains that its browser technology doesn't infringe on Eolas' invention. Microsoft's Mr. Desler said that the decision is "just one step in a long process," and that "we plan to appeal this decision and are confident the facts will support our position."

Microsoft attorneys assert that the patent is invalid because the Eolas technology is based on "prior art," or a broad body of public knowledge, and wasn't invented by the patent holders. The court dismissed Microsoft's prior-art argument before the case reached the jury. Microsoft says it may use prior-art as part of a body of evidence in its appeal. Whatever the case, "we believe the evidence will show that there wasn't any infringement of any kind," Mr. Desler said.

Martin Lueck, an attorney for Eolas, said the company holds a "very novel patent," and that prior-art argument held no merit. James E. Holst, the university's general counsel, called the verdict a "significant landmark in defining and protecting Internet technology whose benefits literally reach the whole world."

The plaintiffs asked for damages totaling $1.2 billion, a number based on potential royalties Eolas could have received had Microsoft licensed the technology. The award is based on the 354 million copies of Windows that Microsoft shipped with Internet Explorer between November 1998 and September 2001. The trial began July 9, and the case went to the jury Thursday.