Microsoft & Timeline started negotiations in early 1999, when Microsoft released a new version of its SQL Server software. At first, Microsoft claimed to own the disputed patented technology, but then backed down from that untenable position. All along, Microsoft wanted the license to allow for customer enhancement of SQL Server without facing patent liability. Though Timeline & Microsoft signed an agreement, the two have tussled in court since the ink dried.

In 2002, the Washington state Court of Appeals drew a very fine line. On one hand, the court ruled that the license did not cover infringing combinations of Microsoft and non-Microsoft products where the non-Microsoft product provides a material element in infringing a claim. On the other hand, sublicensing protection applied if the added non-Microsoft code was not a "material part" of Timeline's patented technology, even if the resulting combination would otherwise infringe.

Meanwhile, Timeline had been approaching SQL Server customers to take a separate license to cover themselves. One company that balked, ProClarity, has been ensnarled in infringement litigation with Timeline since June 2005. Timeline accused ProClarity of inducing infringement since 1999 by directing ProClarity's customers in combining ProClarity software with Microsoft's SQL Server. Timeline said that ProClarity had been notified of the infringing action on several occasions prior to its filing suit. This spring, Microsoft acquired ProClarity.

Timeline's business is focused solely on licensing its patent portfolio (5,802,511; 6,023,694; 6026,392; 6,631,382; 6,625,617), having sold its software servicing and consulting business in 2005.

The battle is in Seattle. Timeline is represented by firms regaling in sticking it to Microsoft: Rohde & Van Kampen PLLC and Susman Godfrey LLP.