They shouldn't have been allowed to do this, but according to Eben Moglen (right, from Wikipedia) they did.

Microsoft got a patent in 1998 on technology that is eerily similar to IPv6.

Moglen, who now runs the Software Freedom Law Center in New York, says IPv6 represents prior art not disclosed in Microsoft's patent application, meaning the patent should be invalidated.

He also says members of the Internet Engineering Task Force are ready to testify, creating a "smoking gun" against Microsoft, he told eWeek:

Those familiar with the meetings of the IETF as the committee hammered out the IPv6 IP address discovery system told eWEEK.com that Microsoft was actively participating in those discussions back in late 1997 and early 1998. Microsoft left the meetings and filed a patent for work on which there already existed numerous RFCs (requests for consensus)—basically the legislation that runs the Internet.

Off with their head, or oops? We report, you decide.