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The PTO says the patent may be invalid, but

"In the long term this doesn't make a heck of a lot of difference," said Greg Aharonian, editor and publisher of the Internet Patent News Service and a prominent critic of the USPTO. "This will probably wind up in front of the court of appeals at some point. Right now I wouldn't bet any money on the outcome, because there are too many fifty-fifties all around." [News.com]

The article is a good overview of the situation.