FULL PRODUCT VERSION :
java version "1.7.0"
Java(TM) SE Runtime Environment (build 1.7.0-b147)
Java HotSpot(TM) Client VM (build 21.0-b17, mixed mode, sharing)

ADDITIONAL OS VERSION INFORMATION :
Microsoft Windows XP [Version 5.1.2600]

EXTRA RELEVANT SYSTEM CONFIGURATION :
Counter Part:
Windows 2003 Server Service Pack 2
Microsoft Windows [Version 5.2.3790]

IIS 6



A DESCRIPTION OF THE PROBLEM :
Using non ASCII-letters (especially tested with german umlauts and eszett) like "ä" (ä), "ö" (ö), "ü"(ü), "ß" (ß) doesn't work with NTLM Authentication over HTTP(S) using HTTP(S)URLConnetion.

Also Bug 6628661 claims this to be fixed it doesn't work. Neither 1.6.0_27 or 1.7.0 is sending the correctly encoded characters.
This is reproducible for the username as well as for the password.

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
IIS server with NTLM authentication configuration.
user or password containing the special characters.

Authenticator.setDefault(new Authenticator()
{
@Override
public PasswordAuthentication getPasswordAuthentication()
{
return new PasswordAuthentication(user,
password.toCharArray());
}
}
});

URL url = new URL("http://domain/somefile.html");
URLConnection connection = url.openConnection();
connection.getInpuitStream();

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
Successfull authentication regardless of special characters in username or password. The access via IE should be taken as a reference.
ACTUAL -
Authentication fails

REPRODUCIBILITY :
This bug can be reproduced always.

CUSTOMER SUBMITTED WORKAROUND :
Do not use special characters in username and password, which is not really desirable,