Microsoft relieved of $1.5 bln verdict

A federal district court judge overturned his jury’s decision that required Microsoft to pay $1.5 billion to phone firm Alcatel-Lucent in a patent infringement lawsuit over digital music technology.

Senior U.S. District Judge Rudi M. Brewster of San Diego delivered a major blow to french telecommunications equipment maker Alcatel-Lucent as he relieved Microsoft of the payment of one of the largest patent awards ever granted.

Earlier this year, the jury had given a verdict that Microsoft's Media Player software breached on two Alcatel patents regarding the conversion of audio into MP3 files.

Reversing the decision, the judge wrote in a 43-page order that Alcatel did not have the rights to one disputed patent and had provided no evidence that Microsoft's programs were using the technology in the other.

The judge also disagreed to the jury's formula for awarding damages and said that Microsoft should get a new trial on just the amount of the award, even if his other decision was upturned.

Alcatel immediately promised an appeal against the decision “This reversal of the judge’s own pretrial and post-trial rulings is shocking and disturbing, especially since — after a three-week trial and four days of careful deliberation — the jury unanimously agreed with us,” said Mary Lou Ambrus, a company spokeswoman. “We still have a strong case, and we believe we will prevail on appeal."

Microsoft proclaimed the reversal was “a victory for consumers of digital music and a triumph for common sense in the patent system.”

Microsoft and others have licensed MP3 from a consortium led by the Fraunhofer Institute, a large German research organization which, along with the French electronics company Thomson and Bell Labs, was involved in the format’s development.

But Alcatel has been claiming that the MP3 technology also relied on the Bell Labs patents that it inherited last year when it bought Lucent Technologies.

During a trial in January and February Alcatel was awarded by the jury, 0.5 per cent of Microsoft's global personal computer sales since 2003.

Brewster, in April entered the ruling against Microsoft but post additional arguments made in July he decided to reverse it, relieving not only Microsoft but also Apple Inc., Sony Corp. and virtually every other company that makes music software or devices that play digital music.