Alcatel-Lucent Loses $1.53 Billion Appeal Against Microsoft

Alcatel-Lucent has lost its US Federal Court appeal to force Microsoft to pay $1.5 billion in damages in a long-running patent dispute.

The court upheld the August 2007 decision of a lower court that ruled Microsoft did not violate a patent for MP3 digital audio technology and held licensing rights to the other, citing a joint ownership agreement between Germany’s Fraunhofer Institute and AT&T.

The company claimed the MP3 patents were originally filed by Bell Labs, the R&D arm of AT&T. When AT&T spun off Lucent Technologies in 1996, Lucent retained much of the patent portfolio of Bell Labs. French firm Alcatel subsequently acquired Lucent in 2006, forming Alcatel-Lucent.

The case could have impacted many companies had Alcatel-Lucent won, since Microsoft’s software is used by many of its partners.

Tom Burt, corporate vice president at Microsoft, said: “The Federal Circuit’s ruling is a victory for consumers of digital music and a triumph for common sense in the patent system.”

Earlier in April, a jury ordered Microsoft to pay $367.4m to Alcatel-Lucent over another patent violation, which was upheld by a district judge who increased the damages to $512m. The companies are still fighting other patent disputes in the US District Courts of Texas and California.