Judge overturns US$1.5b Microsoft decision

A US judge has thrown out a US$1.5 billion (A$1.74 billion) jury verdict against Microsoft, overturning a ruling that the company had infringed intellectual property owned by telecommunications vendor Alcatel-Lucent.

A San Diego jury in February found that Microsoft had breached two Alcatel-Lucent’s patents related to MP3 music file formats. The jury then awarded Alcatel-Lucent the largest patent damages award in history.

But US District Judge Rudi Brewster, in a 43-page ruling issued on August 6, said the damages sum awarded against Microsoft could not stand because the jury had erred in law and that Microsoft had not infringed one of the two patents.

“The Court finds that the jury's verdict of infringement was against the clear weight of evidence,” Judge Brewster wrote in the court documents.

Microsoft had sought either a reversal of the jury ruling, a drastic reduction in the damages, or a new trial.

“Today's ruling by the judge reversing the jury's $1.52 billion verdict against Microsoft is a victory for consumers of digital music and a triumph for common sense in the patent system,” said Microsoft general counsel Brad Smith.

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Outraged Microsoft to fight MP3 ruling

MICROFT has vowed to fight an “outrageous” federal jury ruling ordering it to pay US$1.5 billion in damages to Alcatel-Lucent for patent infringements involving MP3 technology.

“We think this decision is completely unsupported by the law or the facts,” Microsoft deputy general counsel Tom Burt said in a statement.

The company has also warned that the ruling could open the floodgates to legal action being taken by Alcatel-Lucent against hundreds of other MP3 licensee companies.

Microsoft said the lawsuit involved converting audio into MP3 format on personal computers.

The dispute dates to 2002 and 2003 when networking firm Lucent (which was subsequently acquired by Alcatel last year) sued PC makers Gateway and Dell over claimed patent infringements. Microsoft then sued Lucent over the claims – which involved software running on PCs – and Lucent counter-sued.

Microsoft has called the ruling outrageous. It says it properly licensed MP3 technology from the German research outfit Fraunhofer-Gesellschaft for US$16 million in 1997 and 2004.

“We think this verdict is completely unsupported by the law or the facts,” Microsoft’s Mr Burt said. “We will seek relief from the trial court, and if necessary appeal.”

"Like hundreds of other companies large and small, we believe that we properly licensed MP3 technology from its industry recognised licensor – Fraunhofer.”

“The damages award seems particularly outrageous when you consider we paid Fraunhofer only $16 million to license this technology.

“We are concerned that this decision opens the door for Alcatel-Lucent to pursue action against hundreds of other companies who purchased the rights to use MP3 technology from Fraunhofer, the industry-recognized rightful licensor.”

The appeal process is expected to be a lengthy one.

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