A US federal judge overturned a jury verdict ordering Microsoft to pay Alcatel-Lucent 1.5 billion US dollars for infringing on the French firm’s patents related to a digital music technology. The US District Judge Rudi Brewster in San Diego ruled that the jury’s damage award could not stand since one of the two patents was not infringed. Brewster further ruled that the second disputed patent was co-owned by a German research institute and Microsoft had a valid license. The music-compression technology was developed in AT&T’s Bell Labs, which later on turned out to be a part of Lucent, and was co-owned by Germany firm Fraunhofer. Microsoft had a licensing agreement with that company to use its technology.
The jury had earlier ruled in February that Redmond, Washington-based Microsoft must pay $1.52 billion for violating Paris-based Alcatel’s rights to the inventions. Alcatel-Lucent’s lawsuit against Microsoft had marked the largest patent verdict in US history. The lawsuit centered on origins of the MP3 standard, a digital audio encoding format that was developed nearly two decades back. The two sides argued in court in July over whether the verdict should stand. The patent dispute started with a 2003 lawsuit filed by Lucent Technologies, which was acquired last year by Alcatel. The complaint alleged that Microsoft customers Dell Inc. and Gateway Inc. have infringed 15 patents related to the MP3 technology for encoding and decoding audio files.
Alcatel-Lucent had contended in the court that technology used to encode and decode digital audio files in Media Player infringed on two of its patents. On the other hand, Microsoft maintained that it had paid Munich-based licensing firm Fraunhofer-Gesellschaft 16 million US dollars to legally use the disputed MP3 technology. Alcatel-Lucent had also argued that Fraunhofer had no right to license the MP3 technology, however, the federal judge said in the filing that the right to sell the intellectual property in question extended to both Lucent and Fraunhofer. Moreover, the judge also noted that ownership of the second disputed patent was questionable, and a retrial may be needed to resolve that matter.
The recent ruling overturning the earlier judgment is no doubt delivered a major setback to Alcatel-Lucent. Reacting to the judgment, Alcatel-Lucent instantaneously said it intended to appeal the ruling. Commenting over the ruling, Alcatel-Lucent spokeswoman Mary Lou Ambrus has said, ’shocking and disturbing, especially since — after a three-week trial and four days of careful deliberation — the jury unanimously agreed with us, and we believe their decision should stand’.
Microsoft general counsel Brad Smith speaking over the development said, ‘The ruling is a victory for consumers of digital music and a triumph for common sense in the patent system.’ Microsoft has said in its statement that there will be no new trial unless the French networking company appeals the decision to the US Federal Circuit Court and succeeds in overturning the San Diego court’s ruling. It further said that even if that is the case, damages from the original ruling will not be reinstated.
The recent riling on patent infringement has certainly brought relief to a number of other companies as the jury’s ruling had left other providers of hardware and software that support MP3 files vulnerable to claims from Alcatel-Lucent. However, Alcatel-Lucent seems to be all set to appeal in the higher court against the decision as its spokeswoman has said, ‘we still have a strong case and we believe we will prevail on appeal’.
