Judge overrules jury and reverses $1.5 billion Microsoft payout

The largest patent infringement award ever made has been reversed by a US judge. Microsoft will no longer have to pay a $1.5 billion settlement to Alcatel-Lucent in a dispute over MP3 file technology.

The judge in the trial has over-ruled a jury decision that Microsoft should make the payout because he said that patent infringement in one case had not taken place.

The format for MP3 audio files was invented almost 20 years ago and more than one company claims to have patents covering the technology. The Microsoft case turned on whether or not its use of MP3 files in its operating system violated patents which Alcatel-Lucent claims to own.

Microsoft's Windows Media Player plays files using the MP3 standard, and the company paid a licence fee to a consortium which includes Germany's Fraunhofer Institute, which owns patents relating to the technology.

Alcatel-Lucent, though, said that Microsoft's use violated patents relating to technology developed by its predecessor, Bell Labs, before it worked with Fraunhofer, and that it was due royalties from Microsoft.

A jury trial in the District Court in San Diego in California found that Microsoft had violated patents and awarded $1.5 billion in damages to Alcatel-Lucent, a huge sum that was derived from the large numbers of Windows operating systems sold by Microsoft.

Trial judge Rudi Brewster has overruled the jury, though, and has said that one of the two patents involved in the case was not in fact violated by Microsoft.

Of the second supposed patent violation, Brewster said that it was not even certain that Alcatel-Lucent owns the patent, and that a new trial could be required to settle that question.

Alcatel-Lucent said it would appeal the ruling. "The reversal of the judge's own pre-trial and post-trial rulings is shocking and disturbing,'' an Alcatel-Lucent spokeswoman told Bloomberg. "The jury unanimously agreed with us. We believe their decision should stand."

Microsoft welcomed the ruling as "a victory for consumers of digital music and a triumph for common sense in the patent system," according to Brad Smith, the company's general counsel.

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