Monday, telecommunication equipment giant Alcatel-Lucent (ALU), applied to a U.S. federal appeals court to reinstate an earlier announced $1.52 billion patent violation jury verdict against Microsoft Corp. (MSFT).
The case pertains to two audio coding patents that Paris-based Alcatel-Lucent claimed were infringed by Microsoft's Windows Media Player application, and is one of the several patent cases pending between the two companies.
The three-judge panel of the U.S. Court of Appeals for the Federal Circuit heard arguments over whether U.S. District Judge Rudi Brewster erred in throwing out the verdict.
Alcatel-Lucent charged Microsoft of violating patents pertaining to new work carried out by the company.
Microsoft countered that Alcatel-Lucent's patent weren't infringed upon in the first place as the patent was co-owned by a German research institute, which had granted Microsoft permission to use it.
The dispute between Microsoft and Alcatel-Lucent dates back to 2003 when Lucent Technologies, which was acquired by Alcatel in 2006, filed suit against Gateway Inc. (GTW) and Dell Inc. (DELL) in U.S. District Court, San Diego, California.
Alcatel-Lucent claimed in this first San Diego case that Dell and Gateway had violated patents on MP3-related technologies developed by Bell Labs, a division of predecessor company American Telephone & Telegraph.
Other patents said to be infringed relate to MPEG video technology, speech technology, internet technology, and other technologies. Microsoft voluntarily joined the lawsuit in April of 2003 and Alcatel was added after it acquired Lucent.
After the first San Diego lawsuit was filed, Microsoft and Alcatel-Lucent have filed additional patent lawsuits against each other.
The first part of the San Diego case revolved around the audio coding patents. Alcatel-Lucent claimed that Microsoft's Windows Media Player infringed these patents by virtue of its MP3 capabilities.
In February 2007, a San Diego jury found for Alcatel-Lucent and against Microsoft. Alcatel-Lucent was awarded a record-breaking $1.52 billion in damages.
The damages could have been $4.5 billion but the jury was unable to decide if the infringement was "willful." Microsoft disputed the verdict, maintaining that the federal jury's decision was "unsupported by the law or facts", since Microsoft had already paid $16 million to license the technology from Fraunhofer Institute, which, it claims, is "the industry-recognized rightful licensor".
U.S. District Judge Rudi Brewster, in San Diego, in August of last year, granted Microsoft's motions for Judgment and for new trial, saying that the jury's decision was not supported by the evidence.
Judge Brewster declared that there was insufficient evidence both for Microsoft's liability and for the damages model used by Alcatel-Lucent. Alcatel-Lucent appealed the judge's decision, and the Court of Appeals for the Federal Circuit heard oral arguments in July 2007.
A week after the first jury verdict, in March, Judge Brewster ruled in the second part of the case that Microsoft had not violated Alcatel-Lucent's patents relating to speech recognition and the case was therefore dismissed before going to trial. Alcatel-Lucent said that it intends to appeal the ruling.
The trial in the third part of the San Diego case involved four patents. Earlier in April, an U.S. jury had awarded Alcatel-Lucent $367.4 million in damages after finding that Microsoft had violated two patents related to the user interface in its software.
Last month, the trial judge upheld the jury's verdict and increased the damage award against Microsoft to $512 million to account for interest. Microsoft plans to appeal that decision.
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