Microsoft relieved of U$1.5B payout in online music suit

SAN FRANCISCO, Aug 6, 2007 (AFP) - A US judge ruled Monday that Microsoft doesn't have to pay Alcatel-Lucent 1.5 billion dollars, overturning a jury verdict that promised to shake up the digital music industry.

US Senior District Court Judge Rudi Brewster sided with Microsoft in its appeal of a verdict in a lawsuit filed against the US software giant by the French firm.
Brewster issued a written ruling "in favor of Microsoft and against Lucent ... terminating the case," according to court documents.

 "Today's ruling by the judge reversing the jury's 1.52 billion dollar 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.

The trial that ended in US District Court in the southern California city of San Diego in February centered on MP3 audio technology used in the Windows Media Player software.
Alcatel-Lucent argued in court that technology used to encode and decode digital audio files in Media Player infringed on two of its patents.
Microsoft said that it had paid Munich-based licensing firm Fraunhofer-Gesellschaft 16 million dollars to legally use the disputed MP3 technology.
In his ruling, Brewster concluded that the US software giant did not infringe on one of the patents and that Fraunhofer would need to join Alcatel-Lucent's infringement suit for it to be valid in court.

Alcatel-Lucent had embraced the jury's verdict, saying it "made strong arguments" supporting its accusations.
Before it merged with Alcatel, Lucent filed a US federal lawsuit in 2003 claiming Microsoft partners, including computer makers Dell and Gateway, used Windows software that infringed on its patented technology.

Microsoft insisted it pays license fees for the technology it uses and violated no patent rights.
The staggering jury verdict sent a shock wave through the digital music industry, raising fears that it would be a precedent triggering punishing lawsuits against hundreds of companies that use licensed technology for the ubiquitous MP3 format.

Microsoft, Apple and Sony are among the firms that license MP3 audio technology, which is used in products such as iPods and digital Walkmans.
In the wake of the verdict, Daniel Harris, global head of intellectual property law at Clifford Chance in Washington, told AFP the case had "significant" ramifications for the fast-growing world of digital music.

MP3 was developed in the 1990s by technicians at Fraunhofer and Bell Labs, which later became part of Lucent.
It was a breakthrough in compressing large music data files into smaller versions able to be stored and played on devices.
The case nullified by Brewster on Monday is part of a broader intellectual property dispute between Microsoft and Alcatel-Lucent.
The remaining alleged patent violations headed for trial concern technology for digital video, speech coding, user interface, and Xbox 360 video game consoles, according to Microsoft.

In the unlikely event that Fraunhofer joins Alcatel in the litigation, a new trial could be ordered with a different jury that would be called on to make its own decision in the case.