Microsoft hit with $1.5B US patent penalty
Last Updated: Thursday, February 22, 2007 | 7:06 PM ET
CBC News
Microsoft Corp. must pay $1.5 billion US for violating two patents connected with converting audio signals into the digital MP3 format, a U.S. jury ruled Thursday.
The federal jury in San Diego, Calif., said Microsoft must pay the damages to equipment maker Alcatel-Lucent SA.
"We think this verdict is completely unsupported by the law or the facts," Microsoft lawyer Tom Burt said in a statement. The company is expected to appeal.
Microsoft has put MP3 conversion technology into its Windows operating system, so the finding could affect the heart of its business.
Lucent, which was taken over by Alcatel in 2006, filed 15 claims involving MP3 encoding and decoding systems in 2003 against computer makers Dell Inc. and Gateway Inc.
Microsoft added itself as a defendant, saying the patents were closely related to Windows.
Two of the 15 claims were thrown out, and the judge has scheduled six trials covering the other claims.
Microsoft has said it does not believe that its MP3 encoding and decoding systems are covered by Alcatel-Lucent's patents. It has said it uses software licensed from a German company, Fraunhofer-Gesellschaft.
"The damages award seems particularly outrageous when you consider we paid Fraunhofer only $16 million to license this technology," Burt said.
The decision led 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," he said.
Lucent co-developed the technology with Fraunhofer.
A spokeswoman for Alcatel-Lucent said the company was pleased with the ruling.
Microsoft recently claimed that Alcatel-Lucent infringed four of its patents related to phone and video technology.
With files from the Associated PressShare Tools
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