Microsoft order to pay $1.5bn MP3 damages to Alcatel-Lucent

Microsoft has been ordered by a US court to pay $1.52bn (£800m) in damages to Alcatel-Lucent for violating two MP3 patents.

Microsoft has been ordered by a US court to pay $1.52bn (£800m) in damages to Alcatel-Lucent for violating two MP3 patents.

The patents in question cover the conversion of audio into the digital MP3 file format on PCs.

In 2003, Lucent, which was acquired by Alcatel last year, filed 15 patent claims against Gateway and Dell for technology developed by its research arm Bell Labs.

In the same year, Microsoft added itself to the list of defendants, claiming the patents were closely linked to its Windows operating system. The PC makers are still fighting the case.

A district court in San Diego has now awarded the damages against Microsoft to Alcatel-Lucent, but Microsoft said it intends to appeal.

Microsoft disputes that Alcatel-Lucent's patents govern its MP3 encoding and decoding tools. It says the software used by its Windows Media Player is licensed from German firm Fraunhofer-Gesellschaft.

Tom Burt, Microsoft corporate vice president and deputy general counsel, said, “We think this verdict is completely unsupported by the law or the facts. We will seek relief from the trial court, and if necessary appeal.

"Like hundreds of other companies large and small, we believe that we properly licensed MP3 technology from its industry recognised licensor – Fraunhofer. The damages award seems particularly outrageous when you consider we paid Fraunhofer only $16m to license this technology.”

Burt claimed the verdict opened the door for action to be taken against a number of other firms who have licensed the same technology from Fraunhofer.

Those companies include Nokia and Apple.

Related article: Orange and Alcatel-Lucent form IP delivery alliance

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