Microsoft to Pay $1.52 Billion in Patent Suit Damages
Microsoft must pay $1.5 billion in damages to telecommunications equipment maker Alcatel-Lucent SA for violating two patents related to digital music, a federal jury ruled Thursday.
The Redmond, Wash.-based software company said the patents in question govern the conversion of audio into the digital MP3 file format on personal computers.
In 2003, Lucent Technologies Inc., which last year was acquired by Alcatel, filed 15 patent claims against Gateway Inc. and Dell Inc. In April 2003, Microsoft added itself to the list of defendants, saying the patents were closely tied to its Windows operating system.
Microsoft disputed that Paris-based Alcatel-Lucent's patents govern its MP3 encoding and decoding tools, and said it licenses the MP3 software used by its Windows Media Player from Fraunhofer-Gesellschaft, a German company.
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"We believe that we properly licensed MP3 technology from its industry recognized licenser - Fraunhofer. The damages award seems particularly outrageous when you consider we paid Fraunhofer only $16 million to license this technology."
Microsoft said the damages were calculated by multiplying Windows sales volumes and PC sales prices worldwide since May 2003.
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