Microsoft ordered to pay $1.5B to Alcatel
SAN FRANCISCO - A federal jury Thursday ruled Microsoft (MSFT) must pay $1.5 billion in patent-infringement damages to telecom equipment maker Alcatel-Lucent in what patent attorneys call one of the biggest judgments ever.
Microsoft says the patents involve converting audio into digital MP3 files on PCs. It plans to appeal.
The news came before markets closed. Shares of Microsoft closed 4 cents higher at $29.39 on Thursday. Alcatel-Lucent's U.S. shares were up 7 cents to $13.14.
"This verdict is completely unsupported by the law or facts," Tom Burt, Microsoft's deputy general counsel, said in a phone interview.
In 2002 and 2003, Lucent, which was acquired by Alcatel last year, filed 15 patent claims against computer makers Gateway (GTW) and Dell (DELL). Microsoft sued Lucent over the claims and was countersued by Lucent. A judge has tossed out two of Lucent's claims and set six trials to consider the remaining patent disputes.
Microsoft says it properly licensed the MP3 technology from Fraunhofer-Gesellschaft, a German research company, for $16 million, in 1997 and 2004.
"We are concerned that this decision opens the door for 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," Burt said in an earlier statement.
"We made strong arguments supporting our view, and we are pleased with the court's decision," said Alcatel-Lucent spokeswoman Joan Campion. She declined to discuss details of the decision.
The software giant, meanwhile, says damages were determined by multiplying Windows sales and average PC sales prices worldwide since May 2003.
The same federal court in San Diego will consider the next of the patent lawsuits, this time covering speech coding, in March and April, Microsoft said. Also at issue is video coding on both Microsoft's Xbox video game console and the Windows interface.
"This case could bode ill for the other five patent cases still in the pipeline," says Charles King, principal analyst at Pund-IT.
While the verdict is a public-relations blow to Microsoft, it isn't necessarily a financial one, patent attorneys and software analysts say.
Large jury verdicts on patent-infringement cases are typically appealed, and damages can be reduced significantly or reversed, says Jeff Berkowitz, a software-patent attorney.
"This thing is far from over," says analyst Matt Rosoff of Directions on Microsoft. He notes Microsoft successfully appealed a $521 million patent-infringement award in 2003 for Eolas Technologies, which developed a Web-browser patent. The case is still in court.
www.usatoday.com
The news came before markets closed. Shares of Microsoft closed 4 cents higher at $29.39 on Thursday. Alcatel-Lucent's U.S. shares were up 7 cents to $13.14.
"This verdict is completely unsupported by the law or facts," Tom Burt, Microsoft's deputy general counsel, said in a phone interview.
In 2002 and 2003, Lucent, which was acquired by Alcatel last year, filed 15 patent claims against computer makers Gateway (GTW) and Dell (DELL). Microsoft sued Lucent over the claims and was countersued by Lucent. A judge has tossed out two of Lucent's claims and set six trials to consider the remaining patent disputes.
Microsoft says it properly licensed the MP3 technology from Fraunhofer-Gesellschaft, a German research company, for $16 million, in 1997 and 2004.
"We are concerned that this decision opens the door for 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," Burt said in an earlier statement.
"We made strong arguments supporting our view, and we are pleased with the court's decision," said Alcatel-Lucent spokeswoman Joan Campion. She declined to discuss details of the decision.
The software giant, meanwhile, says damages were determined by multiplying Windows sales and average PC sales prices worldwide since May 2003.
The same federal court in San Diego will consider the next of the patent lawsuits, this time covering speech coding, in March and April, Microsoft said. Also at issue is video coding on both Microsoft's Xbox video game console and the Windows interface.
"This case could bode ill for the other five patent cases still in the pipeline," says Charles King, principal analyst at Pund-IT.
While the verdict is a public-relations blow to Microsoft, it isn't necessarily a financial one, patent attorneys and software analysts say.
Large jury verdicts on patent-infringement cases are typically appealed, and damages can be reduced significantly or reversed, says Jeff Berkowitz, a software-patent attorney.
"This thing is far from over," says analyst Matt Rosoff of Directions on Microsoft. He notes Microsoft successfully appealed a $521 million patent-infringement award in 2003 for Eolas Technologies, which developed a Web-browser patent. The case is still in court.
www.usatoday.com
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