Microsoft to pay $511m for patent violations

updated 6:35 p.m. ET June 20, 2008

REDMOND, Wash. - A U.S. District Court judge in San Diego ruled that Microsoft Corp. must pay Alcatel-Lucent $511.6 million for infringing on two patents, marking the latest move in a 5-year-old patent scuffle between the two companies.

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In April, a jury ordered Microsoft to pay Paris-based Alcatel-Lucent $357.7 million for infringing on a patent that covers how software users select a calendar date from a menu in certain programs, including Microsoft Outlook and Windows Mobile.

It also ordered Microsoft to pay $10.4 million for infringing on an Alcatel-Lucent patent related to the use of a stylus on a tablet computer.

Judge Marilyn L. Huff denied Microsoft's request for reconsideration of that jury's decisions late Thursday, and raised the amount of damages the court awarded Alcatel-Lucent to include prejudgment interest meant to compensate for how long it took to resolve the matter.

"We are disappointed that Judge Huff denied our request for a new trial," said Microsoft spokesman David Bowermaster, in an e-mailed statement. "We plan to appeal the rulings against us. We are confident that the damages award against Microsoft will not be sustained on appeal."

Huff also upheld the jury's decision that Microsoft's video encoding technology doesn't infringe on a third Alcatel-Lucent patent. Bowermaster said the company was pleased with that decision.

In April, PC maker Dell Inc. was also found to have infringed on the stylus-related patent. In the Thursday order, Huff affirmed that Dell must pay damages of about $70,000 to Alcatel-Lucent, including prejudgment interest.

"We had always believed we had a strong case and are pleased that the judge agreed that the jury's thoughtful verdict was well reasoned and supported by the evidence presented during the more than monthlong trial on these two patents," said Alcatel-Lucent spokeswoman Mary Lou Ambrus in an e-mailed statement.

This case, which considered three patent infringement claims against Microsoft and two against Dell, was one of several trials stemming from claims made in 2003 by Lucent Technologies Inc. against PC makers Gateway Inc. and Dell Inc. for technology developed by Bell Labs, Lucent's research arm.

Microsoft added itself to the list of defendants in 2003, saying the patents were closely tied to its Windows operating system. The PC makers are still defendants. France's Alcatel bought Lucent last year.

Some of the claims have not yet been addressed by the courts, including ones related to video coding on Microsoft's Xbox game console and its Windows' user interface.

Alcatel-Lucent is also appealing U.S. District Court Judge Rudi M. Brewster's 2007 decision that Microsoft need not pay $1.5 billion in damages, reversing a jury's decision that Microsoft infringed on one of the French company's digital music patents.

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