This week, a federal judge in San Diego issued a ruling against Microsoft in its Alcatel-Lucent patent infringement case. A jury had already found that Microsoft infringed on two Alcatel-Lucent patents related to the MP3 format and fined the company $1.5 billion. In a parallel part of the case, Judge Rudi Brewster had heard five defenses from Microsoft. This week, he ruled against Microsoft on four of them. A ruling on the fifth defense is expected soon.
"Lucent is the sole owner of the \[MP3\] patents," the judge wrote in his ruling. "Microsoft is not entitled to any intervening rights." Although Judge Brewster wasn't in a position to reverse the jury's ruling, he might have lowered the jury-imposed fine if he had found in favor of Microsoft in any of the defenses.
Microsoft said it will ask the court to review the verdict, but is waiting for Judge Brewster's ruling on the fifth defense submission, which involves procedural issues related to Alcatel-Lucent's patents. A spokesperson for Alcatel-Lucent believes that this week's ruling paves the way for Judge Brewster to render a final judgment on the jury's verdict.
The Alcatel-Lucent patent has a wide range of implications for many digital-music companies, such as Apple Computer and RealNetworks. Microsoft argued that Alcatel-Lucent's MP3 patents are invalid because Alcatel-Lucent jointly developed the MP3 format with several other companies, including the Fraunhofer Institute for Integrated Circuits IIS in Germany. Alcatel-Lucent, Microsoft said, licensed the MP3 format from the Fraunhofer Institute and shouldn't be able to claim any patent ownership. Microsoft also noted that it paid $16 million to the Fraunhofer Institute to license the MP3 format, which should have shielded the company from any patent infringement charges.
In a separate but obviously related case, Microsoft sued Alcatel-Lucent in February for infringing on the software giant's computer and phone systems patents. The US International Trade Commission recently agreed to investigate Microsoft's complaint.