$1.53 Billion Judgment Against Microsoft Overturned

In a blow to telecom equipment manufacturer Alcatel-Lucent, a federal judge has overturned a $1.53 billion judgment against Microsoft for infringing digital music technology patents, the largest patent damages award in history. The case concerned the MP3 digital encoding format, the most common means of distributing music online. The decision could thus affect Apple, the world leader in digital music hardware and software, as well as many other companies involved in music distribution over the Internet. Microsoft licenses its MP3 technology from a German research institution that was involved in its original design, along with Bell Labs, which later became part of Lucent. Judge Rudi Brewster said one of the patents was not infringed by Microsoft and that ownership of the second was "questionable" and might require a new trial. Alcatel plans to appeal. "This reversal of the judge’s own pretrial and post-trial rulings is shocking and disturbing, especially since — after a three-week trial and four days of careful deliberation — the jury unanimously agreed with us," said Alcatel-Lucent spokeswoman Mary Lou Ambrus. Microsoft general counsel Brad Smith called the decision "a victory for consumers of digital music and a triumph for common sense in the patent system."

Sources: Financial Times, New York Times
Commentary: Microsoft Gets Boost in Alcatel Patent Battle • Microsoft Takes Next Round in Battle with Alcatel-Lucent • Alcatel-Lucent Wins $1.52 Billion Patent Judgment Against Microsoft
Stocks/ETFs to watch: MSFT, ALU, AAPL, GTW, DELL
Earnings call transcripts: Microsoft F4Q07, Alcatel-Lucent Q2 2007

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.