Record Patent Fine Thrown Out

A judge has effectively reversed a Feb. 2007 jury verdict that would have forced Microsoft to pay Alcatel-Lucent US$1.52 billion for infringing two patents related to MP3, a digital audio compression technology. The ruling lets Microsoft avoid the largest patent-infringement fine ever levied, which was based on 0.5% of revenues from all Windows sales during the time Microsoft allegedly infringed the patents. The ruling also could prevent Alcatel-Lucent from successfully suing other providers of MP3-supporting hardware and software, such as Apple and Sony.

The Aug. 2007 reversal by U.S. District Court Judge Rudi Brewster responded to Microsoft’s request for a Judgment as a Matter of Law (JMOL) and new trial after the jury verdict. A JMOL, or Directed Verdict, is made against a party on a given issue when there is no legally sufficient basis on which a jury could find for that party on the issue. For one of the patents (the ‘457 patent), the judge ruled that the evidence did not support the jury’s finding of patent infringement. The other patent (the ‘080 patent) is “jointly owned” by Fraunhofer and Alcatel-Lucent, the judge ruled, and the jury erroneously discounted Microsoft’s prior licensing of this patent from Fraunhofer. Finally, Judge Brewster ruled that the original damage calculation was not valid and must be redetermined if the case is retried.