Microsoft Told to Pay Alcatel-Lucent $368 Million

Microsoft Told to Pay Alcatel-Lucent $368 Million

(Bloomberg) -- Microsoft Corp., the world's biggest software maker, was told to pay $368 million after a jury found it infringed two patents owned by Alcatel-Lucent SA for touch- screen form entry and use of a stylus on computers.

Alcatel-Lucent had asked for about $1.75 billion from Microsoft and Dell Inc. after claiming four of its patents were violated. The jury in federal court in San Diego today also said Dell infringed the stylus patent and owed Alcatel-Lucent $51,000. It rejected claims of infringement on two other patents related to video controls.

``Its kind of a mixed verdict -- everybody wins,'' U.S. District Judge Marilyn L. Huff joked with the lawyers after the jury was dismissed. ``There's something for everybody.''

The verdict is the second-biggest patent award this year, and the fifth-biggest in U.S. history in a patent case, according to Bloomberg data. The biggest-ever patent verdict was a $1.52 billion award against Microsoft in a related trial last year brought by Alcatel-Lucent. That verdict was later thrown out and Paris-based Alcatel-Lucent is appealing.

``We do not believe the jury's verdict against Microsoft on the two user interface patents is supported by the facts or the law,'' Microsoft Deputy General Counsel Tom Burt said in a statement. ``We feel confident the verdicts will be overturned, just as the court overturned a verdict last year by a San Diego jury in Alcatel-Lucent's favor in a dispute with Microsoft concerning widely used MP3 technology.''

After Verdict

Microsoft rose as high as $29.58 after the verdict was announced, or 1.4 percent above its closing price of $29.16 in trading on the Nasdaq Stock Exchange.

Alcatel-Lucent said it was pleased with the aspects of the verdict it won, and disappointed in those it lost.

``Alcatel-Lucent views its intellectual property as a vital asset and we will continue to preserve and defend this asset,'' Alcatel-Lucent spokeswoman Mary Ward said in a statement.

The jury said Microsoft should pay $357.7 million on the patent for the form entry system and $10.4 million for the stylus patent.

Dell spokeswoman Colleen Ryan said Microsoft will have to pay the $51,000 award against Dell. She praised the jury for rejecting some infringement claims and awarding such low damages.

``We clearly think the jury made the right call by returning a decision that recognizes the claims don't have merit,'' Ryan said in a telephone interview.

Lucent Technologies

The patents were owned by Lucent Technologies Inc., which Paris-based Alcatel SA acquired in 2006. Lucent sued Dell and Gateway Inc. in 2002 claiming infringement of its patents. Microsoft sued Lucent to challenge the patents since the dispute relates to features within the Microsoft Windows operating system.

All of the cases were combined, and then split again based on technology. A trial on some of Microsoft's infringement claims against Alcatel is scheduled for later this month, also in San Diego.

Closing arguments were held last week in San Diego, and the jury started its deliberations on March 28. In arguments, Alcatel-Lucent sought about $1.29 billion from Redmond, Washington-based Microsoft, $340.6 million from Round Rock, Texas-based Dell, and another $125 million that would be split by the two companies.

Waited Too Long

Both companies argued that they didn't use the Lucent technology, and challenged the validity of the patents. Dell, the world's second-biggest personal-computer maker, also claimed Alcatel-Lucent waited too long to sue and didn't file proper notices of infringement.

The trial is the second stemming from a package of claims and counterclaims that U.S. District Judge Rudi Brewster in San Diego split into five separate cases based on types of technology.

In February 2007, a San Diego jury ruled in the first trial that Microsoft's Windows Media Player infringed Lucent patents related to the MP3 digital-audio standard and awarded Alcatel- Lucent a then-record $1.52 billion in damages.

Brewster threw out the verdict in August, finding that one of the two patents wasn't infringed and that Microsoft had a valid license for the second one.

The biggest patent verdict this year was a $431 million jury award against Boston Scientific Corp. in a trial in Texas over heart devices. Boston Scientific is challenging the decision won by a New Jersey doctor.