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Microsoft told to pay Alcatel $1.5bn in MP3 patent spat

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Microsoft is reviewing its legal options after a US court ordered it to pay Alcatel $1.5bn for infringing the French telecoms' company's MP3 technology in Windows.

Microsoft slammed the court's ruling, calling it "completely unsupported by the law or the facts," and claimed it had paid $16m to license the voice technology in question from the German company, Fraunhofer.

"We will seek relief from the trial court, and if necessary appeal," Microsoft said in a statement.

Alcatel, which announced a partnership with Microsoft on IPTV in February 2005, inherited the San Diego court action through its $11.5bn merger with Lucent.

The original action pitted Lucent against Gateway and Dell over 15 patent claims, but saw Microsoft step in as it might be obliged to re-imburse the PC makers for damages they'd have to pay. The action has spawned related suits, with Alcatel last November prosecuting Microsoft in the Eastern District of Texas over video and voice technology used to decode video signals in Microsoft's Xbox 360.

According to Microsoft, Alcatel's Xbox action is an extension of the San Diego case.

The $1.5bn award comes a day after Microsoft's legal team attempted to persuade America's Supreme Court to find in its favor, in a patent infringement case brought by AT&T. AT&T has argued Microsoft violated a 2001 settlement between the companies over violation of sound recognition technology in Windows as overseas PC manufacturers continued to ship offending copies of Windows.

It's feared victory for AT&T could hold all US-based technology defendants internationally liable in future patent suits, vastly inflating any damages and awards.

Drawing a link with its Alcatel case, Microsoft said: "We are concerned that this decision opens the door for Acatel-Lucent to pursue action against hundreds of other companies who purchased the rights to use MP3 technology from Fraunhofer." ®

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