AT&T filed the suit in a U.S. District Court in New York, claiming that it had been and will continue to be "damaged and irreparably harmed by Microsoft's infringement."
"The suit speaks for itself," AT&T spokeswoman Cindy Neale said. "We've been in licensing discussions with Microsoft for quite some time. It's obviously a patent that's very important to us."
AT&T said it first notified Microsoft of the infringement in April 1999. The two companies began licensing negotiations at that point but were unable to resolve the issue.
"We can't comment without having seen the complaint," Microsoft spokesman Jim Cullinan said. "But we are an intellectual property company that certainly respects the rights of intellectual property holders."
Neale said AT&T has given many companies licenses to use its patented method, which allows the coding and decoding of voice signals and the holding of conference calls over the Internet.
Microsoft, which invested $5 billion in AT&T in 1999, has incorporated the voice coding through its TrueSpeech software into its Windows Me, 95, 98, 2000 and NT operating systems, the lawsuit said.
At the time of the investment, AT&T said it would use Microsoft's software in its television set-top boxes. Additionally, AT&T said it would work with Microsoft to run market tests of new digital cable services.
The suit also alleged that Microsoft has incorporated the patent through its NetMeeting software on some editions of the Windows Me, 98 and 2000 operating systems.
New York-based AT&T has asked a judge to declare the patent infringement willful, to enjoin Microsoft from future infringements and to award unspecified damages.
News.com's Joe Wilcox contributed to this report.