Updated 1:40 p.m. PDT, with comment from Alcatel-Lucent.
A federal appeals court has upheld a lower court ruling that Microsoft need not pay damages to Alcatel-Lucent in a long-running patent dispute in a case that could have opened up a broad range of litigation over the MP3 music format.
The appeals court, in its ruling published Thursday, agreed with a lower court that Microsoft didn't infringe on one patent in question and that Alcatel-Lucent didn't have standing to sue over the other patent.
Microsoft was initially hit with a $1.5 billion verdict in the case. There was concern that had Alcatel-Lucent prevailed that a wide range of companies could have been impacted.
In a statement, Microsoft deputy general counsel Tom Burt said the ruling "is a victory for consumers of digital music and a triumph for common sense in the patent system."
In a statement, Alcatel-Lucent said it was disappointed with the ruling.
"We will review our options to see what steps we should take," Alcatel-Lucent said. "It is too early to speculate on what our next steps might be."
While this was the most widely watched case, the two companies still have other, in courts in Texas and California.