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Microsoft to pay Alcatel $70M in patent ruling

A jury has decided that Microsoft must pay Alcatel-Lucent $70 million in damages for infringing on the company's patent in Outlook software.

A federal jury in San Diego today ruled that Microsoft must pay $70 million in damages to telecommunications infrastructure maker Alcatel-Lucent, stemming from a patent infringement claim that dates back to 2003.

The patent, which was originally applied for by engineers at AT&T, covers a method of entering information into fields on a computer screen without using a keyboard. Lucent initially sued computer makers Gateway and Dell for infringing on the patent in 2002, with Microsoft intervening.

An earlier trial involving the same parties found Microsoft guilty of infringing on that patent in the company's Outlook e-mail software, Windows Mobile, and Microsoft Money--a ruling that would have cost Microsoft more than $500 million in damages. Microsoft appealed the decision, and the damages were recalculated.

An Alcatel-Lucent spokesperson said the company was pleased with the ruling.

"We are very pleased that the jury recognized that Alcatel-Lucent is entitled to fair compensation for Microsoft's use of this patent. We appreciate the time and effort and thoughtful consideration that the jury gave to this matter. Alcatel-Lucent views its intellectual property as a vital asset, and we work hard to preserve and defend that asset," the spokesperson said.

David Howard, Microsoft's corporate vice president and deputy general counsel of litigation, noted that the company would be reviewing the verdict.

"Today's verdict reflects a positive trend in the law of patent damages stemming from the Federal Circuit's earlier opinion in this and other cases," Howard said in a statement. "However, we continue to maintain that current law requires a genuine apportionment of damages when the infringement is directed to a small feature of a feature-rich product, and we are reviewing the verdict in that light and considering next steps."

This particular patent infringement case is just the latest in a long series between the two companies. A 2003 case had Alcatel targeting PC makers Gateway and Dell for using MP3 audio technologies. Like in this case, Microsoft intervened, though came out the victor. Microsoft was also the target of a U.S. International Trade Commission patent infringement complaint by Alcatel over technology to identify and affiliate a user in a telephone network. The ITC ended up siding with Alcatel-Lucent on that. A third patent case, involving digital speech compression technology as well as a computer communications patent was met with a mixed ruling in 2008.

Bloomberg first reported on the ruling today.

Update at 9:40 a.m. PT August 1 with additional comment from Alcatel-Lucent.