Alcatel-Lucent back in court over $1.5 billion suit

The legal dispute between Microsoft and networking specialist Alcatel-Lucent is back in court again, as the latter looks to win back a $1.5 billion (750 million) judgement in its favour that was later overturned.

A US appeals court heard fresh arguments in a battle over MP3 digital music patents between the two companies that focused on a joint development pact struck nearly two decade earlier.

Much of the arguments before the US Court of Appeals for the Federal Circuit centered on a 1989 joint development agreement between AT&T and German research organisation Fraunhofer Gesellschaft.

Microsoft has said that it licensed the MP3 technology from Fraunhofer for $16 million (8 million), and is innocent of any infringement.

Alcatel-Lucent, however, maintains the patent was based on work that was done previously by Bell Labs, now the research arm for Lucent Technologies, and could not legally be licensed by Fraunhofer to Microsoft. Lucent was spun off from AT&T in 1996 and owns Bell Labs.

The case caused an uproar last year when a jury in San Diego ruled that Microsoft had infringed two patents and awarded Alcatel-Lucent $1.5 billion.

But US District Judge Rudi Brewster disagreed with the jury, and said Microsoft had not violated one of the patents and had licensed the other. The judge threw out the jury's award.

"We are hopeful that they (federal circuit judges) will agree that the jury was correct in its original judgment and that the jury's verdict should be reinstated," Alcatel-Lucent said in a statement.

Microsoft reiterated its innocence. "Judge Brewster was correct when he ruled that Microsoft did not infringe the '457 patent and that Microsoft properly licensed the technology embodied in the '080 patent from its co-owner and industry recognised MP3 licensor - Fraunhofer," said Microsoft spokesman David Bowermaster.