Microsoft to pay £777m for patent breach

Published on Friday 23 February 2007 11:56

SOFTWARE giant Microsoft has been ordered to pay £777 million to French phone equipment firm Alcatel-Lucent, after a US court decided it had infringed audio patents.

Alcatel had taken action against the US colossus, arguing that two patents - from 1994 and 1997 - related to the standards used for converting audio into MP3 digital music files had been breached.

But Microsoft said that it would consider an appeal of the decision as it was "unsupported by the law or facts" and insisting that it had already paid just over 8m to license the technology from German research organisation Fraunhofer Gesellschaftfirm.

Tom Burt, lawyer for the world's biggest software firm, said: "We are concerned that this decision opens the door for Alcatel-Lucent to pursue action against hundreds of other companies who purchased the rights to use MP3 technology from Fraunhofer, the industry-recognised rightful licensor."

Bernstein analyst Paul Sagawa said the decision means Alcatel-Lucent may seek payments from providers of software and hardware that support MP3 files, including Apple's iPod and iTunes.

"Potentially it's a significant windfall for Alcatel-Lucent," he said.

Alcatel-Lucent spokeswoman Joan Campion said the company was pleased with the decision but would not say whether Lucent would go after other companies.