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Quick Hits: Microsoft Unscathed in Patent Trial

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Brief scrutiny of today's headlines.

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Microsoft (MSFT) didn't infringe 2 patents for encoding and decoding audio into the digital MP3 format, a Federal Appeals Court says.

If the ruling stands, Microsoft won't have to pay Alcatel-Lucent (ALU) $1.5 billion in damages.

In February 2007, a jury in US District Court in San Diego decided that Microsoft had infringed the patents for the conversion of music from CDs into computer files and viceMinyanville's Why Wall Street Will Never Be the Same versa.

But 6 months later, the judge who handled the trial set aside the ruling, saying that Microsoft's Windows Media Player software didn't infringe one of the patents.

The judge said the second patent is held jointly by Alcatel-Lucent and Fraunhofer Gesellschaft, a German company that received $16 million from Microsoft for the right to use the technology. The German company didn't sue Microsoft and the judge said that put Microsoft in the clear.

"The Federal Circuit's ruling is a victory for consumers of digital music and a triumph for common sense in the patent system," Tom Burt, an attorney for Microsoft, said in a prepared statement.

The MP3 patent claims were two of 15 made by Lucent Technologies in 2003 against Dell (DELL) and Gateway for technology developed at Bell Labs, Lucent's research division.

Microsoft said the patents were linked to its Windows operating system and added itself to the case. France's Alcatel acquired Lucent in 2006.

Alcatel-Lucent says it's reviewing the decision by the Washington D.C. Federal Appeals Court.
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