Alcatel-Lucent V. Microsoft - Trials

Trials

The first part of the San Diego case involved the '457 and '080 audio coding patents. Alcatel-Lucent claimed that Microsoft's Windows Media Player infringed these patents by virtue of its MP3 capabilities. Testimony was given by inventors James Johnston and Joseph Hall. Coincidently, AT&T inventor James Johnston was employed by Microsoft post-AT&T breakup and during the trial. Additional testimony was taken from Dr. Karlheinz Brandenburg, who worked with Johnston at Bell Labs.

On February 22, 2007, a San Diego jury found for Alcatel-Lucent and against Microsoft. Alcatel-Lucent was awarded a record-breaking $1.52 billion in damages. The damages could have been $4.5 billion but the jury was unable to decide if the infringement was "willful." Microsoft disputed the verdict, maintaining that the federal jury's decision was "unsupported by the law or facts", since Microsoft had already paid $16 million to license the technology from Fraunhofer IIS which, it claims, is "the industry-recognized rightful licensor".

Subsequently, on August 6, 2007 the federal judge in San Diego, U.S. District Judge Rudi Brewster, granted Microsoft's motions for Judgment as a matter of law (JMOL) and for new trial, saying that the jury's decision was not supported by the evidence. The Judge's Order found that there was insufficient evidence both for Microsoft's liability and for the damages model used by Alcatel-Lucent. Alcatel-Lucent appealed the judge's decision, and the Court of Appeals for the Federal Circuit heard oral arguments in July 2007. The Court of Appeals published its decision on September 25, 2008, upholding the dismissal of the case by Judge Brewster on two grounds. The court held that Fraunhofer was a joint developer and thus co-owner of one patent, which meant that Lucent lacked standing to sue. The other patent was not infringed because Lucent failed to show that the patented algorithm was ever used by Microsoft's products.

A week after the first jury verdict, on March 2, Judge Brewster granted summary judgment in the second part of the case that Microsoft had not violated Alcatel-Lucent's patents relating to speech recognition, and the case was therefore dismissed before going to trial. Alcatel-Lucent stated that it intended to appeal.

The trial in the third part of the San Diego case involved four patents. In April 2008, a jury awarded Alcatel-Lucent $367.4 million in damages after finding that Microsoft had violated two patents related to the user interface in its software. One of the patents found infringed by Microsoft's Tablet PC products involved technology originally developed by GO Corp. concerning gestures using a stylus on a tablet computer. (Microsoft's acquisition of the technology is the subject of a separate antitrust lawsuit against Microsoft.) The bulk of the damages award resulted from the jury's finding infringement of another patent titled "Touch Screen Form Entry System" that was found to cover form entry methods in Microsoft's Outlook and other products. In June 2008, the trial judge upheld the jury's verdict and increased the damage award against Microsoft to $512 million to account for interest.

In the fourth San Diego case, the jury issued its verdict on June 2, 2008. This time both Microsoft and Lucent were asserting that the other side was infringing its patents. The jury found that Lucent did not infringe Microsoft's patents (and one patent was invalid) and that Microsoft's Xbox did not infringe Lucent's patent.