The US Appeals Court for the Federal Circuit handed down its ruling in the ongoing MP3 patent lawsuit between Alcatel-Lucent and Microsoft late last week, and the court's decision doesn't favor Alcatel. The good news, for those of you who don't particularly enjoy watching lawyers get rich while patent infringement lawsuits drag on for years, is that the court's decision last Friday may finally write finis to the entire affair.

The lawsuits between Microsoft and Alcatel-Lucent date back to 2003, when Lucent (not yet acquired by Alcatel) filed suit against Dell and Gateway, alleging that the two companies had violated music compression patents first held by Bell Labs. Microsoft later willingly joined the lawsuit as a co-defendant, and Alcatel joined the ongoing court proceedings when it purchased Lucent in 2006.

In the interim period between 2003 and the present day, Alcatel-Lucent and Microsoft have lobbied a volley of additional lawsuits at each other, and the entire case history bears a certain unsettling resemblance to World War I, though with fewer cases of "trench foot."

In February 2007, a jury trial ruled in favor of Alcatel and rewarded the company a stunning $1.52 billion, by far the largest amount ever awarded to a company in a patent infringement lawsuit. Microsoft predictably appealed, claiming that it had already licensed the necessary MP3 encoding technology from Fraunhofer IIS. Judge Rudi Brewster agreed with Redmond on appeal and threw out the $1.52 billion judgment. Adding insult to injury, the judge further indicated that Alcatel-Lucent's second major claim against Microsoft was possibly invalid. Judge Brewster's decision merited another trip through the appeals process—an appeal Alcatel-Lucent lost once again last week.

Alcatel may never take its jury-mandated $1.5 billion to the bank, but one of the company's other patent infringement lawsuits against Microsoft has earned it a cool $512 million (which has already survived an appeal). Alcatel-Lucent's dreams of suing the entire computer industry for infringing its MP3 patents may have gone up in a puff of smoke last Friday, but suing Microsoft appears to be a viable business plan if you can make the allegations stick.

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