Microsoft does not have to pay $1.5 billion to Alcatel-Lucent in a court ruling that ends a long-running digital music patent lawsuit.

In February 2007, a jury in San Diego said Microsoft infringed on two patents that cover the encoding and decoding of audio into the digital MP3 format. The US District Court judge who presided over the case, Rudi Brewster, later set aside the ruling, saying Microsoft's Windows Media Player software does not infringe on one of the two patents.

Brewster ruled that the second patent was jointly owned by both Alcatel-Lucent and Fraunhofer Gesellschaft. Microsoft paid $16 million to Fraunhofer Gesellschaft in exchange for use of the technology and since Fraunhofer did not sue Microsoft, Redmond was off the hook.

Alcatel-Lucent appealed and now a panel of Judges Alan Lourie, William Bryson and Sharon Prost of the Court of Appeals for the Federal Circuit in Washington, DC, upheld Brewster's decision.
Microsoft said that the ruling is a victory for consumers of digital music and a triumph for common sense in the patent system. X

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