Microsoft argued that one patent in question did not apply to its MP3 software and that the other was included in the Fraunhofer software that it paid to license.

Moreover, it argued that the damages sought by Alcatel were unreasonably high, pointing out that it paid Thomson, which represented the consortium in its dealings over the patent, a flat $16 million fee for the rights to the MP3 software.

“We think this is just plain wrong,” Mr. Burt said. “They told the jury to measure damages, not on the value to Microsoft of one of the 10,000 features in Windows, but on the value of the entire computer.”

Alcatel argued that the damages should be based on a royalty of 0.5 percent of the total value of Windows computers sold.

John M. Desmarais, a partner with Kirkland & Ellis who represented Alcatel, said the proposed damages were consistent with patent law. He said it was not appropriate to compare them with the $16 million Microsoft paid Thomson because the rights to the Bell Labs patents were far more valuable.

“It’s like going to the supermarket and paying $1 for a bar of soap,” he said. “That lets you use the soap. We were offering the equivalent of the right to make soap any way they wanted.”

The jury supported Alcatel’s arguments on every count except one. It deadlocked on the question of whether Microsoft willfully infringed on the Bell Labs patents. If the jury had found that it did, Microsoft would have had to pay triple damages.

said by rradina :

I understand Microsoft licensed the technology and paid fees to Fraunhofer.

said by rradina :

Obviously Fraunhofer may not have a valid patent but if true, will Fraunhofer be sued by MS for damages resulting from the false patent? My guess is $1.5B can be absorbed by MS but if MS is successful at passing those damages to Fraunhofer, it would ruin them.

said by rradina :

Although I think the amount is questionable, the jury must have convincing facts that Lucent has reasonable claim. Somewhere inside Microsoft there's a very nervous patent lawyer who advised them that they only had to pay Fraunhofer.