Legal News

Fed. Cir. Nixes Infringement Award Against Microsoft

By Ashby Jones

On Friday afternoon, Microsoft got a dose of good news and bad news on the patent front. The bad news: the Federal Circuit upheld a jury verdict that the company’s Outlook software and two other products infringed an Alcatel-Lucent patent. The good news: a $358 million damages award against Microsoft was not supported by evidence and needed to be re-calculated. Click here for the WSJ story; here for the Bloomberg story; here for the opinion; here for further coverage from the Patently-O blog.

The case largely centered on Lucent’s claim that Microsoft Outlook’s calendar function infringed one of its patents. Microsoft argued that Lucent’s patent was invalid and not infringed, but it also attacked the jury’s damages award as far too high.

The company said the $358 million award was based on the full market value of Outlook, even though there was no evidence that Lucent’s patented technology contributed to that value. Microsoft argued that it should have to pay only $6.5 million.

Alcatel-Lucent said in court papers that the jury award was “undeniably large,” but argued that the amount “simply reflects a reasonable royalty for Microsoft’s unauthorized exploitation of Lucent’s invention in over 110 million units of infringing software.”

The jury award had since grown to more than $500 million with interest.

“Because the damages award with respect to infringement by Outlook is not supported by the evidence but is against the clear weight of the evidence, a new trial on damages is necessary,” the court said.

A Microsoft spokesman said the company was “pleased that the court vacated the damages award, and we look forward to taking the next step in the judicial process.”

An Alcatel-Lucent spokeswoman said her company was pleased the court affirmed that its patent was valid and that Microsoft infringed it. She said the company was disappointed that the court threw out the damages award but “we look forward to an upcoming proceeding to determine the compensation to which Alcatel-Lucent is entitled based on the court’s finding that Microsoft did use our patented invention.”

Kirkland & Ellis’s John Demarais argued the case for Alcatel-Lucent; Constantine Trela at Sidley Austin argued the case for Microsoft.

Full post as published by Law Blog - WSJ.com on September 14, 2009 (boomark / email).