Bloomberg News

Alcatel-Lucent Told Microsoft Damages Award May Be Reduced

October 13, 2011

(Updates with share price in final paragraph.)

Oct. 13 (Bloomberg) -- Alcatel-Lucent’s patent-infringement jury award against Microsoft Corp. may be lowered to $26.3 million from $70 million, a federal judge said.

U.S. District Judge Marilyn Huff in San Diego said at a hearing yesterday that she will review more legal arguments before issuing a ruling. Huff said she agreed with the world’s largest software maker that the jury’s July 29 award wasn’t supported by evidence presented during a 10-day trial.

The judge said she disagreed with how an expert witness for Alcatel-Lucent calculated damages and told lawyers $26.3 million is “a fair damages figure that is not excessive based on the totality of the evidence.” She asked attorneys on both sides to file additional legal arguments on her finding by the end of the month before she makes her decision final.

The infringed patent relates to technology used in Microsoft’s Outlook program and two other applications. Microsoft asked the judge to reduce the award to no more than $5 million.

Microsoft attorney Roger Denning told the judge that Alcatel-Lucent’s formula for computing damages didn’t comply with guidelines set by Huff and appellate court rulings.

“Those went ignored,” he said. “Lucent put its head down and bullied through with its $70 million figure ignoring the guidance that was given.”

Alcatel-Lucent’s lawyers argued there was more than sufficient evidence to support the jury’s verdict and that the verdict should be respected.

‘High’ Standard

“If the court is going to take the judgment out of the jury’s hands the standard is extraordinarily high,” said company attorney Luke Dauchot.

Lawyers for Alcatel-Lucent also asked Huff to award $38.3 million in prejudgment interest on top of the jury’s $70 million award. Alcatel-Lucent, France’s largest maker of telecommunications equipment, also has been awarded $450,479 in trial costs.

The technology at issue, called the “Day patent,” was described in court during the trial as involving a touch-screen form entry. Microsoft argued the patent relates to a simple “date-picker” function and has nothing to do with e-mail, the most popular function on Outlook. Paris-based Alcatel-Lucent described the technology as a tool that “plays a central role in the entire operation” of Outlook.

Infringement

A different jury in San Diego in 2008 found that Redmond, Washington-based Microsoft had infringed the patent and awarded $358 million in damages. An appeals court, upholding the infringement verdict, overturned the damages award, finding the calculation lacked sufficient evidentiary support. The case was sent back for retrial on damages only.

The case is Lucent Technologies Inc. v. Gateway Inc., 07- cv-02000 U.S. District Court, Southern District of California (San Diego).

Alcatel-Lucent today rose as much as 11 percent to 2.31 euros in Paris trading after the Financial Times reported, without saying how it got the information, that the company agreed to sell its corporate call-center business. Alcatel- Lucent spokesman Simon Poulter declined to comment.

--Editors: Peter Blumberg, Michael Hytha

To contact the reporter on this story: Bill Callahan in San Diego at callahan@san.rr.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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