New York - Microsoft has been ordered by a federal jury to pay $1.52 billion in damages to Alcatel-Lucent, for infringing on the company's digital music patents.

Alcatel-Lucent's patents related to technology that governs the conversion of uncompressed audio into the MP3 format.

The company filed the claims against Microsoft, as well as PC makers Gateway and Dell, in 2003; cases are still pending against the computer makers.

"We believe that we properly licensed MP3 technology from its industry recognized licenser -- Fraunhofer," Microsoft deputy general counsel Tom Burt told AP.

"The damages award seems particularly outrageous when you consider we paid Fraunhofer only $16 million to license this technology."

Damages were reportedly calculated based on sales of Windows-based PCs since 2003.

"We've made strong arguments supporting our view, and we are pleased with the court's decision," said Alcatel-Lucent spokeswoman Mary Lou Ambrus.

Microsoft also faces patent infringement claims relating to video coding technology on its Xbox video game console.

Related Links:
http://tinyurl.com/26ht8a (CNET)

http://biz.yahoo.com/ap/070222/microsoft_alcatel.html?.v=6 (AP)

http://news.yahoo.com/s/nm/20070222/tc_nm/microsoft_verdict_dc_4 (Reuters)