A federal jury in California awarded Alcatel-Lucent $1.52 billion dollars in damages Thursday for violations of two of Alcatel-Lucent's digital music patents committed by Microsoft. The patents govern technology that converts audio input into MPEG-1 Audio Layer 3, more commonly known as MP3, which Microsoft has incorporated into several variants of its Windows Media Player. Microsoft has said that it properly licenses the MP3 technology from Fraunhofer-Gesellschaft, a German company which Microsoft describes as the "industry recognized licensor."

Microsoft plans to appeal the jury's decision, which could have far-reaching implications in the digital media industry, as large numbers of companies in the industry, including Apple, Nokia, and Sony, license its MP3 technology from Fraunhofer.

Related claims against Gateway and Dell are still pending. Lucent Technologies filed 15 patent claims in 2003 alleging that the PC makers violated patents governing technology developed by its research and development organization, Bell Laboratories. Microsoft joined in the litigation as an intervenor and counter-claimant, due to its wide circulation of Windows Media Player through its Windows operating system. Lucent Technologies was acquired by Alcatel in December of 2006.