A jury in Rhode Island found Microsoft guilty of patent infringement, ordering it to pay US$38 million to Uniloc, the patent holder.
Initially filed in 2003 in the U.S. District Court for the District of Rhode Island, the suit alleges that Microsoft's product activation system infringes on a patent held by Uniloc.
The jury decided that the patent is valid and that Microsoft willfully infringes it.
The software giant still thinks otherwise and intends to appeal the decision.
"We believe that we do not infringe, that the patent is invalid and that this award of damages is legally and factually unsupported. We will ask the court to overturn the verdict," the company said in a statement.
Microsoft's product activation process aims to reduce piracy by requiring people to activate their software, tying it to a particular machine in the process.
Users can then reinstall the software repeatedly on that machine, but can't share the software with other people and PCs.
Uniloc sells technology that software developers use to offer flexible licensing terms, such as trial periods.