USPTO ruling favors Microsoft in Alcatel-Lucent appeal

Office rejects claims surrounding final patent at issue, paving way to reverse US$358 million penalty

The U.S. patent office has rejected two claims regarding the last disputed patent in an ongoing legal battle between Microsoft and Alcatel-Lucent, appearing to pave the way for the software vendor to win a pending appeals case that would reverse a US$358 million penalty.

In an interim decision last month, the U.S. Patent and Trade Office (USPTO) rejected two claims surrounding the so-called "Day" patent after Microsoft and Dell -- the latter involved in an earlier suit about the patent -- asked for a re-examination of the patent in May 2007.

Alcatel-Lucent and Microsoft had already settled most of the claims of a broad patent dispute that started in 2002 and at one point spanned six different suits. Originally, Alcatel-Lucent charged Microsoft, Dell and Gateway with patent infringement, and then Microsoft counter-sued Alcatel-Lucent the next year to invalidate the patents.

The only claims not resolved are ones surrounding the validity of the "Day" patent that concern how technology is implemented in Microsoft's Outlook application.

The USPTO's decision is significant because in April 2008, a federal jury in San Diego concluded that the same two claims asserted against Microsoft were valid. As a result, the jury ruled that Microsoft infringed the Day patent and awarded $358 million to Alcatel-Lucent.

That same jury also awarded Alcatel $10 million for infringement of another patent, which is no longer at issue.

Microsoft appealed the decision on the Day patent to the Federal Circuit Court of Appeals, a case that is still pending.

In an e-mail, Microsoft spokesman David Bowermaster said the USPTO's decision "will bolster our arguments that the Day patent is invalid and the jury's verdict should be reversed."

However, Alcatel-Lucent continues to attest that the Day patent is a "valid and valuable patent," said Mary Ward, a spokeswoman for Alcatel-Lucent.

"Despite Microsoft's suggestion, this interim decision does not conclude the re-examination process or result in an ultimate determination of invalidity of the patent," she said.

The next arguments in the appeals case have been scheduled for sometime in the next few months.

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