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Originally published October 3, 2007 at 12:00 AM | Page modified October 3, 2007 at 2:01 AM

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Judge lets Alcatel lawsuit proceed

Microsoft, Dell and Gateway have lost a bid to have a court throw out a $2 billion patent-infringement lawsuit by Alcatel-Lucent over a...

Bloomberg News

Microsoft, Dell and Gateway have lost a bid to have a court throw out a $2 billion patent-infringement lawsuit by Alcatel-Lucent over a standard technology for playing DVDs, Internet videos and computer games.

Judge Rudi Brewster in San Diego rejected the companies' challenge to the transfer of two patents into a trust before last year's merger of Alcatel and Lucent Technologies. Microsoft, Dell and Gateway had argued the move was a sham to keep Lucent's patents separate from an Alcatel licensing deal.

The ruling means the dispute will go to trial in February.

The Multimedia Patent Trust, set up by Lucent, seeks as much as $1.3 billion in damages from Microsoft, $491 million from Dell and $126 million from Gateway. A countersuit by Microsoft, alleging infringement of 10 patents, is set for trial in April.

Microsoft, Dell and Gateway argued that the trust was set up to avoid Alcatel's obligation to share technology with more than 1,000 companies that make up MPEG-LA, the group of companies that control the MPEG-2 computer-video standard.

"There is nothing nefarious about this," Multimedia Patent Trust attorney John Desmarais, who also represents Alcatel-Lucent, told Brewster at last week's hearing. "It is not the sham being depicted by the defendants."

Brewster's 27-page order left open certain issues surrounding the trust for trial, giving Microsoft, Dell and Gateway the opportunity to argue that the transaction was illegitimate and hidden from regulators.

"Today's ruling simply means that the court has decided that the jury should have the opportunity to hear these issues," said Microsoft spokesman Jack Evans, in an e-mailed statement.

"We look forward to explaining how Lucent and Alcatel knowingly circumvented inclusion of the asserted video patents in the industry recognized patent pool."

The ruling is the latest development in a five-year patent battle the four companies are waging.

Copyright © 2007 The Seattle Times Company

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