Microsoft pays out $1.52 billion for MP3 patents

If upheld on appeal, the New York Times said it would be the largest patent judgment on record.

Alcatel-Lucent, a computer networking equipment company, won the case. It inherited the patents from Bell Laboratories, which was involved in the early development of audio compression technology.

The lawsuit centered on Microsoft's Windows Media Player, a software application that plays MP3 encoded audio files. Microsoft and other companies have licensed MP3, but not from Alcatel-Lucent.

Instead, they paid a consortium led by the Fraunhofer Institute, a German research organization that was involved, along with Thomson and Bell Labs, in the format's development. The case focused on two patents developed by Bell Labs before it joined Fraunhofer to develop MP3.

If the ruling stands, hundreds of other companies that make MP3 products — including portable players, computers and software — could also face royalty demands from Alcatel.