Digital Music Dodges Bullet As MP3 Lawsuit Overturned

The entire digital music industry dodged a big bullet yesterday when a US court ruled that Microsoft does not have to pay Alcatel-Lucent $1.5B for use of mp3 technology. This overturned a previous jury verdict in a lower court.

Yesterday's the judge issued a ruling "in favor of Microsoft and against Lucent ... terminating the case," according to court documents.

If the lawsuit had been affirmed virtually every major music company would have been subject to large back payments for mp3's sold.  Royalties would have also doomed the format forcing a struggle among competing alternatives with no clear winner.

"Today's ruling by the judge reversing the jury's 1.52 billion dollar verdict against Microsoft is a victory for consumers of digital music and a triumph for common sense in the patent system," said Microsoft general counsel Brad Smith.