San Diego – A federal judge in a San Diego district court recently held that a jury award in a patent infringement action against Microsoft totaling $70 million was excessive and not supported by substantial evidence. District court judge Marilyn Huff has ordered either that the damage award be reduced or that Microsoft opt to re-try the case.
The action was filed by French telecommunications leader Alcatel-Lucent alleging that Microsoft’s Outlook software, sold as part of the Microsoft Office suite, infringed on a patent covering a touch screen method of data entry. Alcatel argued that Outlook’s calendaring software used its method patent to allow users to enter data into their calendars.
The jury issued a verdict for Alcatel, finding that Microsoft had committed patent infringement and ordering Microsoft to pay a royalty of $70 million, apparently based on the number of infringing Microsoft Office licenses sold. The $70 million figure ordered by the jury was based on the 109 million licenses of Office issued by Microsoft during the period of infringement. However, that figure amounts to a per unit cost of $67 for the Microsoft Outlook product alone.
Upon Microsoft’s motion for a new trial, Judge Huff ruled that the jury’s verdict was excessive, as no reasonable jury could conclude that Microsoft Outlook by itself was worth $67 of the price of the entire Microsoft Office suite which also includes Word, Excel, and PowerPoint. A valuation of $67 for Outlook would leave Excel, Word, and PowerPoint with a combined value of only $31. Instead, the court concluded that the highest value supported by substantial evidence for Microsoft Outlook was $24.55. This would cut the highest possible award to $26.3 million.
Finding that the award was excessive, the court will allow Microsoft to elect to re-try the case. Microsoft may also pay the reduced damages award of $26.3 million to avoid re-litigating the matter.