Microsoft Co-Founder Bill Gates

A US federal jury in San Diego, California, ruled Thursday that software giant Microsoft should pay $1.52 billion for infringing two patents held by Franco-American telco equipment manufacturer Alcatel-Lucent, relating to MP3 music player audio code technology.

Microsoft was charged with violating Alcatel-Lucent's patents with Windows Media Player, including the version in the new Vista operating system. Microsoft said it would challenge the verdict.

"We have made strong arguments supporting our view, and we are pleased with the court's decision," said Alcatel-Lucent spokeswoman Joan Campion in an email statement.

The decision enables Alcatel-Lucent, to seek an order barring Microsoft from using the patented technology. Alactel-Lucent's victory also facilitate other legal actions against hundreds of companies that rely on MP3, the standard for playing music and sound files on a computer, mobile phone or digital-music player.

Microsoft said it licenses the technology from a German research organisation, Fraunhofer Institute for Integrated Circuits IIS. Fraunhofer was responsible for the development of MP3 audio-compression technology with Bell Labs, once part of Lucent Technologies Inc., which French company Alcatel acquired last year.

``The damages award seems particularly outrageous when you consider we paid Fraunhofer only $16 million to license this technology,'' Microsoft Deputy General Counsel Tom Burt said in an e-mailed statement. ``Today's outcome is therefore disappointing for us and for the hundreds of other companies who have licensed MP3 technology.''

Microsoft, said in a filing last week with the US District Court of Delaware that Alcatel-Lucent violated four patents dealing with computer and phone systems that monitor and run calls, messages and video communications. Microsoft claimed Alcatel was already selling products that used the technology.

In April, Lucent sued Microsoft for illegally using Lucent's video-decoding technology in Microsoft's Xbox 360 videogame system. The two had a prior agreement for the original Xbox, but Lucent claimed that it didn't extend beyond the older system. A month later, Microsoft filed a countersuit seeking to dismiss the claims.