Alcatel-Lucent has lost another round in the battle against Microsoft over patents for the MP3 digital music format.
The US Court of Appeals for the Federal Circuit in Washington, DC, upheld a ruling denying Alcatel-Lucent a $1.5 billion (£812m) award from Microsoft. The amount would have been one of the largest-ever awards for patent infringement.
In February 2007, a jury ordered Microsoft to pay Alcatel-Lucent the money for infringing two patents covering MP3 encoding and decoding technology.
But the decision was reversed in August 2007 in U.S. District Court for the Southern District of California in San Diego after a judge found Microsoft was guilty of infringing one patent.
The judge also ruled the court had no jurisdiction over the other patent since its co-owner, Fraunhofer-Gesellschaft -- a German research organisation -- did not join the suit with Alcatel-Lucent. That decision was upheld Thursday.
Microsoft maintained it properly licensed the technology, which is used to reduce the size of music files but preserve audio integrity, from Fraunhofer-Gesellschaft for $16 million.
Alcatel-Lucent spokeswoman Mary Ward said Friday the company was "disappointed" but had not decided whether to appeal.