(UPDATES with comment from Microsoft spokesman in the fourth paragraph, new stock quotes)

By Lauren Pollock

Of DOW JONES NEWSWIRES

A federal appeals court reinstated one of two patent cases tossed out last year in the ongoing patent dispute on user-interface technology that pits Alcatel-Lucent (ALU) against Microsoft Corp. (MSFT) and Dell Inc. (DELL).

The appeals court said the San Diego district court erred in its determination of a "terminal device" and remanded the case, which was dismissed, back to the court for further proceedings. The technology covered by the patent in that matter is a communications protocol that aids information exchange between a host processor computer and a terminal device, like a portable computer or smart phone.

Dismissal of the second patent case, which concerns methods used to compress speech by removing redundant pitch information, was backed by the appeals court.

"Today's ruling is a victory for Microsoft," company spokesman David Bowermaster said.

"We are gratified that the Federal Circuit affirmed the lower court's ruling that speech coding technology in Microsoft's products did not infringe the '954 patent. We look forward to demonstrating at the district court level that Microsoft did not infringe the '131 patent and that the patent is invalid, but Microsoft is a minor player in that dispute."

The patents asserted against Microsoft and Dell are among a number being litigated by the companies in an ongoing case that originated in 2003. In early April, a jury ordered Microsoft to pay $367.4 million in damages to Alcatel- Lucent, which the company said it would appeal. The most high-profile decision stemming from the imbroglio was handed down last year, when Microsoft was ordered to pay $1.5 billion for infringing Alcatel-Lucent patents related to MP3 technology. That decision was later reversed.

Gateway and Dell were initially sued by Alcatel-Lucent over a series of patents in 2003, and Microsoft subsequently stepped in on their behalf. Alcatel- Lucent had claimed computers made by Gateway and Dell, using Microsoft programs including Outlook and Quicken, infringed on its patents.

Microsoft shares traded recently up 9 cents at $29.30, while Alcatel-Lucent shares traded up 6 cents at $7.09 and Dell added 20 cents at $19.10.

-By Lauren Pollock, Dow Jones Newswires; 201-938-5400; lauren.pollock@ dowjones.com

  (END) Dow Jones Newswires
  05-08-08 1444ET
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