Alcatel-Lucent lost another round against Microsoft this week, after a federal appeals court ruled in favor of the latter in a long-running court battle over patents for the MP3 digital music format. The software maker was initially hit with a $1.5 billion verdict in the case, but the decision was reversed in August 2007 by US District Judge Rudi Brewster. The amount would have been one of the largest-ever awards for patent infringement.

Alcatel-Lucent argued that the technology used to encode and decode digital audio files in Microsoft’s Windows Media Player infringed on its patents. The patent in question, however, is co-owned by Fraunhofer Gesellschaft and Microsoft had already licensed the technology from them for $16 million. The two companies have been sparring in courts for years. While this was their most widely watched case, they still have other ongoing patent disputes in courts in Texas and California.