Alcatel-Lucent lost another round against Microsoft on Thursday in a continuing court battle over patents for the MP3 digital music format.

The U.S. Court of Appeals for the Federal Circuit in Washington, D.C., upheld a ruling denying Alcatel-Lucent a $1.5 billion 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 on two patents covering MP3 encoding and decoding technology. But the patent decision was reversed in August 2007 by a U.S. District Court judge in San Diego.

The judge also ruled the court had no jurisdiction over the other patent since its co-owner, Fraunhofer-Gesellschaft -- a German research organization -- 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.

The IDG News Service is a Network World affiliate.