Software giant Microsoft will pay Paris-based telecommunications company Alcatel-Lucent $1.52 billion (£777 million) for infringing MP3 copyrights.
A US court ruled that Microsoft, co-founded by Bill Gates, must pay the multi-million pound damages for infringing the copyright patents regarding the technology used to convert audio into MP3 files in Microsoft windows.
However it is thought the legal battle could continue between the two multinationals.
Tom Burt, corporate vice president and deputy general counsel of Microsoft, said: "We think this verdict is completely unsupported by the law or the facts. We will seek relief from the trial court, and if necessary appeal."
Washington-based Microsoft argues that it did license the MP3 technology for $16 million (£8.17 million) from Fraunhofer, described by Microsoft as the "industry recognized licensor".
Microsoft says it is now "concerned" that the court ruling will "open the door for Alcatel-Lucent to pursue action against hundreds of other companies who purchased the rights to use MP3 technology from Fraunhofer".
Mr Burt added: "This case is only one part of a larger dispute between Microsoft and Alcatel-Lucent over intellectual property that began when Alcatel-Lucent took aggressive action against our customers and later against Microsoft."
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