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Alcatel-Lucent appears to have lost a battle over valuable patents for television and DVD technology. Early Wednesday morning, after two days of trial in Delaware Chancery Court, Alcatel-Lucent agreed to a settlement that may require the patents to be turned over to an entity that administers a licensing pool for the technology. As we reported earlier this week, an entity called MPEG LA had sued Alcatel-Lucent, claiming that before their 2006 merger, Alcatel and Lucent schemed to divert five valuable patents on compressing transmission signals to a trust in order to avoid sharing them with other companies (including Dell and Microsoft) in a licensing pool that includes Alcatel. (Our earlier story stated that the patents could be worth as much as $2 billion in royalties, but Alcatel has asserted in a press release that this figure, originally cited in a Bloomberg article, is “deceptive and outlandish.”) The Alcatel-Lucent trust, called the Multimedia Patent Trust, was also named as a defendant in MPEG LA’s suit. MPEG LA is represented by Sullivan & Cromwell. Kirkland & Ellis represents the Multimedia Patent Trust, as does Wilmington’s Bouchard Margules & Friedlander. Alcatel-Lucent is represented by Morris Nichols Arsht & Tunnell. Wednesday’s settlement, described in this court filing, requires the trust to submit the patents at issue to MPEG LA, which will evaluate them under its normal procedures to determine if they are “essential patents” for MPEG-2 technology. If so, they will be part of the licensing pool. The settlement also includes unspecified “other consideration” from Alcatel-Lucent. Alcatel-Lucent denied wrongdoing in the settlement. In the proceedings before Delaware Vice-Chancellor Travis Laster, the company argued that Lucent had every right to create the patent trust and was not conspiring with Alcatel to shield the patents from the licensing pool. The company stated that it agreed to settle the case “to avoid the expense and distraction of further litigation.” The trust’s lead trial lawyer, Edward Donovan of Kirkland, declined to comment. MPEG LA hailed the deal. “We’re very pleased with the terms of the settlement,” lead trial lawyer Garrard Beeney of S&C told us. Editors note: An earlier version of this story stated that Kirkland & Ellis represents Alcatel-Lucent. The firm’s client is the Multimedia Patent Trust, which is associated with Alcatel-Lucent and was also a defendant in the case. This article first appeared on The Am Law Daily blog on AmericanLawyer.com.

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