Microsoft and the patent damages.

Apparently Alcatel Lucent owns patents on MP3 files and players, which is why Microsoft has been hit with damages of over $1.5 billion:

A U.S. federal jury found that Microsoft Corp. (MSFT.O: Quote, Profile, Research) infringed audio patents held by Alcatel-Lucent (ALU.PA: Quote, Profile, Research) (ALU.N: Quote, Profile, Research) and should pay $1.52 billion in damages, the No. 1 software maker said on Thursday.

Microsoft said it plans to first ask the trial judge to knock down the ruling and will appeal if necessary. It said the verdict is unsupported by the law and that it had already licensed the technology in question from Germany's Fraunhofer.

Alcatel-Lucent had accused the world's biggest software maker of infringing patents related to standards used for playing MP3 digital music files.

If this judgement stands then Alcatel may well go after other people as well, like Apple: and any damages would be far more wounding to the smaller company which relies upon iPods in a way that Microsoft does not rely upon audio products.