An appeals court today overturned a $358 million verdict against Microsoft in a case that was closely watched as a gauge of the way damages will be determined in future patent cases.

In a 64-page opinion (PDF) the U.S. District Court of Appeals for the Federal Circuit upheld the jury's finding that Microsoft Outlook's "date-picker" feature infringed on an Alcatel-Lucent patent. However, it determined that the jury overestimated the significance of the feature in Outlook in the process of calculating the size of the award.

"In short, Outlook is an enormously complex software program comprising hundreds, if not thousands or even more, features," the court wrote. "We find it inconceivable to conclude, based on the present record, that the use of one small feature, the date-picker, constitutes a substantial portion of the value of Outlook."

Bloomberg News explores the broader implications of the ruling in this story, noting that it could help Microsoft argue against the size of damages in other patent-related cases, including its ongoing dispute with i4i Inc. over XML-related technology in Microsoft Word. But the news service also quotes an Alcatel-Lucent lawyer saying the opinion doesn't give Microsoft the sweeping reform it was seeking.

This is the only lingering patent-related legal dispute between Microsoft and Alcatel-Lucent following a settlement of nearly all their outstanding litigation last year.

Microsoft spokesman Kevin Kutz said in a statement, "We are pleased that the Court vacated the damages award, and we look forward to taking the next step in the judicial process."