A U.S. appeals court on Wednesday upheld a lower court decision that Microsoft Corp. was liable for infringing on an AT&T Corp. patent for converting speech into computer code in copies of Windows sold overseas.

The Federal Circuit Court of Appeals said that the world's largest software maker was liable for the unauthorized distribution of codec technology, used to compress speech signals into data, in copies of Windows overseas.

Last year, Microsoft settled most of the telephone company's outstanding claims, and both agreed to appeal the unresolved issue over the distribution of the technology overseas, which Microsoft said it was not liable for.

Terms of the March 2004 settlement were not disclosed.

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