MS ordered to pay $1.5 billion over MP3 patent


— 10:47 AM on February 23, 2007

A San Diego, California jury has ordered Microsoft to cough up $1.5 billion in damages to telecommunications giant Alcatel-Lucent as part of a dispute over patents to MP3 technology. As CNet reports, the $1.5 billion figure represents compensation based on each Windows PC sold since 2003. Microsoft says it properly licensed the MP3 format from Fraunhofer with a $16 million payment years ago, but Alcatel-Lucent is also laying claim to patents on the technology. According to a previous article by the Seattle PI, Fraunhofer Gesellschaft and AT&T's Bell Laboratories co-developed the MP3 format in 1989. AT&T spun off Bell Laboratories into a new company named Lucent Technologies in 1996, and Lucent merged with Alcatel last year.

Although Microsoft intends to seek relief from the court and perhaps even appeal the decision, Alcatel-Lucent's victory doesn't bode well for other companies that use MP3 technology. Microsoft lawyer Tim Burt is quoted by BBC News as saying, "We are concerned that this decision opens the door for Alcatel-Lucent to pursue action against hundreds of other companies who purchased the rights to use MP3 technology from Fraunhofer, the industry-recognized rightful licensor." Such companies would include Apple, HP, Toshiba, Intel, RealNetworks, and Yahoo.

 
   
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