MS ordered to pay $1.5 billion over MP3 patent

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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    • albundy
    • 14 years ago

    they better use that money to make better adsl2+/wirelessN routers!

    • DragonFli
    • 14 years ago

    Wait Wait Wait…
    MP3 is 18 years old?

    • tempeteduson
    • 14 years ago

    Could it be that Alcatel-Lucent has been waiting all this time so they can sue the pants off all the companies (especially lucrative MS) using MP3? Say it ain’t so!

    Then again, FLAC FTW!

      • eitje
      • 14 years ago

      EXACTLY. i knew we kept you around for a reason.

        • tempeteduson
        • 14 years ago

        Yep, that’s the audio guy in me talking. Who cares about lawsuits when you can listen to pure, unmangled music. 😉

    • rythex
    • 14 years ago

    I’m pretty sure this will be appealed in favour of MS. From what I’ve read MS already licensed the tech from that German firm a long time ago..

    I think whoever awarded Lucent-Alcatel 1.5 Billion needs a kick in the nuts.

    • Hattig
    • 14 years ago

    It’s a rather strange result. The amount of money is *vast* when licensing the technology is already shown to cost $16m for a company of Microsoft’s size – even 3x that amount is only $50m, one thirtieth of the final sum.

    They must have used RIAA mathematics.

    It seems to be an issue with the system that has two possible licensers, and one of them has decided that it has a patent in MP3 that isn’t covered by the joint MP3 licensing mechanism. This patent was applied for in 1998, a year before design was started on MP3, yet the joint licensing agreement was done in 1991 (IIRC) that should have covered all prior patents – Microsoft are claiming that the patent was pre-dated.

    Regardless this is bad news for everyone involved. I guess the patent in question is close to expiry, but maybe it will drive people and companies to incorporate license-free formats like OGG, and utilise that for media formats instead of MP3. AAC is another royalty-free codec (AACplus isn’t however).

    Apple must be worried, with nearly 100m iPods out there – the per-device licensing fee would be higher than the per-computer fees that Microsoft was hit for.

      • Hizpanick
      • 14 years ago

      I don’t believe it’s a license to play MP3s, but rather encode them? They might have to pay because of iTunes, and Apple doesn’t release music in MP3 right? I don’t know because I don’t buy anything from them. But they could sue anyone who sells MP3s or anyone who sells software that allows you to encode MP3s.

      LAME encoder FTW!

        • Thresher
        • 14 years ago

        If you recall, MP7 did not code into MP3 without the use of a third party codec. Later on, MS licensed the codec from Frauenhoffer and it was included in later versions of MP7 and everything since.

        I’m just wondering how Lucent and Alcatel got involved.

          • Inkedsphynx
          • 14 years ago

          Read the first paragraph right above you, it explains how.

    • liar
    • 14 years ago

    Maybe this will spur the use of oggs.

    • Ricardo Dawkins
    • 14 years ago

    wooooooooohhh…pay MS and everybody else pay, too.

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