Jury Tells Microsoft To Pay $1.5 Billion To Alcatel-Lucent Over MP3 Patents

from the mp3-tech-to-get-more-expensive dept

Jury trials over patent disputes quite often turn out in favor of the patent holder, so it's no surprise to see that a jury in San Diego hasn't just sided with Alcatel-Lucent in its patent dispute with Microsoft, but also has ordered that Microsoft pay $1.5 billion for supposedly violating patents having to do with MP3 technology. The details of the case are a little bit complex. Back in the late 80s, AT&T's Bell Labs teamed up with the Fraunhofer Institute to develop the MP3 standard. Fraunhofer ended up with a bunch of patents, and most companies that make use of MP3 technology pay Fraunhofer for the privilege. However, AT&T's Bell Labs claimed some patents related to the standard as well. Microsoft, however, claims the company had a patent reissued and backdated to make it look like it came before the Fraunhofer patents and that the two patents in question are invalid. Of course, since then, Bell Labs was spun off to become Lucent, which later merged with Alcatel. Somewhere along the line, Lucent's management realized how much money people were making off these patent things, and decided to make a big splash demanding that everyone using MP3 technology shouldn't just be paying Fraunhofer, but Lucent as well. Lucent went after Microsoft, but if it wins this suit (and the subsequent appeals), you can bet that just about everyone else who uses MP3 technology will be subject to similar claims as well -- perhaps making MP3 technology a lot more expensive. About the only good thing in the ruling is that the award of $1.5 billion is that it's less than the $4.6 billion Alcatel-Lucent has mentioned in the past. Microsoft will obviously appeal, and it will take some time to get this all sorted out -- but it seems like MP3 technology may be getting a bit more expensive thanks to patents. In the meantime, if all of this sounds familiar, perhaps that's because it mirrors the situation with JPEG patents, where companies suddenly showed up well after the standard was popular to claim patent rights.
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  1. identicon
    Mattb, 23 Feb 2007 @ 8:13am

    Who they should sue

    Why didn't they sue Fraunhofer instead of everyone else? Fraunhofer is the one that claimed to own the patents, and companies paid Fraunhofer on the good faith that they owned what they were selling. This could be applied to anything you buy. Someone somewhere could claim they own the patent to something and require you to pay them extra instead of the company that sold it to you.

    Obviously they sued MS and the others because that is where the big bucks are. The patents could be perfectly legit (Bell Labs has develop a ton of critical stuff of the years) and once they found out the patents were being infringed on, they should go after the company that was using the patents to sell its technology (Fraunhofer).

    The only part that might cause some thinking is this scenario- you develop something wonderful. Someone steals it and starts to sell it for pennies on the dollar. Now who do you go after? The person who stole it only made a little. The person who bought should have paid a lot more (in your eyes).

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