February 22, 2007 1:16 PM PST
Microsoft hit with $1.5 billion patent verdict
Last modified: February 22, 2007 2:48 PM PST
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In its verdict, the jury assessed damages based on each Windows PC sold since May 2003. The case could have broader implications, should Alcatel-Lucent pursue claims against other companies that use the widespread MP3 technology.
An Alcatel-Lucent representative praised the ruling.
"We made strong arguments supporting our view, and we're pleased with the court's decision," spokeswoman Mary Lou Ambrus said.
In a statement, Microsoft Deputy General Counsel Tom Burt said the software titan believes that the verdict "is completely unsupported by the law or the facts."
"We will seek relief from the trial court, and if necessary, appeal," Burt said.
The company also noted that roughly half of the damages are for overseas sales of Windows, which could be affected by a separate patent case. That case, currently before the Supreme Court, deals with whether overseas sales of software products should be subject to U.S. patent law.
Microsoft said it believes that it properly licensed MP3 technology from Fraunhofer, paying that company $16 million. Fraunhofer, which helped develop the MP3 compression technology along with Lucent's Bell Labs, has licensed its intellectual property to companies that want to use the audio format in their products. Fraunhofer has since handed the MP3-licensing duties over to Thomson.
Scores of technology companies, including Apple, Intel and Texas Instruments, license the MP3 technology, according to Thomson's MP3licensing.com. An Apple representative declined to comment on the verdict.
"Therefore, today's outcome is disappointing for us and for the hundreds of other companies who have licensed MP3 technology," Burt said. "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."
Alcatel-Lucent's Ambrus declined to say whether the company might pursue other companies that use MP3 technology in their products.
The ruling could spur Alcatel-Lucent to seek royalties from other companies, said Andrew Leibnitz, an intellectual property lawyer for Farella Braun and Martel in San Franisco.
"Given this verdict, it wouldn't surprise me if Lucent is even more aggressive in the marketplace about licensing its patents, but it has always been aggressive," Leibnitz said. Leibnitz earlier represented Dolby Labs in a patent dispute over whether one of Dolby's audio codecs infringed on Lucent patents.
While the ruling was large, Leibnitz said some of that is simply by virtue of Microsoft's size. "Anytime Microsoft gets sued, it can be a serious amount of damages at stake, especially when it relates to Windows."
The case dates back to 2003, when Lucent sued PC makers Dell and Gateway over their use of the audio technology. Microsoft stepped into the legal fray and has been embroiled in a widening legal battle with Lucent (now Alcatel-Lucent) ever since.
The jury verdict Thursday relates only to a portion of Alcatel-Lucent's patent claims. Microsoft has also countersued in the case, and there have been additional actions in other legal venues, including an International Trade Commission case filed this week.
"This case is only one part of a larger dispute between Microsoft and Alcatel-Lucent over intellectual property that began when Alcatel-Lucent took aggressive action against our customers and later against Microsoft," Burt said. "We will continue to defend our customers against unfounded claims and are pursuing a number of patent claims against Alcatel-Lucent, including the International Trade Commission case filed earlier this week."
Leibnitz said he expected a protracted fight. "I don't think this is the end of this fight by far."
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One thing the story doesn't indicate is what concept is Lucent claiming. Perhaps this just relates to something specific Microsoft does with MP3 processing, but if not, the implications could be that all people making MP3 playback software/hardware could be at risk now.
Now although it was a colaboration between Fraunhofer ATT and Thompson. The righful patent owner is Fraunhofer.
Its a bit of twisting of patent laws, that Lucent Suddenly issued a patent then had it back dated to before the Fraunhofer patent.
But heck, when you company is in trouble heck I quess it never hurts to play like this.
So now I assume all people who license MP3 from Fraunhofer will now also have to pay an additional fee to Lucent?
the license for the US and payed other company's for the non US
use of the technology.
The law states that every box or product that gets shipped out
also has to be payed for except when its a blueprint to other
manufacturers. For MS the master DVD is a blueprint but Lucent
thinks otherwise. In effect all US based company's would have to
pay a US license for US and overseas sales added to the licenses
it already pays to company's for other country's.
Its sick but i love it, a lot of company's will escape the US for this
law alone. USofA is one sick country, come to mainland Europe
and live the genuine freedom we have instead of make believe.
I have always thought that rectal medicine is good for a bully.
I'm hoping Ballmer is smart enough to see that, today's case in the USSC, and actually think that maybe the whole software patent thing isn't such a good idea after all?
If this keeps up, all those vague and empty threats Ballmer has been mouthing in Linux' direction won't mean much.
(Yes, MSFT has a metric ton of cash on hand, but a billion and a half equals (roughly) 6% of their total cash on hand, 12% of their total operating cash flow, and 15% of their current year-on-year Net Income (Q1/06 to Q1/07) at this time. Now imagine where that money is going to actually come from... obviously not Petty Cash).
/P
mp3 is a mathematical algorithm. Nothing more.
Mathematical algorithms can not be patented. All software are nothing more then a collection of algorithms. Software patents should not be allowed.
Copyright is all that is needed to protect specific implementations of a collection of algorithms. Patents stifle innovation and competition.
Knowledge belongs to all, because all knowledge builds on other previous knowledge. Restricting knowledge in the form of the very oxymoron-ic title of IP is the very opposite of what got mankind as far as we have gone.
Hiding it from others, just to be greedy will slow down the march of progress, for the worse. This sort of thing along with the unethical actions of giants like MS are the reason computing has not advanced much further.
if everybody can be sued for using mp3s... we have wma and ogg left. It just takes an anti-DRM FUD campaign for ogg to be left standing alone.
top dog. They are dominant in the world of computers. But will
Microsoft survive? Sadly, they will. They've got a war chest of
funds for atleast 20 of these lawsuits. (put together even)
But does Microsoft care about losing 1.5 billion? No. I believe it
actually works out in their favour. I really don't believe they care
much for the MP3 format. They'd just as soon toss it and replace
it with WMA, if they had it their way.
But Apple on the other hand can very well be crippled by this
type of lawsuit. Dating back five years to the first release of
Itunes. Not to mention every iPod sold since its inception. Not to
mention Quicktime's use of MP3s in Mac OS X and OS 9.
Hopefully this lawsuit won't snowball past Microsoft.
wait there bigger money suing all these companys then suing one small company for given the paid license to other for the use of MP3
- Why is Microsoft mad?
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by dargon19888
February 23, 2007 6:37 AM PST
- "The company also noted that roughly half of the damages are for overseas sales of Windows, which could be affected by a separate patent case. That case, currently before the Supreme Court, deals with whether overseas sales of software products should be subject to U.S. patent law."
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See all 74 Comments >>First, regardless of what you think about the current patent system, you can't have your cake and eat it too. Microsoft is just as guilty as any of the other large companies that have abused software patents so they don't have any room to squirm.
But what Microsoft doesn't like is the fact that they are on the hook for international sales. That is what they are going to for an appeal.
From an outsider's perspective, the judge was right to include the overseas sales as part of the damages. When the laws were drafted, the world was less of a global marketplace.