“Alcatel-Lucent’s landmark victory against Microsoft Corp. over the right to use the popular MP3 format for digital music potentially paves the way for the gear-maker to seek compensation from a flurry of other companies, analysts said on Friday,” Aude Lagorce reports for MarketWatch.
Lagorce reports, “Microsoft on Thursday was ordered to pay more than $1.5 billion to Alcatel-Lucent after a federal court in California ruled that the software giant infringed two Alcatel-Lucent patents in using the MP3 format for playing digital music on its Windows Media Player device.”
“Although Microsoft has vowed to fight the penalty payment and is likely to appeal the decision, thus delaying the cash payout, the ruling could have significant implications for the music and technology industries,” Lagorce reports. “If the ruling stands, Apple and hundreds of other companies that make products that play MP3 files, including portable players, computers and software, could also face demands to pay royalties to Alcatel.”
Lagorce reports, “In its defense, Microsoft argued that it was authorized to use the MP3 audio technology based on an agreement with the Germany-based Fraunhofer Institute. Microsoft said that it paid the Institute $16 million to legally use the disputed MP3 technology. The Institute was involved, along with the French electronics company Thomson and Bell Labs, in the format’s development… Other companies licensing the technology from Fraunhofer include Apple, Inc., Cisco Systems and Hewlett-Packard Co.”
Lagorce reports, “Analysts warned that these firms could now be at risk of a similar fate. ‘If Lucent does possess an essential MP3 patent, something we are not qualified to judge, the company could potentially go after Apple, whose iPod can play MP3 files,’ Merrill Lynch analysts told clients.”
Full article here.
It’ll take some time for all of this to play out. How Microsoft does with their appeal, what exactly was licensed from the Fraunhofer Institute and under what authority, and many other questions have yet to be answered.
Are MP3 patents really in upheaval after Alcatel-Lucent’s verdict over Microsoft? – February 23, 2007
Microsoft ordered to pay Alcatel-Lucent $1.52 billion for Windows Media Player patent infringement – February 22, 2007