Alcatel-Lucent’s landmark MP3 victory over Microsoft paves way to demand royalties from Apple?

“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.

Related article:
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

38 Comments

  1. What kills me is the MP3 format is about 12 years old I believe.
    If this was indeed Alcatel’s property, what took them so long to sue?

    It’s not like MP3s were some hidden obscure technology that no-one ever heard of.

  2. “A lot of posters in the other article on this look mighty stupid right about now.”

    Indeed, and MDN as well. People were as usual blinded by their hatred of Microsoft to see the real implications.

    Any fool could see that this case would mean almost everyone who licensed MP3 from Fraunhoffer would be next in line for a lawsuit. Makes sense that Alcatel would go after the biggest fish first. The 2nd biggest fish has to be Apple.

  3. Reason #315 Why Software Patents Are a Joke.

    Seriously, this is getting crazy. Not that I like M$ or anything, but this is just getting stupid. The patent laws need a serious overhaul.

  4. So there’s a point that should be made. iTunes sells AAC formatted files, not MP3’s. Can they be sued or not? There are a lot of unanswered questions as to what patent Actel supposedly has and how broad it really is. Does it refer to only windows media files PC only or what?
    To many questions and not enough answers here.

  5. The next iPod update will just remove .MP3 playing and you’ll have to pay Lucent some fee to re-instate it.

    When those “fat cats” in Washington find their sons and daughters complaining about it, then, they’ll jump so hard on “Alcatel-Lucent” that they’ll wonder why they weren’t contributing more money to political parties instead of chasing down this lawsuit. ” width=”19″ height=”19″ alt=”smile” style=”border:0;” />

    To each his “own”, all my music is in AAC.

  6. MS, Apple, Cisco et al all have decent lawyers who obviously thought that they had licenced this technology correctly.

    That leads me to believe that the Fraunhofer Institute misrepresented THEIR authority over this patent. If so, the Fraunhofer Institute is going to have their own legal problems as MS and all the others sue them for compensation.

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