“Microsoft was ordered by a federal jury yesterday to pay $1.52 billion in a patent dispute over the MP3 format, the technology at the heart of the digital music boom. If upheld on appeal, it would be the largest patent judgment on record,” Saul Hansell reports for The New York Times.
“The ruling, in Federal District Court in San Diego, was a victory for Alcatel-Lucent, the big networking equipment company. Its forebears include Bell Laboratories, which was involved in the development of MP3 almost two decades ago,” Hansell reports.
Hansell reports, “At issue is the way the Windows Media Player software from Microsoft plays audio files using MP3, the most common method of distributing music on the Internet. 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.”
“Microsoft and others have licensed MP3 — not from Alcatel-Lucent, but from a consortium led by the Fraunhofer Institute, a large German research organization that was involved, along with the French electronics company Thomson and Bell Labs, in the format’s development,” Hansell reports. “The current case turns on two patents that Alcatel claims were developed by Bell Labs before it joined with Fraunhofer to develop MP3.”
“Thomas W. Burt, the deputy general counsel of Microsoft, said… the appeals process might take another year or two. He said he did not expect that the courts would force Microsoft to remove the MP3 functions from Windows,” Hansell reports. “Joan Campion, a spokeswoman for Alcatel-Lucent, …declined to comment on whether that company would pursue similar claims against makers of MP3 players, like Apple. An Apple spokesman declined to comment.”
Full article here.
MacDailyNews Take: This sounds worse than it will end up being for Microsoft. The same goes for other companies that — as pointed out by TheStreet.com’s Marek Fuchs — were brought into this issue by “one of Microsoft counsels, who is obviously trying to rally other companies to his cause by scaring the bejesus out of them. However, that does not have to define the story, especially because it’s about an issue that can be turned on appeal (many patents cases are) or could end up with some relatively modest royalty payments all around.”
Full article here.
Related articles:
Alcatel-Lucent’s landmark MP3 victory over Microsoft paves way to demand royalties from Apple? – February 23, 2007
Microsoft ordered to pay Alcatel-Lucent $1.52 billion for Windows Media Player patent infringement – February 22, 2007
Actually, there was at least one member with a technical background in the jury; he said the issues were complex and that the case was a difficult one. The jury system is good; the defense failed to prevail, and we don’t know why.
Microsoft counsel said the Fraunhofer Institute patents were related to MP3s, but the Alcatel-Lucent patents [developed by Bell Labs working with Fraunhofer at the time] were related to AAC. They are not the same set of patents, but Microsoft’s media player software uses both sets.
Jerry:
Apple sells and distributes music in the AAC format; AAC and MP3 are not the same.
For Apple, this isn’t about the music, it’s about the player. Apple iPods, and Apple computers are both able to play MP3 files.
There is another factor here.
Microsoft had to pay $1.52 billion.
The issue was the use of MP3 patents in media player, which is included with EVERY copy of windows.
So even if Alcatel go after Apple (and others), as Microsoft say all the time, 95% of the OS share is Windows.
There are still more Windows PCs than iPods and Macs.
So lets say Microsoft have 95% = 1.52 billion
100% = 1.6 billion
Lets say adding all the iPods and all the Macs together gives the other 5%, means Apple could be up for $0.08 billion (or $80 million!!!!)
I know that is dodgy maths, but there is no way Apple could be up for the same amount as Microsoft if it is a payment for royalties on use!
My 2 cents,
Luke
Meh, I like AAC much better anywise…AAC can play on MP3s AND CD Audio.
MP3s can’t.
Much as I am not a MS fan I wonder if this sets a “Me Too” precedence. MS paid a licensing fee yet another player demands the same. What’s to stop other companies to demand same payment for standards like Gif, Jpegs etc eventhough user-companies have already paid initial licensing fees?