Microsoft ordered to pay $1.52 billion for MP3 technology
A federal court decision ordering Microsoft to pay $1.52 billion to Alcatel-Lucent for MP3 patent infringement could have a widespread implication on digital music businesses, according to US legal experts.
Alcatel-Lucent successfully claimed in court the status of co-development of the audio codec with German research organization – Fraunhofer Institute, and the resulting patents gleaned from its half of the process, gave it the right to license the technology to companies that wanted MP3 technology incorporated in their hardware and software.
The patents in question cover the encoding and decoding of audio into the digital MP3 music format in Windows Media Player were also being used by hundreds others, including RealNetworks Inc. and Apple Inc., many of whom logically assumed that a license from Fraunhofer was the only license they needed.
RealNetworks and Apple declined to comment on the verdict, but experts believed the trouble could extend well beyond Microsoft.
Microsoft in a statement issued by Tom Burt, corporate vice president and deputy general counsel, said, “We think this verdict is completely unsupported by the law or the facts”. Microsoft paid Fraunhofer $16 million for the relevant intellectual property licenses and source code when it decided to add MP3 decoding and encoding capabilities to its Windows Media Player. Microsoft said, “We will seek relief from the trial court, and if necessary appeal”.
If Microsoft loses its case, however, the implications could be severe. A definitive Alcatel-Lucent win would give the latter crystal clear rights to go after those and any vendors who use the MP3 technology and pursue claims or seek royalties.
“Today’s outcome is disappointing for us and for the hundreds of other companies who have licensed MP3 technology,” Microsoft said in a statement after the decision. “We contend that there was no infringement of any kind and that we have paid the appropriate license fees for any technology that is used in our products.”
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February 27th, 2007
If you want to read the patents — note that the jury found Microsoft infringed the
RE39,080 Patent for a “rate loop processor for perceptual encoder/decoder” and
US 5,341,457 on “perceptual coding of audio signals”. I found these over at the blog on http://www.patentmonkey.com.