Jury Tells Microsoft To Pay $1.5 Billion To Alcatel-Lucent Over MP3 Patents
from the mp3-tech-to-get-more-expensive dept
Jury trials over patent disputes quite often turn out in favor of the patent holder, so it's no surprise to see that a jury in San Diego hasn't just sided with Alcatel-Lucent in its patent dispute with Microsoft, but also has ordered that Microsoft pay $1.5 billion for supposedly violating patents having to do with MP3 technology. The details of the case are a little bit complex. Back in the late 80s, AT&T's Bell Labs teamed up with the Fraunhofer Institute to develop the MP3 standard. Fraunhofer ended up with a bunch of patents, and most companies that make use of MP3 technology pay Fraunhofer for the privilege. However, AT&T's Bell Labs claimed some patents related to the standard as well. Microsoft, however, claims the company had a patent reissued and backdated to make it look like it came before the Fraunhofer patents and that the two patents in question are invalid. Of course, since then, Bell Labs was spun off to become Lucent, which later merged with Alcatel. Somewhere along the line, Lucent's management realized how much money people were making off these patent things, and decided to make a big splash demanding that everyone using MP3 technology shouldn't just be paying Fraunhofer, but Lucent as well. Lucent went after Microsoft, but if it wins this suit (and the subsequent appeals), you can bet that just about everyone else who uses MP3 technology will be subject to similar claims as well -- perhaps making MP3 technology a lot more expensive. About the only good thing in the ruling is that the award of $1.5 billion is that it's less than the $4.6 billion Alcatel-Lucent has mentioned in the past. Microsoft will obviously appeal, and it will take some time to get this all sorted out -- but it seems like MP3 technology may be getting a bit more expensive thanks to patents. In the meantime, if all of this sounds familiar, perhaps that's because it mirrors the situation with JPEG patents, where companies suddenly showed up well after the standard was popular to claim patent rights.
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years and years
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Re:
I do have resepct for Microsoft because it did make its mark on its own, back before the internet became a toy.
Does anyone know if the windows media format is something that stands on its own, or is it derivative of mp3 technology. It would interesting if Microsoft incited the mobs by simply not supporting mp3.
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Eventually when a company stagnates, and no longer continues to innovate, the company finds ways to cut costs in it's supply chain, and also give it's assets value.
This is just another way that companies are changing these "assets that are just lying around" and turn it into cash to add to the books, and impress it's shareholders with good returns.
So as more and more companies decide to merge, apply supply chain strategies learned from monoliths like WalMart, fail to take chances to innovate, it's concievable that we'll see more and more companies take this route if the lawsuit proves successful.
Sad, when all they have to do is be more creative, take a chance to re-invent themselves.
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How was value established?
Microsoft and many other companies have been paying Fraunhofer for the licensing. Microsoft for example has paid $16million over the years. So in essence there is a going rate for what this technology is worth. Now a jury comes in and says it is worth over 93 times what hundreds of companies have been paying for years. How can they award that much more than the established market value?
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Re: How was value established?
That's easy, it's call punitive damages. It teaches Microsoft a lesson by hitting them hard in the pocketbook. Punitive damages are intended to punish the defendant and to discourage the conduct of the type the defendant engaged in. I think it should have been higher!
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Re: Re: How was value established?
I would be interested in hearing your thoughts concerning the conduct of over 200 hundred companies that you feel needs to be discouraged. According to all accounts they acquired licensing directly from the company that held the patents. They've done this year after year for over a decade. There were no cease and desist demands, no accusations of faulty ethics, and in no way were they ever discouraged from maintaining their status quo. What grevious conduct did these companies engage in that calls for the punative damages you are delighting in?
The only real winner in this case seems to be Microsoft, for a paltry 1.5 billion dollars they may very well have caused a large number of their open-source and non open-source competition to go belly up.
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This will go nowhere
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Patent will be worthless soon
So by the time this is sorted out in court MS and others will be free to use them so I think it's a bit of a storm ina tea cup and as someone has pointed out the lawyers are just making a meal of this for themselves.
In anycase it won' t take too much tweaking of codecs to avoid infringments I would think if they haven't done that already.
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VOIP patent/s
COBT.OB
MARSHALL, TEXAS--(MARKET WIRE)--Jun 15, 2006 -- C2 Communications Technologies Inc. ("C2"), a subsidiary of C2 Global Technologies Inc. (OTC BB:COBT.OB - News), announced today that it has filed a patent infringement lawsuit against AT&T, Inc., Verizon Communications, Inc., Qwest Communications International, Inc., Bellsouth Corporation, Sprint Nextel Corporation, Global Crossing Limited, and Level 3 Communications, Inc. The complaint was filed in the Marshall Division of the United States District Court for the Eastern District of Texas and alleges that the defendants' services and systems utilizing Voice over Internet Protocol ("VoIP") infringe C2's U.S. Patent No. 6,243,373, entitled "Method and Apparatus for Implementing a Computer Network/Internet Telephone System".
TORONTO, ONTARIO--(MARKET WIRE)--Aug 30, 2006 -- C2 Global Technologies Inc. ("C2" or the "Company", formerly Acceris Communications Inc.) (OTC BB:COBT.OB - News) today announced that it has been granted Hong Kong Patent No. HK1018372 by the Intellectual Property Department of The Hong Kong Special Administrative Region for its patent entitled "Method and Apparatus for Implementing a Computer Network/Internet Telephone System". This patent, effective through October 29, 2016, is equivalent to C2's U.S. Patent No. 6,243,373.
TORONTO, ONTARIO--(MARKET WIRE)--Oct 18, 2006 -- C2 Global Technologies Inc. ("C2" or the "Company", formerly Acceris Communications Inc.) (OTC BB:COBT.OB - News) today announced that it has been granted Canadian Patent No. 2245815 by the Canadian Intellectual Property Office for its patent entitled "Voice Internet Transmission System / Systeme pour transmissions vocals sur internet". This patent, effective through February 5, 2017, is equivalent to C2's U.S. Patent No. 6,438,124.
TORONTO, CANADA--(MARKET WIRE)--Nov 20, 2006 -- C2 Global Technologies Inc. ("C2" or the "Company", formerly Acceris Communications Inc.) (OTC BB:COBT.OB - News) today announced that it has been advised by the European Patent Office that it intends to grant C2's wholly-owned subsidiary, C2 Communications Technologies Inc., a European patent that is equivalent to C2's U.S. Patent No. 6,243,373 entitled "Method and Apparatus for Implementing a Computer Network/Internet Telephone System".
http://finance.yahoo.com/q?s=COBT.OB
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Broken Patent System
This case is setting too many very dangerous precedents - not only for Acatel-Lucent to enforce a bogus MP3 patent, but for others to try and follow in their tracks with other technologies.
Everyone, write your Senators! Change patent laws now!
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Who they should sue
Obviously they sued MS and the others because that is where the big bucks are. The patents could be perfectly legit (Bell Labs has develop a ton of critical stuff of the years) and once they found out the patents were being infringed on, they should go after the company that was using the patents to sell its technology (Fraunhofer).
The only part that might cause some thinking is this scenario- you develop something wonderful. Someone steals it and starts to sell it for pennies on the dollar. Now who do you go after? The person who stole it only made a little. The person who bought should have paid a lot more (in your eyes).
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MPEG-1 Audio Layer 3
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Exempt from intellectual property rights?
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