Today, a federal jury announced its finding that Microsoft has violated patents held by Alcatel-Lucent, and that Microsoft must pay the company a massive $1.52 billion in damages.
Although Thomson is widely accepted as the licensor of Fraunhofer's MP3 codec, Alcatel-Lucent apparently holds at least two patents on certain aspects of the technology, and had originally sued Microsoft for up to $4.56 billion for including MP3 functionality in Windows Media Player.
Microsoft's lawyer Tom Melsheimer told the jury, "Lucent just missed the boat on this technology... This case is about Lucent tryingto do in the courtroom what they couldn't do in the 1990s, which ismake money off of MP3." (AT&T's Bell Labs and Fraunhofer started developing MP3 in 1989, although AT&T, now Alcatel-Lucent, spun the company off in 1996.)
If every company that released MP3 encoders (and possibly otherMP3-related apps) owes Alcatel-Lucent a similar settlement, in additionto the fees they already pay to Thomson/Fraunhofer, the MP3 codec couldface a sudden, untimely demise, and so could many of the companies thathave relied on it.
The jury found that Alcatel-Lucent is entitled to more than$759 million for each of the two patents found to be infringed. Italso upheld the validity of the patents. The jury of eight men andone woman began weighing the case Feb. 15, a day after lawyersmade final arguments in a 12-day trial.
Update: A Bloomberg story on the topic adds more details about the trial:
Thejury came up with that amount by multiplying the number of computersMicrosoft has sold worldwide that shipped with Windows Media Player bythe monetary damage done per install. My gut is telling me thatMicrosoft is only liable for the MP3 encoding feature of WMP, meaningthat earlier versions, which didn't ship with the ability to encodeMP3s, would not violate the patents. However, if Alcatel-Lucent'spatents cover playback too, every company involved even tangentiallywith MP3 stands to lose -- and lose big. Microsoft's licensing billfor Thomson/Fraunhofer was only $16 million -- about 1% of what it nowowes Alcatel-Lucent.
Another Update: Microsoft has moved to reduce the award, and will most likely appeal the decision. If it fails, expect Ogg Vorbis to assume supremacy over all other lossy proprietary audio codecs, and probably FLAC to dominate the lossless category. Using open-source codecs would probably be the best way to avoid similar lawsuits.
(via the WSJ; image from changing the court)
