Alcatel/Microsoft MP3 patent row - Apple could be the next target

Alcatel/Microsoft MP3 patent row - Apple could be the next target

Summary: The MP3 patent row that erupted between Microsoft and Alcatel-Lucent could have an enormous effect on the entire MP3 industry. The Federal District Court in San Diego ruling that Microsoft must pay Alcatel $1.52bn (the largest patent award in history) could see hundreds of other firms, such as Apple and Creative, having to pay to use the format.

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TOPICS: Patents
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The MP3 patent row that erupted between Microsoft and Alcatel-Lucent could have an enormous effect on the entire MP3 industry.  The Federal District Court in San Diego ruling that Microsoft must pay Alcatel $1.52bn (the largest patent award in history) could see hundreds of other firms, such as Apple and Creative, having to pay to use the MP3 format.

[poll id=95]

Apple has the greatest exposure and the most to loseThe crux of the case is whether Alcatel-Lucent should be paid for technology developed by the Fraunhofer Institute and Bell Laboratories before Alcatel took over ownership of these companies.

Microsoft claims that no fees are due since it paid $16m to license the MP3 technology from the Fraunhofer Institute.

However, Alcatel sees things differently.  It claims that now they own Bell, Microsoft should now be paying them for using the patent.

Now that the courts have awarded Alcatel this record patent award from Microsoft, other companies who make use of MP3 could have to pay up.  Four companies that spring to mind as using the MP3 standard are Apple, on RealNetworks, Sony, and Creative.  Of these four companies, Apple has the greatest exposure and the most to lose. 

Microsoft plans to appeal and I bet that this could be the first time that Steve Jobs has hoped that Microsoft is successful in court!

Topic: Patents

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  • Impact

    The impact of this MP3 patent award is much further reaching than RealNetworks, Sony, Apple, and Creative. Think about all of the products you own that have MP3 capability. Motorola, Nokia and Samsung make MP3 phones. Verizon, Sprint and other providers sell MP3s. Car stereos, DVD players, cellphones, keychains, and many home theater receivers (and other components) contain MP3 technology.

    The final tally is nearly 500 companies that have licensed MP3 technology for software and/or hardware from Thomson (Fraunhofer IIS's licensing company). See www.mp3licensing.com for the full list.
    tpettyrox
    • True

      It goes well beyond those four companies ... but I still think that Apple's exposure, along with Sony, Creative and RealNetworks is greatest.

      This could be a big pay day for Alcatel.
      Adrian Kingsley-Hughes
  • Would be interesting to see

    what was in the Thomson licence agreement.

    It would be interesting to see if there was any chance they had left themselves open to suits centred on them licencing a patent they were not fully entitled to licence.

    Perhaps if they have not made clear that Bell Laboratories may also require a separate licencing agreement and therefore implied that they were entitled to operate as the sole licencing body for the patents that would constitute misrepresentation.
    nmh
  • I abstained from the poll...

    because I don't know enough either about US patent law or the facts of the case to make a reasonable prediction. I hope MS wins on appeal, but that's because this patent has the potential to inconvenience large numbers of users.

    The real solution is to overturn the existing Federal Circuit precedent that allows patents on algorithms (the US Supreme Court has never ruled on this), which appears to be in direct contradiction to the US Code, but I'm not holding my breath.
    John L. Ries
  • just a few corrections...

    the Alcatel, Lucent merger (really Alcatel buying Lucent..) only happened in 2006, not 2003 as you state... Bell Labs has been part of Lucent for a long time since Lucent was forcibly broken off from Ma Bell.. so Bell Labs is part of the new Company, who's name is "Alcatel-Lucent" not "Alcatel"

    pretty sloppy writing...
    doctorSpoc
  • other companies will sign up for licencing and life will go on as usual...

    i'm not sure what the big deal is here...

    sure it sucks to be MS, but Alcatel-Lucent knows that the best thing to do is to broadly license it's IP and ride this pony over the long haul... screwing user over just lessens the amount of money they can collect and builds ill will. this MS thing is likely just a lesson of what can happen to you if you don't sign up (remember what happened to RIM? they could have settled for a couple mill and then got hit with ~600mil(i think) in the end)... plus as others have stated elsewhere, the more Alcatel tests this in court the more likely a reverse judgment comes down... but in the end Alcatel-Lucent gets a new revenue stream other companies sign on for licensing (probably on the order of what they paid Fraunhofer) and life goes on... no big deal.
    doctorSpoc
    • Re: other companies will sign up for licencing and life will go on as usual

      ... everyone else will just have a lot less cash.
      Adrian Kingsley-Hughes
      • you suggest eveyone will be hit with billion dollar law suites...

        but this just won't happen.. if Alcatel-Lucent is smart they will charge reasonable licensing fees and life goes on... just the cost of doing business.. every product (DVD players, computer, digital camers, scanner etc, etc) have licensing that they need to pay.. ~$1 or less more on each device... who cares?

        the sky is not falling.. unless you are Alcatel-Lucent since all this money adds up and since it's all going to one place money is falling out of the sky for them... but for everyone else.. who cares?
        doctorSpoc
        • so to answer your question as to the impact.. almost nil...

          the remaining companies will get charged reasonable licensing, which they will pass on to the consumer and it will amount to probably ~$1 more for an ipod, zune, computer... big deal..?

          impact... basically, NONE!
          doctorSpoc
  • Take a look at the patents -- I don't think MSoft will win on appeal1

    <a
    href="http://www.patentmonkey.com/PM/PatentID/re39080.aspx" target="_blank">RE39,080 Patent for a "rate loop processor for perceptual encoder/decoder"</a>
    and
    <a href="http://www.patentmonkey.com/PM/PatentID/5341457.aspx" target="_blank">
    US 5,341,457 on "perceptual coding of audio signals"</a>.
    patentmonkey