Microsoft Loses Big In MP3 Patent Suit

Microsoft Loses Big In MP3 Patent Suit
$1.52 Billion Penalty Could Be Harbinger

By Alan Sipress
Washington Post Staff Writer
Friday, February 23, 2007; Page D01

A federal jury in San Diego yesterday ordered Microsoft to pay $1.52
billion to Alcatel-Lucent for violating two patents for a technology
used by hundreds of companies that allows users to play digital music on
computers, cellphones and other portable devices.

The judgment, which lawyers from both sides called the largest patent
award ever, raised the prospect that scores of other companies could now
be financially liable for using the popular MP3 format.

Microsoft

Every move of the world's largest software maker, whose operating
systems drive 90 percent of all PCs, sends ripples through the
technology world.

"Any of the companies that have licensed and implemented that technology
have to have great concern about this verdict," said Thomas W. Burt, a
Microsoft vice president and deputy general counsel.

Alcatel-Lucent argued that it held the rights to the technology because
it was developed at Bell Laboratories, which later became part of
Lucent. Alcatel bought Lucent last year. The company successfully argued
that Microsoft infringed on the patents by including the digital music
technology in its Windows operating system starting in 1998. The same
technology later was used in Microsoft's Windows Media Player and is
included in the Windows Vista operating system, which was released to
the public last month.

Microsoft countered that it had properly licensed the technology from
Germany's Fraunhofer Institute, which was involved with Bell Labs in
developing aspects of the MP3 format. Only after Microsoft and other
companies made licensing agreements with Fraunhofer did Alcatel-Lucent
raise its claim, Microsoft argued.

"As a result of the verdict today, the jury determined the patents were
developed by Bell Labs and not in conjunction" with Fraunhofer, said
Joan Campion, a spokeswoman for Alcatel-Lucent. "We've made strong
arguments supporting our view and we are pleased by the court's decision."

Alcatel-Lucent said it would ask for a larger judgment against
Microsoft. The $1.52 billion in damages was determined by calculating
0.5 percent of all sales of computers equipped with Windows and lacking
the proper licensing from mid-2003 through 2005. John Desmarais,
Alcatel-Lucent's lead trial lawyer, said the company would ask that 2006
sales be included.

Burt said Microsoft not only would appeal the jury's findings of patent
infringement but also would challenge the amount of the damages. He said
it was improper to calculate damages based on the value of computer
sales rather than the lesser value of sales of the Windows operating
system. He also said that the jury improperly included overseas sales of
computers in the calculations.

The issue of whether U.S. patent law can be extended to products made
abroad figured prominently this week in arguments before the U.S.
Supreme Court in a separate case pitting Microsoft against AT&T.

The verdict yesterday came in one of several patent lawsuits that
Alcatel-Lucent brought against Microsoft. Others involve video-file,
color graphics and computer interface technologies. Several billion
dollars of additional damages could ride on the outcome of these suits,
lawyers said.

The judgment surprised industry experts, who said they had not been
following the case closely.

"Most of us thought this was going to go bye-bye," technology analyst
Rob Enderle said. He said he expected Alcatel-Lucent to approach other
companies using MP3 technology and use the verdict "like a club" to
collect fees.

About 400 companies have similar licensing agreements with Fraunhofer,
according to Thomson Technology, a San Diego company that identifies
itself as the "licensing representative of MP3 patents and software of
the Fraunhofer Institute." Those companies include Apple, Creative
Technology, Real Networks, Palm and Samsung.

Alcatel-Lucent and its lawyers would not say whether they plan to target
more companies, but Desmarais signaled that others using the audio-file
technology could be vulnerable.

"For anyone who implements the standard, the same arguments would
apply," he said.

Staff writer Mike Musgrove contributed to this report.

© Copyright 1996-2007 The Washington Post Company

Sparky Spartacus wrote:
> "As a result of the verdict today, the jury determined the patents were
> developed by Bell Labs and not in conjunction" with Fraunhofer, said
> Joan Campion, a spokeswoman for Alcatel-Lucent. "We've made strong
> arguments supporting our view and we are pleased by the court's decision."

I wonder if that was Jim Johnston at Bell Labs. As I recall, working on
what you had to include to get audio to sound good even if it didn't match
the original.

Should be a good TV trial, except lawyers make every patent unrecognizeable,
even to the inventors.
--
Ron Hardin


On the internet, nobody knows you're a jerk.

Ron Hardin wrote:
>
> Sparky Spartacus wrote:
> > "As a result of the verdict today, the jury determined the patents were
> > developed by Bell Labs and not in conjunction" with Fraunhofer, said
> > Joan Campion, a spokeswoman for Alcatel-Lucent. "We've made strong
> > arguments supporting our view and we are pleased by the court's decision."
>
> I wonder if that was Jim Johnston at Bell Labs. As I recall, working on
> what you had to include to get audio to sound good even if it didn't match
> the original.
>
> Should be a good TV trial, except lawyers make every patent unrecognizeable,
> even to the inventors.

Looks like it
google patent search for james.johnston audio gives three

US Pat. 6771777 - Filed May 28, 1999
US Pat. 5638451 - Filed Jan 5, 1995
US Pat. 7062039 - Filed May 27, 1999

one or more assigned to Fraunhofer-Gesellschaft but I won't try reading them.

--
Ron Hardin


On the internet, nobody knows you're a jerk.

On Sat, 24 Feb 2007 10:36:04 GMT, Ron Hardin <>
wrote:

>Sparky Spartacus wrote:
>> "As a result of the verdict today, the jury determined the patents were
>> developed by Bell Labs and not in conjunction" with Fraunhofer, said
>> Joan Campion, a spokeswoman for Alcatel-Lucent. "We've made strong
>> arguments supporting our view and we are pleased by the court's decision."
>
>I wonder if that was Jim Johnston at Bell Labs. As I recall, working on
>what you had to include to get audio to sound good even if it didn't match
>the original.
>
>Should be a good TV trial, except lawyers make every patent unrecognizeable,
>even to the inventors.


I admit I haven't followed the case either but it seems to me that if
so many major companies try to license from another source, something
must have mislead all of them to do this unless it was cheaper to try
to get around the issue so they thought. One thought tho did occur
to me as I read the story, that as Windows evolved, it began to
replace a lot of 3rd party software once used and I suppose that might
have lead to this type of problem (copyright infringements).

It will be interesting to see how the appeal goes. I would think a
lot more companies would want to support MS because of their own
position in this matter. If they don't I guess they also will have a
lot to lose.

White collar theft again by Microsoft... Ben Myers

On Sat, 24 Feb 2007 04:31:47 -0500, Sparky Spartacus
<> wrote:

>Microsoft Loses Big In MP3 Patent Suit
>$1.52 Billion Penalty Could Be Harbinger
>
>By Alan Sipress
>Washington Post Staff Writer
>Friday, February 23, 2007; Page D01
>
>A federal jury in San Diego yesterday ordered Microsoft to pay $1.52
>billion to Alcatel-Lucent for violating two patents for a technology
>used by hundreds of companies that allows users to play digital music on
>computers, cellphones and other portable devices.
>
>The judgment, which lawyers from both sides called the largest patent
>award ever, raised the prospect that scores of other companies could now
>be financially liable for using the popular MP3 format.
>
>Microsoft
>
>Every move of the world's largest software maker, whose operating
>systems drive 90 percent of all PCs, sends ripples through the
>technology world.
>
>"Any of the companies that have licensed and implemented that technology
>have to have great concern about this verdict," said Thomas W. Burt, a
>Microsoft vice president and deputy general counsel.
>
>Alcatel-Lucent argued that it held the rights to the technology because
>it was developed at Bell Laboratories, which later became part of
>Lucent. Alcatel bought Lucent last year. The company successfully argued
>that Microsoft infringed on the patents by including the digital music
>technology in its Windows operating system starting in 1998. The same
>technology later was used in Microsoft's Windows Media Player and is
>included in the Windows Vista operating system, which was released to
>the public last month.
>
>Microsoft countered that it had properly licensed the technology from
>Germany's Fraunhofer Institute, which was involved with Bell Labs in
>developing aspects of the MP3 format. Only after Microsoft and other
>companies made licensing agreements with Fraunhofer did Alcatel-Lucent
>raise its claim, Microsoft argued.
>
>"As a result of the verdict today, the jury determined the patents were
>developed by Bell Labs and not in conjunction" with Fraunhofer, said
>Joan Campion, a spokeswoman for Alcatel-Lucent. "We've made strong
>arguments supporting our view and we are pleased by the court's decision."
>
>Alcatel-Lucent said it would ask for a larger judgment against
>Microsoft. The $1.52 billion in damages was determined by calculating
>0.5 percent of all sales of computers equipped with Windows and lacking
>the proper licensing from mid-2003 through 2005. John Desmarais,
>Alcatel-Lucent's lead trial lawyer, said the company would ask that 2006
>sales be included.
>
>Burt said Microsoft not only would appeal the jury's findings of patent
>infringement but also would challenge the amount of the damages. He said
>it was improper to calculate damages based on the value of computer
>sales rather than the lesser value of sales of the Windows operating
>system. He also said that the jury improperly included overseas sales of
>computers in the calculations.
>
>The issue of whether U.S. patent law can be extended to products made
>abroad figured prominently this week in arguments before the U.S.
>Supreme Court in a separate case pitting Microsoft against AT&T.
>
>The verdict yesterday came in one of several patent lawsuits that
>Alcatel-Lucent brought against Microsoft. Others involve video-file,
>color graphics and computer interface technologies. Several billion
>dollars of additional damages could ride on the outcome of these suits,
>lawyers said.
>
>The judgment surprised industry experts, who said they had not been
>following the case closely.
>
>"Most of us thought this was going to go bye-bye," technology analyst
>Rob Enderle said. He said he expected Alcatel-Lucent to approach other
>companies using MP3 technology and use the verdict "like a club" to
>collect fees.
>
>About 400 companies have similar licensing agreements with Fraunhofer,
>according to Thomson Technology, a San Diego company that identifies
>itself as the "licensing representative of MP3 patents and software of
>the Fraunhofer Institute." Those companies include Apple, Creative
>Technology, Real Networks, Palm and Samsung.
>
>Alcatel-Lucent and its lawyers would not say whether they plan to target
>more companies, but Desmarais signaled that others using the audio-file
>technology could be vulnerable.
>
>"For anyone who implements the standard, the same arguments would
>apply," he said.
>
>Staff writer Mike Musgrove contributed to this report.
>
>© Copyright 1996-2007 The Washington Post Company

I think it is too early to convict MS. The patent/copyright system in the
US is a joke. If the patents really were from 95 and 99, then the judge is
an idiot (which is likely) since there is clearly prior work on this.

Companies are gaming our patent system. ****ed me off.


"Ben Myers" <> wrote in message
news:...
> White collar theft again by Microsoft... Ben Myers
>
> On Sat, 24 Feb 2007 04:31:47 -0500, Sparky Spartacus
> <> wrote:
>
>>Microsoft Loses Big In MP3 Patent Suit
>>$1.52 Billion Penalty Could Be Harbinger
>>
>>By Alan Sipress
>>Washington Post Staff Writer
>>Friday, February 23, 2007; Page D01
>>
>>A federal jury in San Diego yesterday ordered Microsoft to pay $1.52
>>billion to Alcatel-Lucent for violating two patents for a technology
>>used by hundreds of companies that allows users to play digital music on
>>computers, cellphones and other portable devices.
>>
>>The judgment, which lawyers from both sides called the largest patent
>>award ever, raised the prospect that scores of other companies could now
>>be financially liable for using the popular MP3 format.
>>
>>Microsoft
>>
>>Every move of the world's largest software maker, whose operating
>>systems drive 90 percent of all PCs, sends ripples through the
>>technology world.
>>
>>"Any of the companies that have licensed and implemented that technology
>>have to have great concern about this verdict," said Thomas W. Burt, a
>>Microsoft vice president and deputy general counsel.
>>
>>Alcatel-Lucent argued that it held the rights to the technology because
>>it was developed at Bell Laboratories, which later became part of
>>Lucent. Alcatel bought Lucent last year. The company successfully argued
>>that Microsoft infringed on the patents by including the digital music
>>technology in its Windows operating system starting in 1998. The same
>>technology later was used in Microsoft's Windows Media Player and is
>>included in the Windows Vista operating system, which was released to
>>the public last month.
>>
>>Microsoft countered that it had properly licensed the technology from
>>Germany's Fraunhofer Institute, which was involved with Bell Labs in
>>developing aspects of the MP3 format. Only after Microsoft and other
>>companies made licensing agreements with Fraunhofer did Alcatel-Lucent
>>raise its claim, Microsoft argued.
>>
>>"As a result of the verdict today, the jury determined the patents were
>>developed by Bell Labs and not in conjunction" with Fraunhofer, said
>>Joan Campion, a spokeswoman for Alcatel-Lucent. "We've made strong
>>arguments supporting our view and we are pleased by the court's decision."
>>
>>Alcatel-Lucent said it would ask for a larger judgment against
>>Microsoft. The $1.52 billion in damages was determined by calculating
>>0.5 percent of all sales of computers equipped with Windows and lacking
>>the proper licensing from mid-2003 through 2005. John Desmarais,
>>Alcatel-Lucent's lead trial lawyer, said the company would ask that 2006
>>sales be included.
>>
>>Burt said Microsoft not only would appeal the jury's findings of patent
>>infringement but also would challenge the amount of the damages. He said
>>it was improper to calculate damages based on the value of computer
>>sales rather than the lesser value of sales of the Windows operating
>>system. He also said that the jury improperly included overseas sales of
>>computers in the calculations.
>>
>>The issue of whether U.S. patent law can be extended to products made
>>abroad figured prominently this week in arguments before the U.S.
>>Supreme Court in a separate case pitting Microsoft against AT&T.
>>
>>The verdict yesterday came in one of several patent lawsuits that
>>Alcatel-Lucent brought against Microsoft. Others involve video-file,
>>color graphics and computer interface technologies. Several billion
>>dollars of additional damages could ride on the outcome of these suits,
>>lawyers said.
>>
>>The judgment surprised industry experts, who said they had not been
>>following the case closely.
>>
>>"Most of us thought this was going to go bye-bye," technology analyst
>>Rob Enderle said. He said he expected Alcatel-Lucent to approach other
>>companies using MP3 technology and use the verdict "like a club" to
>>collect fees.
>>
>>About 400 companies have similar licensing agreements with Fraunhofer,
>>according to Thomson Technology, a San Diego company that identifies
>>itself as the "licensing representative of MP3 patents and software of
>>the Fraunhofer Institute." Those companies include Apple, Creative
>>Technology, Real Networks, Palm and Samsung.
>>
>>Alcatel-Lucent and its lawyers would not say whether they plan to target
>>more companies, but Desmarais signaled that others using the audio-file
>>technology could be vulnerable.
>>
>>"For anyone who implements the standard, the same arguments would
>>apply," he said.
>>
>>Staff writer Mike Musgrove contributed to this report.
>>
>>© Copyright 1996-2007 The Washington Post Company

On Sat, 24 Feb 2007 11:26:07 -0500, "Tom Scales" <>
wrote:

>I think it is too early to convict MS. The patent/copyright system in the
>US is a joke. If the patents really were from 95 and 99, then the judge is
>an idiot (which is likely) since there is clearly prior work on this.
>
>Companies are gaming our patent system. ****ed me off.

You know Tom, I never really gave it a lot of thought but now that I
do, I kinda agree with you. I'm not sure tho if I'm ****ed off but
that might be because I don't have to really deal with it. When I
think about intellectural property or automobiles, it does make me
think it's a bit of a joke. I can't speak for others but when I look
at certain programs or cars, often they remind me of another so much
so. So that makes me wonder how or if the patent/copyright laws
really work? Maybe they do and I'm just well educated enough on the
subject. Who knows??

<RnR> wrote in message news:...
> On Sat, 24 Feb 2007 11:26:07 -0500, "Tom Scales" <>
> wrote:
>
>>I think it is too early to convict MS. The patent/copyright system in the
>>US is a joke. If the patents really were from 95 and 99, then the judge is
>>an idiot (which is likely) since there is clearly prior work on this.
>>
>>Companies are gaming our patent system. ****ed me off.
>
> You know Tom, I never really gave it a lot of thought but now that I
> do, I kinda agree with you. I'm not sure tho if I'm ****ed off but
> that might be because I don't have to really deal with it. When I
> think about intellectural property or automobiles, it does make me
> think it's a bit of a joke. I can't speak for others but when I look
> at certain programs or cars, often they remind me of another so much
> so. So that makes me wonder how or if the patent/copyright laws
> really work? Maybe they do and I'm just well educated enough on the
> subject. Who knows??

Yeah, point taken, especially since I am off this afternoon to buy a car

The _scam_ is that you let some standard become popular because it's
free (as opposed to, say, real audio's somewhat superior compression); and
then charge rent for it once it's widespread.

It never would have been widespread but for your laying low for a few
years.

--
Ron Hardin


On the internet, nobody knows you're a jerk.

On Sat, 24 Feb 2007 12:01:36 -0500, "Tom Scales" <>
wrote:

>
><RnR> wrote in message news:...
>> On Sat, 24 Feb 2007 11:26:07 -0500, "Tom Scales" <>
>> wrote:
>>
>>>I think it is too early to convict MS. The patent/copyright system in the
>>>US is a joke. If the patents really were from 95 and 99, then the judge is
>>>an idiot (which is likely) since there is clearly prior work on this.
>>>
>>>Companies are gaming our patent system. ****ed me off.
>>
>> You know Tom, I never really gave it a lot of thought but now that I
>> do, I kinda agree with you. I'm not sure tho if I'm ****ed off but
>> that might be because I don't have to really deal with it. When I
>> think about intellectural property or automobiles, it does make me
>> think it's a bit of a joke. I can't speak for others but when I look
>> at certain programs or cars, often they remind me of another so much
>> so. So that makes me wonder how or if the patent/copyright laws
>> really work? Maybe they do and I'm just well educated enough on the
>> subject. Who knows??
>
>Yeah, point taken, especially since I am off this afternoon to buy a car
>


Since I'm thinking already of my next car (I'd love a Corvette but
probably will go a different direction) I'm curious and just have to
ask what car? If I'm being too nosey, just tell me to back off <g>
And if it matters, beware gas prices will go back up but can't say to
what just yet... think of it as my telling you "inside" information
from Texas <g>.