Microsoft Fined Us$1.52b In Mp3 Case

Zohair · Feb 27, 2007 at 1:13 PM

Microsoft fined US$1.52b in MP3 case

Joseph MennandDawn Chmielewski:

Saturday, February 24, 2007

A San Diego jury has ordered Microsoft to pay US$1.52 billion (HK$11.85 billion) for infringing patents underpinning the world's most popular digital music standard, MP3.

One of the largest patent awards on record, the verdict could open other technology firms to massive liability.

Virtually every portable digital music player uses MP3 technology to read music files, including Apple's iPod. The format is also used in computer desktop software such as Microsoft's Windows Media Player, RealNetworks' Real Player and Apple's iTunes.

"Anybody who uses the MP3 standard would be subject to the same arguments," said John Desmarais, who represented the winner in the case, Alcatel-Lucent.

The French telecommunications equipment giant owns patents for compressing music files developed by Bell Labs, a predecessor to Lucent Technologies, which Alcatel acquired last year.

Alcatel convinced the jury that Bell Labs was the first to develop the fundamental technology for compressing music files that would become the basis for the MP3 format.

Alcatel's executives "have to have stars in their eyes about how much they can extract," said Mark Radcliffe, a Silicon Valley intellectual property attorney.

Microsoft is to petition the judge to reduce or set aside the verdict. "We don't think that there is any realistic chance of this verdict being sustained," said Microsoft deputy general counsel Tom Burt.

Microsoft had argued that it had protected itself by paying US$16 million in royalties to Germany's Fraunhofer Institute, which is credited with developing the MP3 audio-compression technology.

More than 100 companies have paid Fraunhofer licensing fees to protect themselves against a lawsuit. Among them are Apple, Hewlett- Packard, Toshiba, Intel, Bang & Olufsen, RealNetworks and Yahoo.

Microsoft argued during the trial that just one of the licensees paid Alcatel a licensing fee of US$1,450.

The damages, yet to be sanctioned by the judge hearing the case, were based on the number of Windows Media Player programs that have been installed on hundreds of millions of personal computers since 2003.

Burt questioned whether it was appropriate to base damages on the sale of computers, instead of the much lower cost of the Windows software within it. He said that Microsoft would challenge that formula either before the trial judge or on appeal.

In 2003, Alcatel sued computer makers Gateway and Dell, whose computers sell with Media Players pre-installed.

Microsoft intervened, filing a complaint against Alcatel and seeking a ruling that its software did not infringe Alcatel's patents. Alcatel then filed a counterclaim.

Testimony in the jury trial spanned three weeks and included highly technical testimony.

In the end, Alcatel won money equal to one half of one percent of the average price for Windows-based computers sold since the second half of 2003.

If the Alcatel ruling holds up, it will be by far the largest financial judgment against Microsoft. In antitrust settlements, Microsoft has paid out billions, topped by US$2 billion it gave Sun Microsystems in 2004.

Although Microsoft could handle such an award considering the US$29 billion in cash and securities on its balance sheet, other companies could be squeezed if such a formula applied across the digital music landscape.

"This is a high-volume, low-margin industry, so when you talk about half a point, right off the bottom line, that's a significant number," said Jonathan Potter, executive director of the Digital Media Association, a Washington-based trade group.

Microsoft and Alcatel are embroiled in a wide range of disputes over each other's use of technology.

The San Diego judge will preside over three more patent disputes between the companies, each with different juries.

One claim to be heard, concerning Alcatel's video patents, could also lead to damages of more than US$1 billion, according to Microsoft.

LOS ANGELES TIMES
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At first I cannot believe this but then.. Damn!

DeLaY · Feb 27, 2007 at 1:15 PM

how stupid...what next. people always wanting money...luckily bill gates can afford it.

becks · Feb 27, 2007 at 2:30 PM

well good coz he shouldnt mind giving itaway then

Anti-Hero · Feb 27, 2007 at 2:41 PM

meh Microsoft will just sue some one and get the cash back if you look at alot of big firms they just sue each other i mean apple and that phone company sue each other atleast once a year

lllAE86lll · Feb 27, 2007 at 3:49 PM

Bill Gate " W/e take the money and enjoy "

xD! He will always afford for the fined that Microsoft gets

gh0st · Feb 27, 2007 at 4:11 PM

lol that's pretty jkz..
haha sux for microsoft... it's not like they can't make that money back though... seriously.

xlink · Feb 27, 2007 at 4:57 PM

Apple's next, they also bought their MP3 rights from Fraunhofer

also all of linux acquired them that way as well..

this might be bad.

iPro · Feb 27, 2007 at 5:05 PM

Bill Gates reply to the lawsuit: "R-O-F-L-M-F-A-O!!!111oneoneone shift+one. Nubzzz, keepz0rs da change"

... Doesn't he have 3 times more then that in his wallet alone?

Phritz · Feb 27, 2007 at 6:34 PM

who needs mp3 anyways lol, wma pwnz it.

OneLazers · Feb 28, 2007 at 10:20 PM

Originally posted by Whit3 Boi@Feb 27 2007, 05:05 PM
Bill Gates reply to the lawsuit: "R-O-F-L-M-F-A-O!!!111oneoneone shift+one. Nubzzz, keepz0rs da change"

... Doesn't he have 3 times more then that in his wallet alone?

[snapback]3560828[/snapback]
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lol gg :tongue:

bill= rich so it tis all good

INTERNUTS. · Feb 28, 2007 at 10:37 PM

Lol.

J0rk-eh · Feb 28, 2007 at 10:52 PM

lol, This is nothing to microsoft.

Lucky suer

Zabiela · Mar 1, 2007 at 11:44 AM

DUMB.

ktutorials · Mar 1, 2007 at 2:08 PM

though he is richest 1.52b is really huge.. go give as fine...

[.BC.]ANNI · Mar 1, 2007 at 2:49 PM

lol it wont make a difference to bull gates

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Microsoft Fined Us$1.52b In Mp3 Case

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Microsoft Fined Us$1.52b In Mp3 Case

Zohair Formerly zohBOT

DeLaY Active Member

becks Well-Known Member

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lllAE86lll GR Since 2005

gh0st Well-Known Member

xlink GR's Tech Enthusiast

iPro Senior Member

Phritz Senior Member

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INTERNUTS. Well-Known Member

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