Microsoft slapped with $1.52 billion payout in MP3 suit
By Paul Miller 
posted February 22nd 2007 4:45PM
posted February 22nd 2007 4:45PM
Those federal juries in San Diego do seem to frown on MP3 patent infringement. They just ordered Microsoft to fork over $1.52 billion (yes, with a "b") to Alcatel-Lucent for infringing on two MP3 audio patents with its Windows Media Player, the largest patent ruling in history. Naturally, Alcatel-Lucent seems to like this turn of events. "We have made strong arguments supporting our view, and we are pleased with the court's decision," said Alcatel-Lucent spokeswoman Joan Campion. Microsoft is singing another tune, and is going to "seek relief from the trial court, and if necessary appeal," according to Tom Burt, corporate VP and deputy general counsel. The irony in all this -- if you can call anything in a $1.52 billion case "ironic" -- is that Microsoft payed the Fraunhofer Institute $16 million to license the tech in the first place, but since Fraunhofer co-developed the MP3 with Bell Labs, and Lucent owns those patents, Alcatel-Lucent decided to go for the gold, and seem to have done a pretty good job of it. This probably won't be the last we hear of this case, and it's only one in a long list of lawsuits between the two companies, but boy is that a hefty sum.
Nothing like a good lawsuit to slow down innovation-- I'm no fan of Microsoft, but this is some bullsh*t.
Lawsuits are out of control
This same scenario occurred on last night's Gilmore Girls.
Coincidence? I think not!
For once, it's a good day to own Lucent stock!
I bought it at near a dollar. I wish I bought more stock because I would have trippled my earnings. But I do agree, it's a good day to earn Lucent Stock.
But dang...that much? Ouch MS. I almost feel sorry for you...almost. But I just hope they don't have to go thought with that again.
AKBlade13
I totally agree!!
I'm doubting a 1.52 billion dollar award relating to a FREE media player app will stand on review.
I just don't see how you can make 1.52 billion by giving something away. Even treble damages (3x) on a profit of zero just doesn't add up to 1.52 billion.
Jury awards are the ultimate crap shoot.
I, for one, welcome our money-grubbing-high-roller-sueing-no-name robot overlords
"payed?"
C'mon posters.... How about a grammar check now and then?
That sucks, especially since MS did the right thing and actually paid royalties. I have to wonder how they didn't see this coming as there must have been some investigation associated with the original $16 million payout.
Could it be that Fraunhofer didn't pass on Lucent's share of the royalties and now Microsoft has to pay Peter, Paul and all.
LOL. bunch of bs if u ask me.
http://www.ashgilpin.com
Free? Since when did media player become free? You need a Windows OS to use it, which isn't free last time I checked.
And this decision is a good thing - it shows Microsoft have to respect patents just like everyone else.
There are several patent-free MP3 alternatives available eg. ogg Vorbis, maybe Microsoft will consider supporting ogg in future and give Lucent the finger? Now, THAT would be innovative!
There is a Mac version of WMP.
Wow, you should look into this more. If you want to shoot down Microsoft I'm not one to stop you, but Apple and most of the other big players will be sued next if this actually goes through. Most all the big players licensed from the recognized licenser. Look at this list to see what I'm talking about http://mp3licensing.com/licensees/index.asp
Its discontinued.
Now there is no mac version of WMP
Yeah, but ogg-vorbis is free, and Win Amp and other media players support them, and converters are available for mp3 to ogg conversion.
The heck with M$ and patent infringment. Run Open Source software!
"Nothing like a good lawsuit to slow down innovation-- I'm no fan of Microsoft, but this is some bullsh*t."
HAHAHAHA, you kidiing right, MS innovate, that's a good one.
"HAHAHAHA, you kidiing right, MS innovate, that's a good one."
Well, in theory this suit also applies to EVERYONE ELSE who ever made MP3 hardware or software. So, basically MP3 is now dead as a format for all future hardware or software, many other companies could be bankrupted (or at least be forced to pay extortion), and all because some idiot jury can't tell Alcatel to pee up a rope.
Juries have no business deciding patent cases, because the engineering, math, etc, are usually far beyond them. Might as well have chimpanzees in the jury box for all they can decide on the merits of a highly technical patent like audio compression.
Worse, considering that Fraunhoeffer (and the Europeans) were instrumental in developing MP3, and Bell Labs/Lucent wasn't (and Alcatel simply bought the dying Lucent), this is just junk. Go check out the Wiki for MP3 and you'll see lots of companies named, but nary a Bell Labs or Lucent in the lot.
Fraunhoeffer asserted it owned the patents and was the licensing authority. Lucent kept quiet. Microsoft paid Fraunhoeffer fair and square. Now Lucent sues out of the blue and some dumbass jury awards the moon and the stars.
Damn right they'll appeal.
I've never heard the argument that jury's should not decide patent cases, but that makes a lot of sense.
Is this a recognized argument or did you just come up with that?
They didn't sue MS. They sued all the potential Vista owners since that's where this expense will be passed off to.
You could just decide to use higher technology (IMHO) and download the latest version of Ubuntu. It's free, innovative, and runs just about everything that windows can run (most even better than windows can). Look up "Beryl" on YouTube, and compare that to Vista's Aero. I find it quite amazing that a free OS can make better use of my hardware (out of the box) than a VERY expensive one.
You could also personally pay for these ridiculous law suits by shelling out $379.99 for a copy of Vista Ultimate. I'll opt for Ubuntu.
LOL@MS. I hope this drives the few people that are still thinking about running Vista away. I can se MS going down the tubes already.
"I can se MS going down the tubes already."
Is this guy kidding?
$288b "down the tubes".
I love these people.
@kev - You moron, this has nothing to do with Vista.
"HAHAHAHA, you kidiing right, MS innovate, that's a good one."
This comment brought to you by another ignorant moron.
On the subject at hand, even if there was a case of infringment, which, given the murky waters of MP3 is questionable, the payout is obsurd. The profit earned from windows media player's MP3 support is far and away lower than the damages awarded. There have been companies whose entire business model was infringing and no such payout was demanded. Hell, creative basically owned the patent on the ipod UI and there is no way they would have recieved an award that large.
"It's free, innovative, and runs just about everything that windows can run (most even better than windows can)." You should say that it has clones of most everything that runs on windows, considering that if you try to install a windows app on linux you're going to get some messed up results. :P
"I find it quite amazing that a free OS can make better use of my hardware (out of the box) than a VERY expensive one." Mmmmm, except that when I installed Ubuntu, guess what? My wifi card isn't supported and my router sits happily in the cieling of another room... so I download drivers on another machine and transfer them to the Ubuntu manually... but wait, there's more! Ubuntu failed to install make, so I have to go get that on my other machine and transfer it manually as well! Right out of the box my ass.
I like linux, but it's not the end all solution at all.
@Kevin
Lets be realistic here. I hate Windows as much as the next man but Beryl simply is not ready to take on Windows. I've been trying to get it running on my Ubuntu Efty Edge install now for weeks. I'm using what should be a well supported GeForce 6600GT card yet i'm just running into a brick wall at every attempt. I've followed more guides on the net than I care to mention, and have had to just give up. If its not Segfaults when trying to run the XGL version (known bug) or dire performance, or unexplained freezing of the X server all together, its been a pretty diabolical experience. When it all works its lovely.. but its a rare occasion when it does.
It's been said before
tell me again why Microsoft is not using the superior, patent-free Ogg Vorbis? Oh that's right, it's not as popular as MP3 so they had to add mp3 to Windows Media Player just so the masses would adopt it, then they'd use the app as their DRM platform with heavy emphasis on WMA.
Ogg Vorbis' royalty-free nature gives power back to artists and corporations alike, which will damage Microsoft's take-control-of-future-formats philosopy. We can't have the masses start using Ogg Vorbis. No, that would be wrong.
http://www.vorbis.com
Shut up, please.
Just because almost all Engadget readers know what ogg and things like VLC are does not mean that the vast majority of all Windows users do.
Don't blame DRM on Microsoft. Try looking at apple. Their proprietary format and itunes has the largest stranglehold on downloadable music, not Microsoft.
Everyone know what an "MP3 player" is. There's not a chance in hell that ogg could ever, ever supplant mp3 or wma. Ever.
Really. We need extra audio formats like we need a new STD. What we do need is for industry standard things like FAT filesystems, GIF images, and MP3 audio to be made public domain by the courts once they pass a certain threshold of standard-ness.
correction.. everyone knows what an iPod is... a few people know what an mp3 player is. I used to work at a Circuit City, and one of the most popular questions was "What is the difference between an iPod and an Mp3 player.?"
The word 'sue' has become a regular term in most of Americans vocabulary.
sad really
Ya it kind of annoys me that they don't include the standard set of compiling tools out of the box in Ubuntu. I mean I know it's geared toward normal users but come on.
The detail most folks are missing is this: MS was not the target of the original suit. PC makers were. The MS joined on the side of the defense because they knew they were next. They paid fraunhofer for their MP3 license. Win95 actually shipped Fraunhofer's own codec, which was crippleware on the encode side (due to the license at the time). Why does MS push WMA? Becasue they own it and knobjocky IP portfolio trolling lawyers can't sue over it, at least not easily.
Those of you reveling over this are fools. MS is just the first target. Lucent will then go to the little guys and say "pay up or you're next." How deep are Apples pockets? Creative? Anyone else who's even shipped an MP3 based product?
This is assuming MS doesn't win on apeal which I think likely.
"The heck with M$ and patent infringment. Run Open Source software!"
Yes, becuase using OGG is so easy. I use it with EAC and damn what a PITA it is to get setup.
The problem I have with most open source projects is that usability is never a concern and UI design typically looks like it was done by a retarded four year old with a stubby crayon.
Half the people in the open source movement seem to thing command line apps with five billion switches (all of which need to be clever puns) are the pinnalce of UI architecture. And for a group of people who claim to hate MS and Aplle they seem to do an awesome job of making a half assed effort to clone the respective OSs look and feel.
Oh how they love to stick it to Microsoft. That is the only explanation for this huge amount. OF course we are not privy to many details of the case, but it sure smells from here. If not the violation then the amount is wrong. Lucent is on hard times, maybe this is their new revenue stream? I am tired of this patent madness. Good thing the wheel was taken care of long ago or it would be in some court case now. Whoever was saying that most juries can't grasp the technicalities is quite right. We need a jury of engineers as opposed to a jury of peers for these cases.
This is a lawsuit of IP rights. Lucent owns them. Microsoft (and Apple, and Dell, etc) do not. The suit says Microsoft used Lucent's patent without licensing it from Lucent.
It doesn't get any more obvious than THAT folks.
Microsoft sues corporations that violate its IP as well. Steve Balmer is currently threatening Linux companies and users saying Linux violates Microsoft patents. Where is your outrage here? Should we strip Microsoft of its intelectual property? Should we strip Lucent of theirs?
There are good, easy, alternatives to IP-burdened formats. Instead of GIF (which is now public domain) you can use PNG. Instead of MP3 (or AAC or WMA) you can use OGG.
OGG is considered superior in both quality and compression by audiophiles. Many portable audio players (iRiver, etc) will play it. iTunes will play OGG if you install the 3rd-party quicktime plugin for it. Apple and Microsoft players will not because it competes directly with their own formats and destroys the advantages they get from lock-in. In rebutal to the poster that said Apple and MS's proprietary formats are to prevent being sued, that's hooey. They exist to create a protective legal wall around their hardware/software lock-in scheme which makes them lots of loot.
Bought an iPod and wish you could play OGG? www.rockbox.org. (Works on iRiver and many others, too. Free your 'Pod.)
Convert MP3 to OGG? Don't. They're both lossy compression formats and the losses are in different parts of the signal. What you end up with is a compounding of those losses which seriously degrades the sound quality. OGG to MP3 is a little better (but still "bad") because OGG has a higher quality for a similar file size--you're already coding down to an inferior quality when you go to MP3 anyway. (Think of MP3's as cassette quality vs OGG (WMA, AAC) as CD quality.)
The bottom line is this: if you use an MP3 player of *any kind*, you owe Lucent a few cents for to license their technology. That fee is common with most formats, including ANY player that plays WMA. iRiver pays Microsoft a license fee for each unit that plays WMA. That fee is passed to you, gentle reader. Apparently, Microsoft has made a calculation that it might free the MP3 format from Lucent for less money than it could license it for.
Screw M$ -- I just want that cool Uncle Scrooge statue
Ahhh, nothing like lawyers to make the world a more infinitely complicated place.
This whole thing will be appealed and if they still have to pay, it'll end up being pocket change for MS.
USPTO really needs to reorganize to make patent identification easier. These days, you're more likely to unintentionally violate a patent than purposely do so.
The big problem with juries in patent cases isn't whether they can decide infringement properly. In most cases, it's close and it is broken down into easy to understand terms. Juries get that.
What they can't grasp is money.
In this case, apparently from USA Today, the jury calculated damages by multiplying the retail sales price of Windows by units sold and adding that to the product of OEM units sold and avg price. That means they awarded Lucent with the ENTIRE REVENUE STREAM FROM WINDOWS SINCE MAY 2003.
Something tells me that this feature does not account for 300% of the value of windows (they didn't even subtract out MS's allocated expenses).
So, if this is in fact a valid case of infringement, then MS may owe something more like 1.5b/3=500 million profit
since this is 1 of 1000 or so pats in windows, and not a very valuable one, it would then go down to 500,000 dollars at which point MS would just pay unless someone else wants to pay the legal fees and fund the suit.
i guess that judge was a windows user because that payout seems more like anger. thats the largest patten infringing payout in history
Linux is only free if your time is worthless.
That Scrooge statue is great.
That should be the picture for all future posts regarding both Microsoft and money.