Yet another episode in the ongoing saga of the IP lawsuit community. They should have their own sitcom. Then again, this seems a valid complaint for once.

A federal jury in San Diego has ordered Microsoft to pay $1.5 billion to Alcatel-Lucent in a patent dispute over MP3 audio technology used in Windows.

In its verdict, the jury assessed damages based on each Windows PC sold since May 2003. The case could have broader implications, should Alcatel-Lucent pursue claims against other companies that use the widespread MP3 technology.

Should we really risk screwing things up even further and try to reform IP and patent law? If so, how?

  1. John says:

    This to me seems crazy. Did Microsoft know when they licenced this stuff from one of the co-developers for $16 million, that the other developer had the rights to it?
    As Alcatel-Lucent going to sue everyone who uses the tech?

    I personally feel either sue everyone that you know is in violation or no one. By suing just the big pocket you are saying you don’t really care about your IP you just want money and they have a lot. In this case there is a clear record of hundreds of companies who thought they licensed the rights to the tech covered by the patents, they A-L can’t say they don’t know who the others are.

    I think perhaps it is the one who has been licensing it not those who were fooled into purchasing licenses that didn’t fully cover the tech that should be sued, and sued by both sides.

  2. gquaglia says:

    Couldn’t happen to a nicer company. Stick that in your pipe and smoke Steve Balmer.

  3. Chris Swett says:

    Damn! I sold my Alcatel-Lucent stock last month! Yeesh!

  4. Lauren the Ghoti says:

    ~ C. Montgomery Burns

    ~ Vincent Price

  5. Wayne Bradney says:

    Gates: 1.5 billion? [digs in pockets] Never mind, still 68.5 billion to go…

  6. Mr. Fusion says:

    I don’t understand. M$ licensed the software from the same people that continue to license it to others today. So how is M$ infringing? Shouldn’t Fraunhofer be responsible for M$’s damages here?

  7. Kamatari Honjou says:

    As much as I dislike MS, this sets a bad precendent. So if I develop somethuign based of a MS API that uses MP3 then can i be sued too?

  8. Steve says:

    “So if I develop something based of a MS API that uses MP3 then can i be sued too?”

    Yes! If you find the right lawyer, anything is possible!

  9. sheva says:

    patent predators are a tota f*** up

  10. Hmeyers says:

    No one in government cares about patent laws unless a lawsuit threats to make their Blackberries not work.

  11. Jim says:

    More data please, John? If this were simply about MP3 Al-Lucenta should have sued
    Fraunhofer? There are pleasant kharma kicks
    here. Ridiculous jury awards get the smackdown,but this could motivate
    OSS solutions.

  12. Mike Cannali says:

    “should Alcatel-Lucent pursue claims against other companies that use the widespread MP3 technology.”
    Here is Alcatel’s apparent strategy:
    1. A patent includes an “implied right of mechantability” – that is: A product can be sold to others and the rights of use of the concepts pass on to subsequent owners.

    2. A patent is assumed vadid on it’s face when granted. It must be challenged to prove it invalid.

    Then Microsoft and all other original licencees could reasonably assume that they had the right to sell products made from the patented technology. This works fine until the original patent is challenged and shown to be invalid.

    The rightful owner could have sued the invalidated owner of the concept, settled, and the original licencees would continue to be proctected by their implied license of mechantability.

    However – that is not the most lucrative path.
    If all of the licensees are sued before the invalidated owner – each must pay individually even though they licensees may have action against then invalidated patent holder. The cumulative effect is a job security plan for lawyers and gravy train for the new owner of the patent.
    Worse – once one licensee is forced to pay – there is legal precedent for all others to be quickly held liable for infringement.

    One can see this is a house of cards for any industry with heavy promotional expense to develop markets – with complex products that collect may concepts into one product and include sub-assemblies, hardware and software aggregations from many vendors. This could go on untill every MP3 (and MP4) based product is forced to pay up.

    What should change in patent law? Infringement penalties based on past licensing should be limited to the original invalidated patent holder, to the limits of their assets – with all future licensing revenue assigned to the rightful owner per any original terms (as if the rightful patent owner had been assigned royalties from the beginning.
    This way, it does prohibit the free use of ideas in commerce – as was the intent of the section of the Constitution that established patent law. Further it compensates the rightful owner per the value of the concept before it had been promoted (at great expense to product developers) in the marketplace.
    If product developers could not be assured from the beginning that they had the right to introduce new concepts in products – then there would be no new products.

    What is the difference between Microsoft and a porcupine? In a porcupine, the pricks are on the outside.

    Much as it hurts to say it, Microsoft may be the injured party here – as they were sold the equivalent of a stolen car with a valid title and wind up paying top dollar for it to the rightful owner based on the value of all the future cars of similar type which may ever exist.

  13. Grrr says:

    Yes, even the chaos we can’t fully foresee is preferable (and perhaps more easily modified) than living under the stifling, utterly broken system in place today.

  14. Mr. Fusion says:

    #12, Mike,

    I agree with your post, it is well said.

    How do we reform patent and copyright law to mesh with modern technology and mores? Rest assured that the intellectual property industry is more organized and positioned to influence Congress.

  15. B. Dog says:

    MS is taking a fall to get rid of mp3 files, maybe. They screwed Vista up so badly with all that DRM crap, and now they get to use it. Big stinking deal.


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