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Microsoft Ordered to Pay $1.52 Billion To Alcatel-Lucent On MP3 Patent Case; Can Appeal

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In a very complex case, Microsoft has been ordered to pay a big amount (though relatively small for them), $1.52 billion, for infringing on two Alcatel-Lucent patents involving MP3 audio code technology, a federal jury in San Diego ruled. It was accused of violating Alcatel-Lucent’s patents with Windows Media Player…the $1.52 billion judgment amount is based on worldwide sales of Microsoft’s Windows OS since 2003.
Reuters: Reacting on the verdict, Microsoft said that Alactel-Lucent’s victory also may clear the way for legal actions against hundreds of companies that rely on MP3. Microsoft said it has already properly licensed the MP3 technology from the German institution Fraunhofer for $16 million…. it plans to first ask the trial judge to knock down the ruling and will appeal if necessary.
Fraunhofer developed the MP3 technology and now license the patents out for other companies to use in their products. History of MP3 here on Wikipedia. Fraunhofer developed it in conjunction with Bell Labs, once part of Lucent, which Alcatel acquired last year.
Microsoft and Alcatel are locked in a number of patent disputes including a suit over the video-decoding technology in Microsoft’s Xbox 360 video game console.
Bloomberg: “The damages award seems particularly outrageous when you consider we paid Fraunhofer only $16 million to license this technology,” Microsoft Deputy General Counsel Tom Burt said in an e-mailed statement to Bloomberg. “Today’s outcome is therefore disappointing for us and for the hundreds of other companies who have licensed MP3 technology.”
The jury was unable to decide whether the infringement was willful, so that count was dismissed. A ruling in Alcatel-Lucent’s favor on that could have resulted in a tripling of the verdict. Alactel-Lucent will decide later whether to seek to block Microsoft from using the technology, said Alcatel-Lucent lawyer John Desmarais of Kirkland & Ellis in New York.