Jury says Microsoft should pay Alcatel-Lucent $1.5 billion

By Stephen Withers
Friday, 23 February 2007 04:14

Business IT - Technology

"The damages award seems particularly outrageous when you consider we paid Fraunhofer only $16 million to license this technology," Burt added. Microsoft's cash and near-cash reserves would cover the damages many times over.

"We invented it and everybody else is making money off it," said Alcatel-Lucent lawyer John Desmarais.

The interesting part of the story is that Alcatel-Lucent may now have the option of preventing further use of its patents by Microsoft. The prospect of having to release a new version of Windows Media Player without the ability to play MP3 files would not be attractive to Microsoft, as it could encourage users to make a different player - perhaps Apple's iTunes - the default application for audio content.

The trouble is that Apple and many other companies offering MP3 software also licensed the technology from Fraunhofer. If this verdict is upheld by the judge and survives any appeal by Microsoft, all those other companies could find themselves facing demands from Alcatel-Lucent.

If that does happen and Alcatel-Lucent demands too high a price, one possibility is that the industry could walk away from MP3 and agree to adopt an open format such as Ogg Vorbis or FLAC. Or we might even see increased use of Microsoft's WMA if the terms were right. 

Further patent suits brought against Microsoft by Alcatel-Lucent are still pending.