DailyTech - U.S. Judge Reverses $1.5 Billion Alcatel-Lucent Award

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IT U.S. Judge Reverses $1.5 Billion Alcatel-Lucent Award
Wolfgang Hansson (Blog) - August 6, 2007 11:57 PM

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3 comment(s) - last by MrDiSante.. on Aug 7 at 11:22 AM

Judge throws out jury verdict in $1.5 billion Microsoft, Alcatel-Lucent settlement

Microsoft's ongoing legal battles with Alcatel-Lucent over patent infringement claims concerning MP3 technology date back to 2003. Alcatel-Lucent fired the first volley of 15 patent-infringement claims against Gateway and Dell, at which point Microsoft stepped in due to the close relation of the suits to the Windows operating system.

Originally, a San Diego jury ordered a settlement of $1.5 billion in favor of Alcatel-Lucent. Today, U.S. federal district judge Rudi Brewster reversed the jury’s ruling; claiming that Microsoft had infringed on the patents held by Alcatel-Lucent and threw out the settlement.

Bewster said that the record $1.5 billion settlement could not stand because Microsoft had not violated one of the two patents related to MP3 files at the core of the case. Also in question was the ownership of the second patent with the judge saying that a new trial might be needed to determine who actually owns that patent.

Microsoft maintains that they licensed MP3 technology at the heart of the lawsuit from a German research firm Fraunhofer Gesellschaft for $16 million.Microsoft deputy general counsel Tom Burt might have been on to something when he was quoted, shortly after the initial settlement, “We think this verdict is completely unsupported by the law or the facts.”

It now appears its Alcatel-Lucent’s turn to be dissapointed with spokeswoman Mary Ward calling the reversal “shocking and disturbing.” If this reversal stands, it would be quite a blow to Alcatel-Lucent after their first suit against Microsoft was also thrown out.

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Right Outcome

By xphile on 8/7/2007 6:17:42 AM , Rating: 5

As far back as 1999 (and possibly even earlier) the Fraunhofer Institute stated that they held the major patent to MP3 technology in many of the more serious aspects of its use. At the time Real Player held a growing share on internet audio, both in streaming and in a digital format conversion of audio cds that was becoming hugely popular.

As I recall it MS somewhat hedged its bets for a while and finally decided yes it would be MP3 that they would buy into, as RP had gotten greedy and shot themselves in the foot with their ludicrous requirements for installation and the wholesale takeover of your systems audio, and then video as well, resources. People stopped being interested in a company that demanded so much even for a free product and turned back to the ever stable ever available Mp3 format in droves. As did Apple and out popped the Ipod and at that point the format war was history.

What is interesting here is who MS paid and why. MS licensed the format from a then consortium led by the the Fraunhofer Institute, along with the French electronics company Thomson and Bell Labs. If you look up Bell Labs you will see that AT&T spun off Bell Labs into Lucent Technologies which was later incorporated into a part of a bigger company Alcatel-Lucent in 2006.

The current case turns on two patents that Alcatel claims were developed by Bell Labs before it joined with Fraunhofer to develop MP3. Thus it is those specific patents that are at play and whether they play any important relevance to the legal understanding of what MS believed they were licensing when they signed up to the original deal.

As anyone who has used MP3 from before the ipod knows, the only real company anyone looked to as owning MP3 was Fraunhofer, so the inclusion of Thomson and Bell Labs in the signees through the consortium must have made the deal absolutely complete in terms of coverage in anyones eyes at the time.

In many peoples' opinion at the time this was largely an Alcatel stunt to try and extort excessively large sums from MS for very little infringement (if any) far in excess of any real value of those patents and very likely to finally fail for the same reasons and gain them nothing.

That's exactly what has happened, and if it hadn't MS would have been the first, closely followed by Apple who would have had a far far higher lawsuit following had this not been reversed.

This would not have been at all in the interests of the format in any case but when you try and go up against something that is as impregnated into modern culture as the MP3 format and stake a wholesale rights claim to it that supposedly has not been recognised, then you really need a very firm footing and Alcatel-Lucent never had one.

RE: Right Outcome

By MrDiSante on 8/7/2007 11:22:33 AM , Rating: 4

What can I say? Let's all cheer for another blow to the patent trolls.

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Legal expenses ?

By crystal clear on 8/7/2007 5:24:38 AM , Rating: 3

quote:
.” If this reversal stands, it would be quite a blow to Alcatel-Lucent

I wonder if & how much M.S. is eligible for compensation/s,as the legal cost in such cases are very high -anything upto 6 zeros attached to it(?,000000).
These cases has been going on for quite a long time plus other patent disputes between the two.

In addition-

The judge's ruling marks the second blow against Alcatel-Lucent in its patent infringement litigation against Microsoft. In early March, just a couple of weeks after the original verdict, a judge threw out an unrelated lawsuit that alleged that the software giant improperly used some of Alcatel-Lucent's speech-recognition technology.

http://arstechnica.com/news.ars/post/20070806-judg...

Microsoft and Alcatel-Lucent are locked in a number of patent disputes including a suit over the video-decoding technology in Microsoft's Xbox 360 video game console.

http://www.reuters.com/article/technologyNews/idUS...