RSSAnalyst: Microsoft Loss in MP3 Case Sets Dangerous Precedent
By Scott M. Fulton, III | Published February 23, 2007, 12:26 PM
With Alcatel-Lucent having been awarded $1.5 billion from Microsoft by a Jury in San Diego yesterday, the other hundreds of companies who hold Fraunhofer/Thomson licenses to the MP3 audio format whose names aren't "Microsoft" must be asking themselves whether similar fates await them in the near future. Now that the descendent of Fraunhofer's former partner is staring at a potential platinum mine of litigation success, has this verdict set a legal precedent that the party who has an idea for an invention can successfully sue anyone who implements that idea - even if it was done with consent?
We took this question, among others, to Info-Tech senior research analyst Carmi Levy, who frequently provides his insight to BetaNews.
SCOTT FULTON, BetaNews: I am wondering how in the world a jury could have been convinced that Fraunhofer Labs was not entitled to license this codec, and I'm concerned that their decision will set a precedent.
CARMI LEVY, Senior Research Analyst, Info-Tech Research: What it does is, it sets a precedent that, just because you think you licensed something doesn't necessarily mean that you did, and you may very well be vulnerable in the future for having incorporated technologies that you believed that you rightfully paid for the right to use.
So yes, it clearly sets a dangerous precedent because now former copyright owners will probably be looking back in history, and looking into their lists of their old dealings, and asking themselves whether there's opportunity to go back, rake up some mud, and generate some revenue from it. Which is a scary proposition for any company that develops products that are largely based on not necessarily new technology, but incorporated technology aggregated from multiple sources.
An operating system is, by definition, one of those products that is a combination of many layers of technology, not all of them developed by the company that aggregates them - in this case, Microsoft.
SCOTT FULTON: The other thing that's being discussed here in the US Supreme Court has to do with the whole patentability of software issue, which is another fine mess that Microsoft finds itself in.
CARMI LEVY: Right, what is intellectual property? How do we define it?
SCOTT FULTON: If Microsoft's argument in that court is actually upheld, then I think the aggregate concept from that, which could be precedent setting from a legal standpoint, is that the idea for software cannot be patented, only the implementation. And if you think of it that way, looking at it historically, applying that to the MP3 case, suddenly Alcatel's position falls apart, because it is, in effect, the holder of the holder of the holder of the original idea, but Fraunhofer was who carried it out.
CARMI LEVY: Exactly, and what that does is, it weakens Alcatel-Lucent's claim, because they never actually directly brought a product to market based on that technology. They simply had a disconnected [association] with the original idea, and therefore, are not as deserving of the $1.5 billion as the court today thinks that they would otherwise be.
SCOTT FULTON: So of course, there's going to be an appeal, but you see perhaps there's a good chance of this being overturned.
CARMI LEVY: I think so, because I think the precedent for this is dangerous for the intellectual property space on the whole, because essentially, it'll send a message to everyone that anybody with an idea scribbled in a diner on the back of a napkin can easily come out of the woodwork years later, launch a lawsuit against a company that has successfully brought such technology to market, and win.
And we've seen this before; we saw this with the Research in Motion and NTP lawsuit, that NTP never successfully brought a product to market based on the technology that it originated, but they successfully got a $612 million settlement out of RIM because of that. What it does is, it makes for a very slippery slope for companies that actually succeed in bringing aggregated technologies to market, because they never quite know how far upstream someone is sitting, lying in wait for the moment when that technology takes off and becomes profitable, and they feel they can cash in via lawsuit.
Next: That lost idea you scribbled on a napkin could be a goldmine...
Let's all go back to punch cards. Let's see them sniff those out and bust people.
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|As much as I don't like Microsoft, I agree with Babylon2x on this. Alcatel should have gone after Fraunhofer/Thomson for not properly distributing funds to them. I wish I knew more details about the case and the patent to have a better understanding of this case. From what I can tell Alcatel neglected to have proper agreements in place with the other companies concerning the MP3 patent thus they didn't receive their fair share of the profit. Alcatel should have just gone after Fraunhofer/Thomson, because I can only imagine has to how this could bring down the marketability of MP3s. Does this mean that Alcatel will now go after Apple, Nullsoft, Xine, MPlayer, DVD player manufacturers, car stereo manufacturers with MP3 capabilities (including automaker OEM units). Perhaps this would make OSS formats (such as Ogg Vorbis or Flac).
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|Frauenhofer is not to blame here. In fact the format is covered both by Frauenhofer mp3 patents and the new more trivial container patent.
Microsoft should urgently seek Us patent reform.
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|First, this is a Californian jury. Second, Microsoft will surely appeal. In the days of suing over burning yourself on hot coffee, anything is possible.
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|Aside from the political subject, as drbillbailey said, we could always switch to Ogg Vorbis... WHICH IS ALSO FAR BETTER SOUNDING THAN THE MP3 FORMAT.
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|We could always switch to Ogg Vorbis.
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|Wasn't there some 'grey area' regarding Ogg in that not be completely open-sourced and freely licensable? If so, it's in the same position as MP3 and isn't a very good alternative.
My vote for FLAC. Although many people still prefer heavily compressed audio. :P
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|I think "many people" just prefer compression ratios that are worth while. FLAC files are so large, you might as well use the CD audio format.
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|Ogg
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|I think that is very sad. On the other hand it was Microsoft which paid lobbyists who fought against software developer interests in Europe. Microsoft now learns it the hard way. Time for them to support patent reform and to change their mind.
Software patents are useless.
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|Yet another reason why juries should not be deciding patent infringement cases.
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|An easier idea is to make formats only a 2 year patent...
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|these patents are non-existing but of course everyone is free to let them lapse.
Patent examination takes 31 month in the US. Patents -- 20 years internationally, according to TRIPs. And the patent covers an object that has no value in software development, every single software patent is an insult of our creative developers. Either you side with the developers or with the lawyers.
Developers build our software, lawyers are corporate parasites.
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|Personally, I am also concerned by lawsuits like this. To my knowledge it is Fraunhofer/Thomson who licenses MP3 technology - the lawsuit should be brought against them, not any other. It is ridiculous. This is another victory for company greed, and another nail in the coffin for any hope of common sense.
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|I was trying to get into several paragraphs of mumbo-jumbo in order to come to that same conclusion, but who really cares to read my 7 paragraph comments anyways?
Agreed 100%. They should appeal, but guess which district they're in? Heh, those fools wouldn't even consider accepting an appeal over this--only if Microsoft won would they have quickley taken it and reversed it.
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|(deleted comment)
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|Just say no to patented formats.
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|Just say no to licensing. Build your own solutions and don't use anyone elses. That's the clear message here.
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|+1
This would be the most simple answer. There is genuinely no reason for patented formats being used when others are available which are equally as good, and better. It just needs a few of the major forces to make a stand and get the codecs/compatibility for the formats out in the open, meaning the less savvy engage in the uptake.
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|I think Mikkisoft has lot of patents too , sure they can put them free for everyone who needs them. Mikkisoft did wrong , it's like robbery , don't cry about that.
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|I don't remember there is a single case where MS sue someone else for using their patents.
Oh wait, I get it, another MS hater.
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|"Just say no to licensing. Build your own solutions and don't use anyone elses."
In theory that sounds so easy but wait till the next greedy company says I own the patent to compressing music into a smaller file size therefore regardless of the codec you still owe me money.
Of course every company using incompatible codecs etc leads to a very fragmented market. Imagine every mp3 manufacturer used their own codec and only sold music thru their own store. Like iPod/iTunes but there are 50 different companies and none of them work together.
This is a very bad outcome for consumers and business alike.
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|Time to start remembering - it was only a few days ago:
http://www.app.com/apps/...BUSINESS/702210368/1003
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|Seeing as the target of that suit is the intiator of this suit against MS, this looks more like leveraging and indirect fighting back. Is there a case where MS is not just counter-suing?
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