Patent decision may be critical to download market

April 2007


A federal jury in the United States has decided that Microsoft infringed on two patents used in the conversion of music to digital MP3 files and has ordered that the computer company must pay $1.52 billion in damages to France’s Alcatel-Lucent SA. The two patents cover the encoding and decoding of audio into the digital MP3 format. Microsoft’s defence was that it had already paid for and licensed the technology (to the tune of $16 million) from Germany-based Fraunhofer Institute, which licenses it to hundreds of companies, including Apple Inc. and RealNetworks Inc. The decision was the first of six cases that will be heard in the U.S. District Court in San Diego. All stem from claims made in 2003 by Lucent Technologies against PC makers Gateway Inc. and Dell Inc. for technology developed by Bell Labs, its research arm. The next case, which relates to speech coding, is set to go to trial in March or April. Other areas in dispute include video coding on Microsoft’s Xbox game console and Windows user interface.

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