For those of you who briefly scanned the recent headlines stating that Microsoft was fined $1.52 billion for infringing on two minor patents related to MP3 technology with only mild passing interest (or glee), Kevin Drum at the Washington Monthly has a solid post explaining why this situation is more than a little screwed up.
Here are the key graphs:
So how about MP3, the ubiquitous music encoding standard? Who holds the patents on that? Answer: the MP3 standard was developed in the early 90s and the patent pool was originally controlled by Fraunhofer IIS. Microsoft paid Fraunhofer $16 million for the right to use MP3 in its Windows Media Player and hundreds of other companies have done the same over the past decade. During that time, everyone in the world assumed that Fraunhofer was the legitimate patent holder.
Until now. In 2003 Alcatel-Lucent suddenly announced that they owned some of the underlying patents on MP3, and on Thursday a jury decided they were right. The result was a $1.52 billion patent infringement verdict against Microsoft. And just in case you hate Microsoft enough to cheer for this, allow Rob Pegoraro to set you straight. As he says, “Alcatel-Lucent’s patent payday has all the things that patent-abuse critics hate”:
“Submarine” patents, invoked years after a contested invention has hit the market? Check
Claiming ownership of a media format most people use all the time? Check
A plaintiff that’s failed to commercialize its own alleged invention? Check
Extortionate royalty demands? Check.