My, that's a lot of money

Since everyone else is talking about it, the IPKat ought to say a few words about Microsoft being successfully sued in a US court for $1.52 billion in damages for patent infringement (Reuters report here). The patents in question apparently relate to MP3 technology, and Microsoft thought they had already licensed the technology from the Fraunhofer Institute for the miserly sum of $16 million. Alcatel-Lucent, however, the owners of several other patents on the same technology, thought otherwise.

Without knowing the details of the patents in question (do any readers know what they are? if so, please leave a comment), this Kat is reluctant to comment further as to the merits of the case. However, the result seems to follow the standard pattern familiar to casual observers of US court actions in first quoting a huge headline figure for damages, which will inevitably be whittled down drastically in further proceedings. Juries in the US appear to be very keen to award such enormous figures. More fundamentally though, this may be an object lesson for Microsoft and others in one of the basic principles of patents, which only allow the proprietor to prevent others doing what the patent claims, and do not give the holder any kind of right to actually do it. Licensing a patent does not necessarily permit the licensee to work the technology, but merely prevents the licensee from being sued by the licensor.

Update (25 Feb): Patent Monkey has been doing some digging, and presents some useful material on the patents involved here. There is also a good analysis of the possible ramifications on MP3 technology from Wired.
My, that's a lot of money My, that's a lot of money Reviewed by David Pearce on Friday, February 23, 2007 Rating: 5


  1. Apologies to email subscribers who may have thought that Micro$oft were awarded damages. This has been corrected.

  2. The US Supreme Court, almost contemporaenously, moved to impose significant limits on sky-high awards of punitive damages in Phillip Morris USA v Williams, so if the award against Microsoft included a punitive element, the IPKat's prediction of its being watered down on appeal has an even greater chance of coming true!


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