Friday, February 23, 2007

Microsoft Ordered to Pay $1.5 Billion to Alcatel-Lucent

Usually when we hear about MP3s and lawsuits, it's some record company suing a file-sharing service. But in a decision that dwarfs all of those legal actions put together, a jury has ordered Microsoft to pay $1.52 billion to Alcatel-Lucent for infringing on the company's patents relating to standards for playing MP3 digital music files. The San Diego jury decided on Friday that Microsoft infringed two Alcatel-Lucent patents with its Windows Media Player. Microsoft said it will appeal.

Of course, this could be just the tip of the iceberg (though admittedly it's a might big tip). Alcatel-Lucent could potentially seek similar payments from other manufacturers of music-playing hardware and software, including Sony, Apple, and Napster.

Press reports have noted that although the sum is a large one, it's much less than Alcatel originally sought ($4.5 billion). And CNN noted that Microsoft generates aobut $1 billion in free cash flow per month.

Microsoft claims that it doesn't owe the French-American firm any money because it had already licensed the MP3 technology from a company called Fraunhofer for $16 million. And financial analysts noted that appeals in cases like this could drag on for some time.

No doubt this is only the first volley to be fired in this dispute.

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