More Patent Pain
Alcatel-Lucent won the tort lottery yesterday when a federal jury in San Diego ordered Microsoft to pay it $1.52 billion. The jury found that the MP3 software in Microsoft's Windows Media Player program violated two Alcatel-Lucent patents that describe ways to store music as compressed digital files.
Microsoft can't be happy about this (the company says it will appeal, calling both the verdict and the penalty unjustified). But you shouldn't be either. 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
But wait--there's more!
The bizarre thing about the Alcatel-Lucent verdict is that Microsoft, along with every other company to make commercial use of the MP3 format, has already been paying licensing fees for it. Microsoft has shelled out $16 million to date to the creators of the MP3 format (principally the Fraunhofer-Institut fÃ¼r Integrierte Schaltungen IIS, a German research center).
Has everybody been writing checks to the wrong company? Or is Alcatel-Lucent incorrectly claiming ownership of the Fraunhofer work? What gives?
You can read the two Alcatel-Lucent patents--one issued to Lucent in 2006, the other granted to Lucent ancestor Bell Labs in 1994--at the U.S. Patent and Trademark Office's Web site, but good luck making any sense out of their technical details. And, annoyingly enough, Alcatel-Lucent's site says nothing about the case. (Way to try to win the war of ideas, people.)
So here we have a company that did the right thing and still got whacked, to the tune of $1.52 billion. I have a real problem with a legal system that defies the attempts of well-meaning people to stay on the right side of the law.
Then consider this: With Microsoft as a defendant you've got the best-case scenario--the company can afford to hire hundreds of lawyers to fight this. Most companies will just pay up; it can be cheaper to accept somebody's licensing demands, however unfounded they may be, than to slug it out in court.
I'd feel different about this if Alcatel-Lucent were not so obviously greedy. Forget $1.52 billion; the company says it wants $4.56 billion! I also have a sick feeling that its next step will be a suit claiming that these patents also cover other music formats.
(I forgive any European readers who feel a little smug about all this; the European Union's parliament had the good sense to vote against allowing software patents in 2005.)
Yes, inventors have a right to profit from their creativity. But we also need to look at how things play out in society at large. It says so right in the Constitution (emphasis added):
The Congress shall have Power.... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
Does the current patent system promote the progress of science and useful arts, or does it promote the padding of lawyers' bank accounts? Does it reward innovative product design or innovative legal strategies?
More from me on this: A 2001 column attacking patent trolling by British Telecom and CMGi, and a 2006 piece on BlackBerry maker Research In Motion's role as both plaintiff and defendant in patent litigation.
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