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Microsoft warns of danger to digital music after record $1.5bn fine

business.guardian.co.uk — Microsoft was yesterday fined a record $1.52bn (£777m) for infringing a digital music patent which could throw into doubt the future of the digital music industry.

Who dugg this? Made popular Feb 24, 2007

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  • Junkyarddawg, on 10/12/2007, -2/+106So microsoft has been victimized by a patent troll. That is not something to celebrate. Patent trolls are bad for everyone.

    Also the sum awarded is ridiculous: 0.5% of the sum total value of all Windows systems in the world? How the hell do you get to the conclusion that that is in any way reasonable? Especially considering that MS was actually paying for the right to use the MP3 format.

    Well, buy stock in Alcatel-Lucent NOW. The next step is to sue Apple, and with the precedent set, and given the success of iPod and iTunes, $1.5B will look like chump change.
  • ryland2, on 10/12/2007, -4/+65Yes this is comment abuse, but it appears no one here is actually reading the article... You guys must realize that they have in no way payed 1.5 billion, and are actively appealing the lawsuit.
  • RogerStrong, on 10/12/2007, -9/+64Don't kid yourself. GIF, MP3 and other formats were royalty free and unencumbered by patents until they became popular - and then there was money to be made. It is an absolute certainty that any number of patents can make claims against Ogg. And if Ogg becomes popular and more companies add Ogg support to thier hardware, you can be absolutely certain that patent claims will be made against it.
  • diggsIt, on 10/12/2007, -11/+61ogg, to the rescue.
  • loker269, on 10/12/2007, -1/+46they licensed from the wrong company and Lucent decided to be quiet about it until it was the optimal time to get the most money out of a lawsuit......
  • galore, on 10/12/2007, -0/+43So they licensed MP3 and still got fined? Why is that article not elaborating on this crucial detail? What exactly did MS wrong here ??
  • loker269, on 10/12/2007, -0/+35Yeah, thats my opinion.....they are realigning the crosshairs on the lawsuit cannon to take a shot at Apple....

    I still think its ridiculous they actually won.....I mean they knowingly allowed their patent to be sold to Microsoft and then just waited until the right time to strike to get the most money.....
  • DelMonte, on 10/12/2007, -0/+30rende said:" i doubt mp3 and aac were developed by the same people, simply because AAC (apple audio codec) contains their proprietary drm which they are pretty secretive about."

    What the heck are you talking about?

    1. AAC doesn't mean "apple audio codec", it means Advanced Audio Codec.
    2. AAC is not owned by Apple, it's owned and licensed by a consortium of companies and unlike WMV are not tied to an OS.
    3. AAC doesn't contain DRM, Apple wraps AAC in their own proprietary DRM wrapper called Fairplay, but that only applies to iTunes Store purchases.
    4. MP3 was the audio layer for MPEG files, AAC is the audio layer for MPEG-4 files.
    5. This is a quote from the wiki on AAC:

    "In contrast with the MP3 format, which requires royalty payments on distributed content, no licenses or payments are required to be able to stream or distribute content in AAC format. This reason alone makes AAC a much more attractive format for distributing content, particularly streaming content (such as Internet radio).

    However, a patent license is required for all manufacturers or developers of AAC codecs. It is for this reason FOSS implementations such as FAAC and FAAD are distributed in source form only, in order to avoid patent infringement.

    Although AAC requires a patent license, contrary to popular belief, it is not a proprietary format."
  • inactive, on 10/12/2007, -1/+30They are definitely going after the money. $1.52 billion is more that the average company makes in their lifetime(s+)...
  • geminitojanus, on 10/12/2007, -2/+29"If they don't, it'll just make it look like they only did it for the money."

    Remember Eolas? $500mln and they promised not to go after Mozilla, or anyone else.

    They don't _have_ to do anything, they own the rights, they can use it as discriminately as they choose. They could choose to allow all open source implementations of the patent to be covered, and all closed not. They could choose to give certain closed implementations the right of way, just because they want to. They chose to sue Microsoft because they knew the light at the end of the tunnel was a guarenteed multimillion dollar payout, and the chance of the lawsuit failing near invisible (the rights for MP3, and more specifically the algorithms contained within, are not hazy in the least, at least not now that we understand Lucent owns the patent).

    So, as much as it sucks for Microsoft and possibly the industry, submarine patents are a real problem and threat, and can be used however the owners of such patents want to use them. They only go after source where the payout is guarenteed, and that's why they attacked Microsoft (and is the same reason most website content creators attack Google or Amazon, most car related patents attack Ford/GM, etc). Want to change that? Change the patent laws. Vote for people who will force reform.
  • geminitojanus, on 10/12/2007, -2/+26Microsoft licensed the wrong part of MP3 when they were "embracing" it for their WMA format. Unfortunately, Microsoft didn't notice this, but went on a rampage of spreading this format far and wide as quickly as they could. Then, years later, one of the holders of the patent (in this case Lucent) realized that Microsoft was violating their IP and that Lucent hadn't received a dime for it. In order to correct this injustice (and to earn himself quite the hefty bonus), he told the corporate lawyers, the lawyers sued Microsoft. Microsoft had no case: they used the algorithm as patented, and had not licensed it from Lucent, and was thusly ordered to pay damages.

    Those damages are so huge and sweeping because Microsoft unwittingly licensed their format to hardware manufacturer's who put the algorithm on chips for millions of media players. So in theory, Lucent could go to town on all of the sub-licensees as well for Microsoft's mistake (though those sub-licensees could just turn around and sue Microsoft for all of the damages caused by their mistake). Microsoft's warning about the former to protect itself against the latter part of the last statement.
  • dobesov, on 10/12/2007, -6/+29@rende

    AAC does not stand for Apple Audio Codec. In fact it has nothing to do with Apple and was developed in part by the makers of mp3. Apple simply inserted DRM to AAC and thus we have iTunes and its monopolistic practices...

    from wikipedia:
    Advanced Audio Coding (AAC) is a standardized, lossy compression and encoding scheme for digital audio.

    AAC was developed with the cooperation and contributions of companies including Dolby, Fraunhofer (FhG), AT&T, Sony and Nokia, and was officially declared an international standard by the Moving Pictures Experts Group in April 1997.
  • gcnaddict, on 10/12/2007, -0/+23but Fraunhofer came up with the codec, did they not?
  • meatwad64, on 10/12/2007, -1/+23Yes. iPods do play back Mp3's and iTunes can rip cds in Mp3 format. So, I would assume apple could be the next target since they use the mp3 codec in iTunes.
  • HonoredMule, on 10/12/2007, -3/+23Patent-holding plaintiffs generally aren't concerned with looking good. Half of them have reverted to a purely libelous business model. They did something 5 years ago, and now they can keep themselves fed for another decade just by suing everybody over it. The R&D gets a long unpaid vacation while the lawyers roll in pure profit for themselves and the senior executives. The best part is that they don't have to in any way have a positive impact on society. Yay!
  • TeCuervo, on 10/12/2007, -1/+20When.. oh when... is the government going to fix the patent system.
    Hell, as much as I hate M$ this is not right.
    RStevens mentioned DOS, but DOS is not the concern as we are talking patents, Gates bought the software outright. You might want to think that M$, however, came with DOS 6.2 that included two new utilities that did infringe on patents and nearly took two companies out of business.
    File compression => PKZIP (I believe is PKWare now)
    Memory management => Quaterdeck
    On this case, however, it did look like MS attempted to pay the correct company.
    How many patents are there for MP3s?
    http://patft.uspto.gov/netahtml/PTO/search-bool.html
    Did a search with "MP3" and "MUSIC" and... too many.
    When the Hell are we going to fix the patents?
    I want no more SCOs!!
  • coldfusion1970, on 10/12/2007, -0/+19What does that have to do with anything?
  • andycr512, on 10/12/2007, -0/+18This is just another example of why software idea patents are such a bad idea. I feel bad for Microsoft, but I also feel bad for everyone who has been sued for something as silly as a patent violation.

    Before anyone accuses me of being a Microsoft backer, please look though my previous comments - I am anything but supportive of Microsoft. However, this is something which should be stopped, and even if it hurts Microsoft, that does not matter as it can also hurt everyone else. This is one case where the enemy of your enemy is NOT your friend.
  • Slashriffs, on 10/12/2007, -10/+28Now that they sued Microsoft for that much money they have to go after everyone else.
    If they don't, it'll just make it look like they only did it for the money.
    (I wouldn't be surprised if that's the case)
  • loker269, on 10/12/2007, -0/+16I dug around and here is Fraunhofers software and patent licensing partners site....LOTS of companies could be in Lucents crosshairs.....

    http://www.mp3licensing.com/licensees/index.asp

    judging by that list things could get interesting......
  • spazoidspam, on 10/12/2007, -0/+14When diggers can actually bring themselves to support Microsoft, they are clearly in the right. Software patents suck for everyone.
  • fuzzynyanko, on 10/12/2007, -0/+13Wow. I wonder if it'd be cheaper for Microsoft to buy Lucent.
  • klawz, on 10/12/2007, -1/+12M$ to Microsoft
    is more creditable than
    right to write

    just a thought.

  • mmzplanet, on 10/12/2007, -2/+13edit: dobesov beat me but I can say it again.....

    @ rende
    AAC is NOT "Apple Audio Coding". AAC is called "Advanced Audio Coding" and is part of MPEG-4. It has been an international standard since 1997.

    http://en.wikipedia.org/wiki/Advanced_Audio_Coding
  • etnu, on 10/12/2007, -2/+13Bell Labs WAS a great research unit, way back when it was part of AT&T. Today it's little more than a huge repository of IP that is used to leverage lawsuits. Most of the original researchers are dead or gone.
  • ivorysky, on 10/12/2007, -1/+11So is the company they licensed from guilty of taking money under false pretences?
  • johnstar, on 10/12/2007, -1/+11they actually play mp3 m4a aac wav and correct me if im wrong, apple lossless.
  • meatwad64, on 10/12/2007, -0/+10This is a bad thing for the non-drm content that was supposed to be coming from the labels. I think if lucent keeps trying to get money out of people such as apple then I think you will see mp3 taken out of iTunes and WMP and each will use their own incompatible format. I hate patents.
  • BlackCow, on 10/12/2007, -0/+9People are STILL bitching and moaning about DOS?
  • Zera, on 10/12/2007, -1/+10Agreed. Poorly written article.

    Here's a better one: http://www.marketwatch.com/news/story/microsofts-latest-nasty-legal-surprise/story.aspx?guid=%7B4582533B-CFB6-4D10-9D09-A77AE583D6C0%7D&dist=MostReadHome
  • wally40, on 10/12/2007, -2/+10OK, so this just may be a dumb comment, but who thinks the recording industry might be asking Lucent to go ahead with this? Just a thought.
  • SniperGX1, on 10/12/2007, -4/+12You can use a plugin to listen to ogg in itunes.... http://jsp.vs19.net/osx/oggtunes.php
  • shad0w, on 10/12/2007, -0/+8And you don't think that someone will claim the patents to OGG? Don't kid yourself, it's not the format, it's the broken patent laws that are the problem.
  • BESTenemy, on 10/12/2007, -0/+8Roger

    Exactly! MPEG standard comes to mind (the original MPEG1). It was registered by the group of lawyers that had nothing to do with computers or multimedia compression. They realized that the trademark wasn't registered by people that were using it, so they did and sued the MPEG creators, aquiring the right to the product through the purchase of the trademark and nothing but.
  • loker269, on 10/12/2007, -0/+8Actually according to Fraunhofer they get access to both the conversion software patent and a license to use MP3.....
  • JohnDGeek, on 10/12/2007, -0/+7I think I need to pay you now for thinking the same thing.
  • computerdude33, on 10/12/2007, -1/+8iPods play AAC, MP3, AIFF, WAV (maybe, not sure), and all except the Shuffle play Apple Lossless.

    EDIT: Wow, I got beaten to the punch.
  • ahknight, on 10/12/2007, -1/+8Yeah, you only need one hard drive per album.
  • TonyCubed, on 10/12/2007, -1/+8Sorry, it maybe Microsoft, but this is wrong.
  • YankeesSuck, on 10/12/2007, -4/+11You might want to research some of the stuff that Bell Labs/Lucent/Alcatel have developed:

    http://www.bell-labs.com/history/75/changedworld.html

    Without Bell Labs, you wouldn't be sitting here reading digg at all.

  • geminitojanus, on 10/12/2007, -3/+10"So is the company they licensed from guilty of taking money under false pretences?"

    _ABSOLUTELY NOT_. Microsoft simply didn't license _all_ of the format, specifically, they left out part of the codec that Lucent has the patent for instead of Fraunhofer Institute. The fact is, MPEG-1, -2 and -4 are patent minefields (in this specific case: MPEG-1, in other, unresolved lawsuits, MPEG-2). If you're going to go deriving formats from them, you had better know the facts of all the patents and licensees before going in, or you're going to get screwed.
  • yfph, on 10/12/2007, -2/+8@diggperson

    If you RTFA, you would realize this case does not deal with the formats sold in their respective online stores. In fact, both companies, Apple and Microsoft, sell DRM-laden audio files, AAC and WMA respectively.
  • Kareema, on 10/12/2007, -0/+6i agree with geminitojanus. We've got to change the obscene patent laws. Let's get off our lazy asses and make those polticians take notice. Look at the success of "net consciousness" in congress now. The FCC has to just about hlde in poorly pulicized meetings in Harrisburg PA just to get the public off its back.TIme to climb on Congress' back big time! Seize the day!
  • itdood, on 10/12/2007, -2/+8Was wondering the same thing, that seems to be the bigger story here.

    Doesn't this mean the person or company they originally paid for use committed fraud?

    That aside, I still cringe when I see the abuse of patent law in the software sector. 19th century patent law is not designed to handle it.
  • drproteus, on 10/12/2007, -2/+8Playing ogg and flac in iTunes is already possible, and has been for quite a while. Check out http://xiph.org/quicktime/ to download the Quicktime components. There are still somethings they can't do, such as album art, but otherwise unnoticeable.

    edit: SniperGX1 got me to it. The above is the direct link though.
  • YankeesSuck, on 10/12/2007, -0/+5@etnu:

    "Bell Labs WAS a great research unit, way back when it was part of AT&T. Today it's little more than a huge repository of IP that is used to leverage lawsuits. Most of the original researchers are dead or gone."

    They certainly do a lot less research than they used to, but I believe they still receive 2-3 patents per day. And I suspect that the 80,000 employees do some other stuff besides looking for people to sue.

    In fact, off the top of your head, can you name 2 other companies they are suing? Or maybe 1?
  • andycr512, on 10/12/2007, -0/+5"do you even know what you're talking about? The patent licensed covers everything. That's how Microsoft and other companies can make MP3 work."

    Software idea patents can cover part of something, or a whole. They could cover the way part of the format is written, or the way the whole format is written. To the best of my knowledge this one only covers part of it.
  • dattaway, on 10/12/2007, -0/+5I don't think I like the idea of ideas being owned as property anymore.
  • naffets, on 10/12/2007, -0/+5Not even remotely funny. £777m loss for any company is rediculous. Even for Microsoft this is a big hit over something which is total *****. There should be anti-patent laws where if a company don't step in within a reasonable timeframe then they can't sue the company breaking the patent laws. At least for patents which are so confusing such as these.

    A complete re-write of patent laws is required, what if a smaller firm were to get hit by a 1.5 billion fine? How would alcatel-lucent like it if the original inventor of the phone were to sue them (Obviously this cant happen, but they'd complain loads, bastards)
  • smcavoy, on 10/12/2007, -0/+5yes there are many others but MP3 is by far the most popular..
    So it could have an effect, especially now that labels and online retailers are starting to move away from drm to mp3
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