Patent Abuse

PATENT ABUSE….You may or may not be aware of this, but pretty much everything in the high-tech world is patented. If you watch a movie on cable TV, for example, it’s delivered in a format called MPEG-2, a standard that’s composed of over 600 different patented technologies from 20 different companies. If you want to build a device that uses MPEG-2, you have to pay a licensing fee to the MPEG Licensing Authority, which controls the patent pool for MPEG-2.

That makes MPEG LA a pretty handy organization to have around. After all, who wants to diddle around trying to locate every single relevant patent and negotiating terms with every single patent holder? And what if you screw up your patent search? That’s what happened with the GIF image format, which everyone thought was in the public domain until 1994, when Unisys suddenly announced that it contained patented Unisys technology. Chaos ensued.

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

The prospect of charging Microsoft $1.52 billion for the use of two minor patents over the course of 30 months (mid-2003 through 2005) is further evidence that the abuse of software patents has become nearly pathological in recent years. And it’s not just software. More here on the wider breakdown of the patent system in the United States.

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