Patent Monkey: Details on Alcatel's $1.5 B Win Against Microsoft

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Here’s some added detail on the biggest patent litigation settlement in history: Microsoft ordered to pay Alcatel $1.5 B based on its Windows Media Player infringing the French telecoms’ MP3 technology. The jury found Microsoft infringed the RE39,080 patent for a “rate loop processor for perceptual encoder/decoder” and
US 5,341,457 on “perceptual coding of audio signals”
. The jury set a royalty of 0.5% for each of the two patents infringed (1.0% total) for sales on Windows Media Players back to version 6.1. If you asked yourself exactly what this case is about, keep reading…

Alcatel received the highest award ever for a patent infringement based on Microsoft’s use of Alcatel’s patented MP3 technology. The $1.5 B settlement is significantly more than the previous high of $909mm Kodak was ordered to pay to Polaroid in the early ’90s for violating patents related to instant cameras.

The case was originally filed in federal court in Virginia pitting Lucent against Gateway and Dell over patents related to color memory, video-search functions and controlling a computer with a stylus. Microsoft joined the case as it was obligated to indemnify and reimburse Gateway and Dell. Then Lucent, Dell, and Microsoft filed various other actions against one another in numerous jurisdictions ultimately leading to the cases being combined all in one jurisdiction – the Southern District Court for California. Judge Brewster then broke all the merged actions into several cases (all in his jurisdiction) based on technology. The case on the patented MP3 technology was the first one decided. Alcatel acquired Lucent last year resulting in the Alcatel v. Microsoft dispute.

Though difficult to track down, here is a folder of the Alcatel and Microsoft patents involved in the various disputes against one another. For this specific case, the jury found that Windows Media Player infringed claims 1, 3, and 4 of the ’080 patent and claims 1, 5, and 10 of the ’457 patent. In case you’re wondering, and we were, here’s a couple exemplary claims…

Claim 1 of the ’080 patent reads as:

Claim 1 of the ’457 patents reads as:

Considering that Alcatel paid $11.6 B for Lucent last year – receiving $1.56 B back on 2 patents could go a long way towards justifying the acquisition. With several more cases still pending, the end result may be even bigger.

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