Philadelphia Inquirer | 02/24/2007 | Microsoft damages could ripple Microsoft damages could rippleIt was ordered to pay $1.52 billion in an MP3 patent-infringement case. Some see more such cases following. By Jessica Mintz Associated Press “SEATTLE – A federal jury’s ruling that Microsoft Corp. infringed on two MP3 patents and must pay $1.52 billion in damages could turn into a major sour note for other technology companies in the digital-music business.

“The victory for France’s Alcatel-Lucent SA could embolden the maker of telecommunications equipment to pursue claims – or seek royalties – from other companies that it believes infringe on the technology, experts said yesterday.

“The two patents in question in Thursday’s decision cover the encoding and decoding of audio into the digital MP3 format – a popular way to convert music from a CD into a lightweight file on a personal computer and vice versa.

“Microsoft said it paid for the technology from Germany-based Fraunhofer Institute, which licenses it to hundreds of companies, including Apple Inc. and RealNetworks Inc.”

“The whole industry understood that that was where you went,” said Tom Burt, a deputy general counsel for Microsoft.

“When the software-maker decided to add MP3 decoding and encoding capabilities to its Windows Media Player, it paid Fraunhofer $16 million for the relevant intellectual-property licenses and source code.

“Other companies “have been relying on the fact that they thought they had critical licenses necessary to practice the technology,” said Michael Dever, a chair of the intellectual-property group at Buchanan Ingersoll & Rooney, a Pittsburgh law firm.