How Microsoft's Big MP3 Patent Loss Could Screw Everyone Else

When Microsoft lost the biggest patent case ever last week and Alcatel-Lucent scored a cool $1.5 billion (with further cases pending) for technically now owning the MP3 patents so important to so much of the world, some might have cheered. Not Microsoft’s competitors and partners, though, who alike are now facing huge bills themselves.

You see, originally Microsoft licensed the MP3 technology from Fraunhofer in 1989, but Alcatel-Lucent has (successfully) argued that their patent backdates to 1988, so that deal is invalid. Now the rub : Everyone else in the world who deals in MP3, and there are quite a few of them (Apple, being the ironic one here), had assumed that the license from Fraunhofer was all they needed, too. Thus the ruling against Microsoft is a ruling against the entire MP3-profiteering world.

Microsoft is appealing the ruling, but if it is upheld then Alcatel-Lucent could be calling in a lot of now technically owed debts.