The MP3 Patent Battle Gets Even More Confuddling

Since Alcatel-Lucent made off with $1.52 billion of Microsoft’s swag (pending an appeal) over the whole sordid affair of "Who conceived the MP3 format ?" the entire debate has been descending into anarchy.

For those of you who don’t know, Microsoft and others had been paying royalties to a German company, Frauenhofer, for the use of the MP3 format. The problem is that Frauenhofer, as it turns out, can’t claim to be the sole owner of the MP3 format.

MP3 is essentially the result of a rather large group effort between many company’s and researchers ; and whilst Frauenhofer isn’t lying when it says it invented the MP3 format, it isn’t quite telling the whole story either. Thompson, Royal Philips Electronics, AT&T and others all hold patents which later became part of the MP3 standard, and so if push comes to shove they can ask for their slice of the cake.

Payments for the use of MP3 is typically around $2,500 for a video game, for example, and $2 on every media player sold. That is, for every iPod, Sansa, Zune or Zen in the world somebody is getting $2 a pop. That’s a lot of money, and on top of the simple lawsuits to determine how much is owed in back-money to a company (remember, Microsoft bought its license from Frauenhofer for a few million, and it wound up costing them a few billion to Alcatel-Lucent) there are future earnings to consider.

So, it would seem that we’re all screwed in what could be described as a cluster... Ohh, right, I can’t say that, can I ? Well, this history of MP3 should help clear up your doubts on the matter. Or multiply them, as the case may be.