Don't worry. The authorities aren't coming to confiscate your MP3 player because of a patent infringement ruling this week that involves the technology behind digital music.
The verdict, if upheld, could cost Microsoft $1.52 billion or more in damages. And that could end up costing you, as manufacturers pass on the expense of paying royalties to Alcatel-Lucent, which a federal jury in San Diego found to be the rightful owner of the technology.
But those costs aren't likely to come for some time, if at all, industry analysts and patent lawyers said yesterday.
The technology industry was abuzz over Thursday's unexpected verdict, which included what lawyers said was the largest patent award in history, and its significance for the MP3 format that is at the heart of the booming market for digital music.
Though the verdict could affect hundreds of companies that use the technology in various devices, experts said consumers would not suddenly be unable to obtain or play MP3 files. Even in the long run, there may be no effect on consumers if the verdict is overturned on appeal. Microsoft's lawyers have said they will appeal both the jury's finding that the company infringed on the patents and the amount of its award to Alcatel-Lucent.
Paul Saffo, a Silicon Valley technology forecaster who teaches at Stanford University, said he thought there was a good chance that the verdict would be overturned. "I don't think there's a credible worst-case scenario," he said.
But Roger L. Kay, a technology industry analyst, said small companies working on low margins to manufacture MP3 players could be vulnerable if the verdict results in licensing fees beyond what they can afford.
"For some of those guys, something like this could be catastrophic," Kay said. While larger companies such as Apple and AOL may be able to pay Alcatel-Lucent's fees, "there will be others that are marginal to begin with, and something like this could put them out of business."
The legal dispute turns on two patents for technology developed at Bell Laboratories, which later became part of Lucent Technologies. Alcatel bought Lucent last year and inherited the patents.
Both patents relate to how music is converted into small digital files. One of the patents is for a method of analyzing sound to gauge whether it is more like music or noise, then representing it in digital form based on that determination. The other patent pertains to the process for determining whether the sound is audible to the human ear and then converting only that audible part into digital form.
Hundreds of companies that thought they had properly licensed the MP3 format from Germany's Fraunhofer Institute, which was also involved in developing the MP3 technology, could be financially liable for infringing on Alcatel-Lucent's patents.
"Because of the uncertainty created by the verdict, you are going to see Alcatel-Lucent out there trying to use the verdict as a lever to get companies playing in the MP3 area to get licenses now," said Martin M. Zoltick, a Washington patent attorney.
He predicted that some companies will wait for the outcome of the appeal before paying Alcatel-Lucent, while others will want to obtain licenses sooner to end the uncertainty. If the verdict is upheld in U.S. circuit court, more companies would give in while a few would hang on to see whether the case is accepted by the Supreme Court for consideration, Zoltick said.
Alcatel-Lucent sued Microsoft over audio-file technology that the software giant first included in its Windows operating system in 1998 and later built into its Windows Media Player.
But the MP3 format is now so widely used that the jury's verdict could affect manufacturers of products well beyond desktop computers. MP3 technology is also used in mobile phones, digital-music players, handheld computers, video games and car audio systems.
About 400 companies, including some of the world's largest technology companies, have licensed MP3 technology from Thomson Technology, a San Diego firm that identifies itself as a representative of the Fraunhofer Institute.
In a prepared statement, Thomson said yesterday that it does not license the two patents at issue in the court case. Thomson said it had the rights to 20 other families of patents that cover some of the standards for compressed audio files and are essential to implementing MP3 technology.
"MP3 is the world's most popular compressed audio technology, and we look forward to its continued popularity," the company said.
But some experts suggested that the fear of litigation and increased royalties could force companies to adopt other formats for audio files, including open-source technology. Apple, maker of the popular iPod music payer, uses a format called AAC for its iTunes music store.