How Many Zeroes Is That?

 Sure, a billion dollars sounds like a lot of loot. But is it all that much to Microsoft?

A U.S. District Court jury recently ruled the company had infringed on patents held by French telecommunications equipment company Alcatel-Lucent and ordered the software giant to pay $1.52 billion in damages in a decision that could have long-reaching effects on the digital music business.

That’s because the patents that Microsoft infringed upon are related to playing MP3 files. If the jury’s decision is left to stand, Alcatel-Lucent could go after other companies, such as Sony, Apple or any other company manufacturing MP3 players or software used to play the digital music files.

In its defense, Microsoft said it had already paid German research company Fraunhofer Gesellschaft $16 million to license that company’s MP3 technology. Fraunhofer Gesellschaft created M-PEG 1, Audio Layer 3, otherwise known as MP3, in the early 1990s.

However, Alcatel-Lucent was able to persuade the jury that its patents were fundamental in compressing audio files.

Microsoft’s patent troubles with Alcatel-Lucent started in 2003 when Lucent filed an infringement suit against Gateway and Dell over patents developed by Lucent’s Bell Labs. Microsoft asked to be included in the lawsuit, saying that the patents were tied to its Windows operating system. When Alcatel and Lucent merged in 2006 it kept the patent litigation going.

Eventually the judge threw out two claims and scheduled six separate trials to decide the remaining. The trial that resulted in the $1.52 billion award to Alcatel-Lucent began on January 29th.

Like any company facing a billion-dollar judgment against it, Microsoft plans to fight back, and will petition the judge to reduce, or set aside, the verdict, according to the Los Angeles Times.

"We think this verdict is completely unsupported by the law or the facts," Microsoft deputy general counsel Tom Burt said.

But even if the judgment stands, writing a $1.52 billion check isn’t going to put Microsoft in the poor house.

Reuters estimates that the amount represents about six weeks of cash flow for the company. Or about 15 cents per share.


Deal Or No Deal

Colleges and universities have their own illicit download problems. Any environment combining music-loving young adults and broadband connections is bound to create more than a few copyright infringement situations.

And nobody knows that better than the Recording Industry Association of America, which recently launched a new campaign to thwart music piracy in institutes of higher learning.

The RIAA says advances in software have enabled the organization to better trace file-sharing on campuses.

On February 28th the trade organization announced it had sent 400 pre-litigation settlement letters to 13 different universities warning the schools that the music industry is ready to launch an infringement suit against a school’s student or employee. In sending the letters, the RIAA is asking the schools to forward the messages to the people the organization claims are copyright infringers.

Now, make no mistake about this. This isn’t a warning to campus file-traders to clean up their copyright acts. These letters are settlement offers from the RIAA, telling students and campus personnel to pay up now or face costly future litigation.

Of the schools on the RIAA’s pre-trial hit list, Ohio University received 50 letters, both Syracuse University and North Carolina State University received 37, and the University of South Florida found 31 such messages in its mailbox.

"Our work with college administrators has yielded real progress and we’re grateful for the help of those who have worked closely with us," RIAA chairman and CEO Mitch Bainwol said. "At the same time, we recognize that the nature of online music theft is changing, and we need to adjust our strategies accordingly."

This isn’t the RIAA’s first attempt to police campus pipelines. The organization has long complained about universities turning blind eyes to student file-sharing. However that has changed as school administrations began taking tougher approaches to illicit song swapping.

At Michigan State University, anyone caught twice must watch an RIAA-produced eight-minute anti-piracy DVD, and a "third strike" offender can be suspended for a semester.

"I get the whole spectrum of excuses," said Randall Hall, who polices MSU’s campus network. "The most common answer I get is, ‘All my friends are doing this. Why did I get caught?’"