Judging by the many news stories, yesterday's $1.5 billion jury verdict against Microsoft in the MP3 case raises almost all of the hot issues swirling around patent reform. Since Microsoft is only the pilot train in this affair -- every company that uses the MP3 music format is involved, and numerous other cases are either pending or in prospect -- the one certainty is that the case is about to get re-tried in front of Congress and the press.

Some issues:

Were the Lucent/Alcatel patents clear enough to be found, and for their applicability to be assessed? If so, then why did Microsoft and others fail to license them -- they were certainly willing to pay the Fraunhofer Institute, which was thought to be the rights holder.

Did Alcatel/Lucent lie in the weeds, failing to assert any rights until large numbers of companies had committed significant capital? If so, how should this affect the suits? If not, why is the tech world so surprised? I recall reading, though I cannot put my finger on where, that there has been considerable bitterness over accusations that the MP3 rights holders (whoever they are) let the standard-setting process go forward without informing the world of their claims. If this is so, it is important.

How should damages be assessed in the tech world, where every product involves the use of hundreds of patents? As a thought experiment, if MP3 is worth $1.5 billion for Microsoft alone, and if you compare this with all the other IP that goes into Windows (and Microsoft annually shells out multi-millions in license fees), and all the other IP used by other users of MP3, then what total value does one come up with -- and does it bear any relationship to the total revenues of the industries?

Are juries the right forum for complex patent litigation? The Constitution provides a right to a jury trial -- perhaps it should also provide a right to a NON-jury trial to cover situations where a jury is the equivalent of a dice roll.

Are there issues of the interpretation of ambiguous claims? If so, then should ambiguity be interpreted against the drafter? This does not seem to be the case in patent law, where the appellate court recasts the claims construction runes de novo.

The Coalition for Patent Fairness, the main advocate for reforms, already has 70 members. It better print up some new application forms.

As we have noted before, we at PFF are IP hawks, but an essential of a good system of property rights is that the metes and bounds of the claims be clear so that people can adjust their actions accordingly.

posted by James DeLong @ 8:37 AM | Patents

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