Lucent/Microsoft Battle Brews

As if it didn't have enough to keep itself busy, Lucent Technologies Inc. (NYSE: LU) has picked a fight with two PC makers in an attempt to defend several patents granted to technologies first developed at Bell Labs. And now Microsoft Corp. (Nasdaq: MSFT) has decided to take up for its customers by filing a suit that seeks to render Lucent's patents invalid and unenforceable.

The confusing and curious series of lawsuits started last fall when Lucent sued PC maker Gateway Inc. for allegedly making use of specific technologies without licensing them from Bell Labs. Months later, Lucent sued Dell Computer Corp. (Nasdaq: DELL) for pretty much the same thing. The patents in question relate to audio coding, telephony, video display, networking, user interface, and other technologies associated with Gateway's and Dell's computer systems.

If you want to geek out, the technologies include: Though Microsoft is just now suing Lucent, it officially became involved as early as February, when it began to intervene on Gateway's behalf. And though Lucent only sued Gateway last year, several of its patents had their origin (like mullets) in the early 80s.

Lucent spokesman John Skalko explains that since it spun off from AT&T in 1996, it has sought to defend its intellectual property. And, even though some of the patents in question have expired, Lucent says it notified Gateway and Dell before time ran out. "We are asking for fair and reasonable compensation for use of our intellectual property," he says.

Why does Microsoft care? In one court document, Microsoft said it interprets both the Gateway and Dell lawsuits as having come, at least in part, from the use of its software in their PCs. It's also likely that Microsoft is bound by indemnity clauses that obligate it to protect its customers should they ever get in trouble selling its technology.

The bad news for Lucent is that its sparring with PC makers ended up threatening Microsoft, which has formidable legal resources, to say the least. In recent months, Lucent has settled its legal matters relatively quickly so as to avoid further distraction for a company that is working hard to mend its public image and shareholder confidence (see Lucent Pays Big to Settle Claims and Lucent to Settle With SEC). This one, however, may take a while, as the damages could soar into the millions of dollars -- and court documents show the company has demanded a jury trial.

— Phil Harvey, Senior Editor, Light Reading

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digerato 12/5/2012 | 12:14:16 AM
re: Lucent/Microsoft Battle Brews Er... this is like when they tried to sue Cisco over patents on packet forwarding. Having failed to make any money on any of these technologies, the crusties at Bell Labs are crying foul: "you made money on things we thought about once in the 1970s".

What does this have to do with Lucent getting a clue on how to run a business -- please, any business -- at a profit?

st0 12/5/2012 | 12:14:12 AM
re: Lucent/Microsoft Battle Brews It's about time for Lucent start to defend its IPs. Way to go!

-st (you got my LU shares for this).
st0 12/5/2012 | 12:14:11 AM
re: Lucent/Microsoft Battle Brews Larry,
Is by any chances you are "lucentsucks"? you two look like got same DNA...

bilbo 12/5/2012 | 12:14:11 AM
re: Lucent/Microsoft Battle Brews If their IPR is really being infringed. The then AT&T spent billions developing a huge number of innovations in telecom / IT. Not all of which they chose to exploit. Much of what we now take for granted in these areas would not have come about if it were not for Bell Labs. Not to mention the profile they maintained for US R&D in these areas. If companies such as this are not able to gain compensation for their R&D expenditure then the days of such long term R&D in US industrial labs are over. That will be a loss to this country and the world. Microsoft just take and take expoliting other labs work and giving nothing back.

Oh - and I have no current or former association with Lucent.
st0 12/5/2012 | 12:14:09 AM
re: Lucent/Microsoft Battle Brews thanks Larry, I just curious (if you are, wish you all the best). that's all. the similarity is profound.

MaxQoS 12/5/2012 | 12:14:08 AM
re: Lucent/Microsoft Battle Brews Bilbo said:

"If their IPR is really being infringed. The then AT&T spent billions developing a huge number of innovations in telecom / IT. Not all of which they chose to exploit."

The ones who were really exploited by the then AT&T are the taxpayers. Bell Labs, part of a quasi-public monopoly invents all sorts of neat things and files patent applications. The entire business is, of course, funded by the public in the form of monopoly priced telephone services. Why don't we make all Bell Labs inventions prior to the breakup public domain with everything after 1982 shared between the public and AT&T for say, seven years. Then, everything from 1989 onward, AT&T or LU would retain full rights.

I find the notion that LU, which now seems to have no innovation, would rummage through old patents obtained while a monopoly and try to collect offensive. It isn't even as if someone is reducing sales of LU's products by infringing their IPR. Rather, some lawyer hopes to make LU a few bucks by suddenly discovering that LU holds the patent on the computer's cursor. Puh-leeze!


fhe 12/5/2012 | 12:14:08 AM
re: Lucent/Microsoft Battle Brews Lucent is not selling anything, so they came up with lawsuits like this, hoping to make a few millions, and maybe have the defendants pay the court fees as well.

But even then, where will the money go? It will end up in the pockets of the goons who call themselves CEO/CFO/VPs, or what have you.
malakraday1 12/5/2012 | 12:14:06 AM
re: Lucent/Microsoft Battle Brews Could someone please make a cogent argument against Lucent/Bell labs instead of ranting? I am interested in hearing why one might say people at Bell labs are lunatics. I'm also interested in what the argument might be for saying that Bell labs isn't innovative.

Please give specific examples of inventions or patents that are suspect.

My impression of Bell labs is that it is one of the most well respected private grouping of scientists in the world. I personally have never worked for Bell labs or lucent but I have worked with people from there and am interested in a serious critique of the place that is balanced.
WiserNow 12/5/2012 | 12:14:06 AM
re: Lucent/Microsoft Battle Brews Lucent/AT&T defending its right to earn money from its innovations is noting new. They did the same when they started charging license fees for UNIX. That sparked the UNIX group at Berkeley to strip AT&T IP out of BSD 4.4 UNIX. That was about 20 years ago.

I wonder what the business case looks like today? AT&T isn't getting much in the way of license fees for UNIX today, though UNIX is everywhere now.

BobbyMax 12/5/2012 | 12:14:06 AM
re: Lucent/Microsoft Battle Brews Dell, Microsoftr, Cisco, and Gateway have used technologies developed by Bell Labs. These companies took advantage of the current unpleasnt business situation at the companies. These companies misappropriated technologies from when it was at its lowest. These companies have become shameless in using technology develoiped by Bell Labs/Lucent.
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