Fraunhoffer, which is partly state-funded, invented, published and patented MP3 in the early 1990s. To market it worldwide, it allied itself with Thomson Electronics, a commercial electronics firm, which adopted a non-discriminatory licensing policy, which by normal standards was quite successful.
What neither Fraunhoffer nor Thomson Electronics foresaw that MP3 would become the dominant standard for online music and the latter would become a grass-root movement, operating outside the established legal framework. Thus, most of music downloaded on the Internet was in the MP3 format but was done on a peer-to-peer basis, without any payment of royalties and acknowledged copyright. On the other hand, since the launch of I-tunes and similar legal online music systems, MP3 is even more dominant and does generate royalties to patent holders. Yet, somehow the impression persists that neither Frauhoffer nor Thomson truly capitalised on MP3 runaway success.
I was reminded
of the MP3 saga by an on-going legal fight around the wi-fi standards, the
dominant wireless Internet technology.
The fight opposes Commonwealth Scientific and Industrial
Research Organization (CSIRO), part of the Australian government, and major
wi-fi players including Microsoft, Dell, Intel, Hewlett-Packard and Netgear. CSIRO
filed patents covering both 802.11a and 802.11g standards in the early
1990s.
Contrary to Fraunhoffer, it did not seek to licence its designs
aggressively. However, as wi-fi became industry standard, CSIRO sought to
enforce its right and obtain royalties. Its efforts were strongly resisted by
big players and it is in response to this opposition that CSIRO decided to
litigate. It hired an
CSIRO expects that once
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