Wired News reports on a federal jury’s big legal judgment against Microsoft over licenses to MP3 technology and questions whether MP3 has a future if the patent claims by Alcatel-Lucent are upheld.

This rather important story has received only scant coverage in the media that I can see. If MP3 is abandoned by the software industry, it’ll inconvenience a lot of people, but probably leave us better off in the long term.

MP3 is not a terribly high-quality format and it doesn’t support some features, such as bookmarks, that would make podcasting more useful. It has triumphed in the market for the same reason that VHS video did: it was in the right place at the right time. The best standard doesn’t always win, and that’s certainly the case here.

If Alcatel-Lucent tries to wring every royalty it can out of this situation, it will score a short-term win but kill MP3 in the long term. The company will be better off accepting 10 cents on the dollar from a few big players and then putting MP3 under a creative commons-type license. It would get some good PR from such a move and could then position itself as a leader in developing digital audio formats.