Display Standard - Veritas et Visus

Veritas et Visus Display Standard February 2009
Westinghouse and Vizio bemoan ATSC license fees
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by Aldo Cugnini
Aldo Cugnini is a consultant in the digital television industry. Prior to founding AGC
Systems, he held various technical and management positions at Philips Electronics’
Research and Consumer Electronics Divisions and at interactive television developer
ACTV. He had a leadership role in the development of the ATSC Digital Television System,
and was a key member of the Advanced Television Research Consortium (ATRC)
development team. Mr. Cugnini received his BS and MS degrees from Columbia University
and has been awarded six patents in the fields of digital television and broadcasting. He
served on the board of directors of the Advanced Television Technology Center, and is the
author of numerous technical papers and industry reports, and is a regular contributor to
several trade publications. This article is revised from the Display Daily, published by
Insight Media on February 9, 2009. http://www.displaydaily.com
As the complaint appears to come from two companies that are outside of the “club” of essential patent holders, it
may represent frustration in paying royalties that the patent holders don’t have to pay. The filing goes on to ask the
FCC to declare that, “ATSC royalty demands that exceed international comparables are presumed to violate the
FCC’s RAND requirements.” The petition cites a number of references, including a 2006 article in the Chinese
business magazine 21st Business Herald, which described a State Intellectual Property Office (of China) list of
digital TV set royalty claims amounting to $23 per unit. The article attributed a “sharp increase in royalties” to
major patent holders Thomson and Sony.
The petition also requests the FCC to form a license pool for all essential ATSC patents. Currently, the intellectual
property required to sell an ATSC product come from a mishmash of patent holders, including MPEG-LA, Zenith,
Dolby, and others. When it was formed back in 1993, the “Grand Alliance” companies developing the US HDTV
standard had hoped to develop a licensing pool that would provide a “one-stop-shop” for licensees. The pool was
never formed, and each company holding intellectual property went on its own to collect from patent users.
Eventually, an independent licensing group was formed – MPEG-LA – to license MPEG and other essential patents
for a multitude of companies. While MPEG-LA later agreed to license various patents needed for ATSC products,
membership is completely voluntary, so the pool doesn’t cover all essential patents. MPEG-LA’s ATSC Patent
Portfolio License currently includes patents owned by Philips, LG, Mitsubishi, Panasonic, Samsung, Scientific-
Atlanta and Zenith. The filing also mentions that “the Consumer Electronics Association and several other parties
have alerted the FCC to problems involving DTV patent licensing practices...”, but in fact, the referenced CEA
communication pertained to the V-chip licensing program, stating that the V-chip license holder participated but
did not disclose to the FCC the ownership of an essential patent.
Last year, a number of companies that hold MPEG-2 video-related patents, including Mitsubishi, Samsung and
JVC, filed suit against Vizio, claiming that the company owed licensing fees for components used in their TVs. In
its defense, Vizio stated that their suppliers, the actual manufacturers of the parts, were responsible for the royalties.
Vizio later settled, saying that it had entered into an MPEG-2 Patent Portfolio License.
The Chinese government has already rejected the ATSC standard for DTV in China, claiming excessive royalties as
one factor. (They rejected DVB and ISDB as well). Now, the FCC is being asked to base a petition on a claim that
“reasonable” fees would be those comparable to what is paid for DVB or ISDB. Whether or not there is a disparity
in royalties, however, it is not the purview of the Commission to set international standards for licensing. And
claims of $20-30 in royalties seem to fly in the face of simple economics – ATSC DTV converters, sold at market
for between $30 and $50, could hardly carry such a burden, even when considering display-related patents.
Nonetheless, we’ll see how the Commission reacts to this issue – but keep in mind that they currently have their
hands full processing analog shutoff requests in light of the DTV transition delay..