Why Is MPEG-LA Getting Into The Patent Trolling Game?
from the questions-worth-asking dept
Joe Mullin has a great blog post, looking in detail at MobileMedia, a recently launched "company" that fits all the traditional characteristics of a "patent troll" or "non-practicing entity" (if you'd prefer). It doesn't appear to do anything but hold patents, demand licensing fees and sue. So what's so interesting about this one? Well, it's a subsidiary of MPEG-LA, the company that manages some important digital video standards, and manages the patent pools related to them -- and both companies have the same CEO. In some cases, it seems like there's a clear conflict here:Even more unusual is that one of the companies targeted in MobileMedia's initial batch of suits is Apple (the others were BlackBerry maker Research in Motion and HTC). Apple happens to be among the companies that has contributed patents to MPEG-LA patent pools, including those covering the MPEG-4 and the IEEE 1394 (Firewire) standards. That puts Horn in the position of collecting money for Apple on behalf of MPEG-LA while at the same time trying to wring money out of the company on behalf of MobileMedia. Considering the breadth of MobileMedia's patent claims--the company claims to hold patents relating to all the central functions of "call handling, speed dial functions, database searches, audio download and playback, and still picture and video processing"--it's easy to imagine that Apple won't be the last company to wind up on both sides of Larry Horn.While some may claim that MPEG-LA and MobileMedia are basically in the same business, Mullin notes the important distinctions:
But there are big differences between the MPEG-LA licensing operation and the nascent MobileMedia campaign. First of all, MPEG-LA's patent pools are widely recognized as vital to digital video technology throughout the industry. And they're accepted as covering industry standards. MobileMedia, on the other hand, holds patents that cover phone features but not industry standards.Mullin has much more detail in the article, including some quotes from the CEO, and also some more details on the patents in question -- including the fact that they came from Nokia and Sony, opening up more questions about why MobileMedia targeted Apple, RIM and HTC in its early lawsuits.
Second, MPEG-LA's licensing rates are relatively low--$2.50 per device for those that want to make a DVD player using MPEG-2 standards, for example, down from $4 back in 2002. And the pool is controlled by a large group of competitors with a shared incentive to keep those rates low (lower licensing costs means more devices made means more revenue for pool contributors).
Finally, MPEG-LA doesn't file enforcement lawsuits on its own. If a user of the MPEG-2 standard, for example, refuses to pay to license patents from the company's pools, MPEG-LA notifies the patent-holders that they may want to file suit. MPEG-LA simply plays an administrative role.
By contrast, MobileMedia owns its 122 U.S. patents (and related foreign patents) outright, and so can enforce them directly. And its majority owner is a pure patent-licensing company that doesn't make products. That gives it an incentive structure more like those of typical "non-practicing entities"--also known as "patent trolls"--that use the threat of litigation to collect settlement cash without concern for the actual market in question.
What I find interesting, of course, is that many patent system folks have said that patent pools are the "answer" to issues like non-practicing entities filing crazy lawsuits. And yet, here we have an example of one of the major patent pooling administrators apparently deciding it's more lucrative to get into the other side of the business instead...
In the meantime, while all this has been going on, it's worth noting that Steve Jobs -- one of the targets in this lawsuit -- has apparently been telling people that MPEG-LA is getting ready to sue open video codecs, such as Theora, for patent infringement. Of course, such threats have been made before and never carried out -- but if MPEG-LA now thinks that suing for patent infringement (rather than just alerting the patent holders to possible infringement) is the way to go these days, perhaps the lawsuits above were an opening salvo.
On top of that, a whole bunch of you have been submitting this somewhat speculative story that notes that MPEG-LA has structured its licensing program in such a way that pretty much any video camera you buy -- even the so-called "professional" ones -- includes a clause saying that it's only for "personal and non-commercial use," because MPEG-LA's licensing terms for anything else are ridiculously high. It appears that this clause has been almost universally ignored by... well... pretty much everyone. But if MPEG-LA is suddenly moving into more questionable means of bringing in revenue... it could get more troubling quickly.
