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.

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.
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.

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.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    I WILL BE HONEST FOR YOU, May 3rd, 2010 @ 1:00pm

    HOW a poor guy lives

    because the "scene" is starting to out tons a x264 and I have begun making thousands of x264 for capped, throttled and poor users and they really don't want them to get it.
    THEY WANT YOU TO SUFFER. THIS is why net costs have been kept artificially high to get rid of poor users, so the excuse for non commercial is moot. IF everyone using the net is wealthy then you can afford to pay for it...RIGHT?

    IT is why they leave alone those precious torrent sites outing x264 and bluray cause it helps build them a market ( hollywood and sony and the hardware makers )
    THING is mepg-LA feels left out in this economic SCAM.

    TRY AGAIN. 24 million accounts in canada, and i nor any of them want to pay 29.95 for a music cdr like i saw at the Ajax Ontario future shop in 2005 , nor do they want to pay 499.99 back then for adobe photoshop 6, nor auto cads 7000$
    NOR vista/windows 7 extortion taxes.

    Ya know that open codec thats supposed to not be H264 but can been watched on h264 players

    and if its open and free any business wants to stop that cause they don't think they can make any money off it.

    Sans enter redhat and IBM even novel has made a good exchange off open source and free, with tech support and hardware and yea even odd time selling said free products for the sake of convenience to some.

    FOR personal and non commercial purposes i have recoded over 5000 xvids and encoded hundreds of dvdrs to a 500 kilobit bitrate at 25 frames in x264 this gives me a 450 meg sized movie and a 190-200 meg tv ep.

    YOU SAVE BIG BUCKS when that xvid is almost double that size and the dvdr is 4.7 or more GB.

    ALSO you save bandwidth ( for those throttled and capped )
    NOW think if BCE and rogers and all those isps didn't do this stuff would i see so many wanting my stuff?
    NOPE. AND when VLC free player can watch em....as with any free player, ON ANY PC ( i use a 800mhz with 256 meg ram for encoding LOL ) am disabled and on medical welfare waiting for disability. I have no money to buy that uber new hardware nor do i ever dl a blu ray rip at 25 GB , nor a HUGE 1080P at 2-6GB size, as i do not nor can afford the cost of the hardware.

    WELL enter meg-la, we have to stop this guy making stuff and doing all this- hes not paying.ITS funnier still that i can put a bluray, a dvdr , a BIG 1080P X264 and one of my rips all at same time and almost 90% go for my rip. OMG, you say. KNOW whats neat-5 tv eps ona regualr cd a whole tv seaosn per dvdr?

    ALSO OMG -people making freely legit video and those out for copyright in canada I now have ability to make my own movies. YES i am now doing that as well. I take clips and parts and scenes from the old mix and match add a few web cam spots and poof a movie costing me only my time that looks pretty cool. COST : whatever electricity and about 5 days a movie.

    TOO bad copyright is 50 years if it was 25 i could get access to some better effects. AND yes i can make 3d renderings myself. THEY all want us locked into paying big time.

    P.S. ALSO a thank you to all other disabled whom also have given me a thank you for standing up for them and there right to do stuff. IMAGINATION takes two. I to dream and you to enjoy.

    NOW back to your regularly TAM scheduled programming.
    Sorry if my spelling and grammer aren't perfect, im not a english teacher, nor am i all that convinced talking about reforms is the way to go anymore. WE gave talk 10 years and it got no one anywhere. Anyone who thinks otherwise needs only look at how all the rich people are able to infringe and you or I or the poor in life can't( warner ceo's son, john macain , obama , sarkozy, UK Offcials, rupert murdoch of fox news the list gets bigger everyday). ITS starting to show how bad copyright is and patents. I was the one back in the beginning to say lets all just stop torrenting for the summer all of us and when they actually get less sales they can go fuck themselves.....

    ....avatar 2.7 BILLION to date, ya know i think they made enough how about you. WHY NOT a good will and make a free download form now on? BOY THE PR would be incredible.
    AND yea know as good looking as the movie was , it was hard to watch it end to end as it wasn't that good a movie.

    OH and yea i share my net account with a low income lad who enjoys the private ftp i have internally. NEXT....

     

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  2.  
    identicon
    Anonymous Coward, May 3rd, 2010 @ 1:03pm

    Re: HOW a poor guy lives

    Honestly, you make TAM look like a genius.

     

    reply to this | link to this | view in thread ]

  3.  
    icon
    Hephaestus (profile), May 3rd, 2010 @ 1:20pm

    Re: Re: HOW a poor guy lives

    He is probably one of those English as a Second Language types. More than likely French canadian. I dont get THE RAnDOM CAP THING though.

     

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  4.  
    icon
    Paul (profile), May 3rd, 2010 @ 2:20pm

    Patents promote progress...

    ... how again?

    Who is going to seriously contend we are going to get more media and more content by granting to some "patent pool" the right to prevent even professional cameras from being used to record video?

    How does this help the content creators, if their video has to pay a royalty to a patent pool even if they buy an expensive, professional camera?

    All this does is put up an artificial barrier to entry by anyone starting out in video.

    Patents give companies the right to prevent products from being developed and sold to customers. No patent ever gives you the right to produce a product. Any significantly complex technical product could have a thousand patents filed and granted, and still run afoul of some dinky patent held by some patent pool or patent troll.

    We need to cut the number of patents by a factor of 100 or more, raise the bar on filing a patent, and pass laws that prevent any non practicing entity (patent troll) from taxing people that develop and ship products.

     

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  5.  
    icon
    Richard (profile), May 3rd, 2010 @ 4:02pm

    Unenforceable

    - 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.
    I think it's been ignored because it has no validity.
    Patents don't constrain the users of products. I don't think the licence constrains end users in any way.

     

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  6.  
    identicon
    HOW a poor guy lives, May 3rd, 2010 @ 5:30pm

    and if 100% ignore it

    if everyone standing aorund sees the tree fall in the forest but ignores it did it really fall? YES BUT WHO CARES. IT didn't matter. And this would be like having a patent on breathing and drinking water and the wheel.

    THINGS like this HARM innovation period and im sorry two the two posters after the 1st CAP means EMPHASIS on what your reading or used as way to make a part STAND OUT.

    Glad you didn't disagree with anyhting said there and its all spelled correctly so how is it english as a seocnd language. Dark knight and TAM is that you?
    TWO people who prolly would run over a grand mother to get at the 25 cent quarter on the road. LOL YOU BOTH make me laugh. Again what makes some people funny when they cant put the message down tehy try to put the writer down.

    Doesn't work of course others read it and understood i did anonymously so after i hit submit i cannot re edit it.

     

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  7.  
    identicon
    Salut, May 3rd, 2010 @ 5:32pm

    P.S. i guess also we shold bring some french canadians buy here

    see how they take to the racist comments of that one poster.

     

    reply to this | link to this | view in thread ]

  8.  
    identicon
    Anonymous Coward, May 3rd, 2010 @ 6:21pm

    Just like with the Pfizer case, they're afraid that if an invention doesn't receive a patent or if it doesn't receive a patent again or if someone doesn't pay royalties, the invention might get uninvented.

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    Anonymous Coward, May 3rd, 2010 @ 6:28pm

    Re: P.S. i guess also we shold bring some french canadians buy here

    Perhaps you could find one that knows what racism is?

     

    reply to this | link to this | view in thread ]

  10.  
    icon
    Niall (profile), May 4th, 2010 @ 4:54am

    So now its the equivalent of when I buy a Ford I am only allowed to use it for non-commercial use? How can you restrictively license the use of a bought video camera?

     

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  11.  
    identicon
    UNAMED.ONE, May 4th, 2010 @ 5:18am

    Nothing to see here, movie along.

    "HOW a poor guy lives" and "salut" is just NAMELESS.ONE (who is indeed Canadian) making his usual rounds. I find his posts hard to read too, which eventually led to a habit of automatically skipping over posts by him without thinking. Same thing happened whenever I saw TAMs inverted avatar. It's a natural defense mechanism I believe, allowing the human brain to protect itself on a subconscious level from illogical insanity that would otherwise cause it to explode. ;)

     

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  12.  
    icon
    packrat (profile), May 4th, 2010 @ 5:48am

    can.tax.pat

    oh, i understand the french guy.. typing in a fury does that to your messages. I do it all the time.

    I'm not paid for this and the scavengers making time off my efforts irk me.

    Myself, I started complaining about this (codex prob) already.. asking for open source to be included in editing packages.
    (corel is a mickysoft biatch, so the prob'itly o'dat is small)

    dunno if .m2ts (sony. weird, eh?) uses the same algorythmn encoding in it's cameras. hope not.
    the same way explorer 5 stayed standard for YEARS beyond it's life cycle makes india and it's industry a forlorn hope for user sanity.

    all your area 1 dvd players belong to us now, right?

    packrat

     

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  13.  
    identicon
    staff, May 4th, 2010 @ 6:31am

    "patent troll"

    Call it what you will...patent hoarder, patent troll, non-practicing entity, etc. It all means one thing: “we’re using your invention and we’re not going to pay”.

    For the truth about trolls, please see http://truereform.piausa.org.

     

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  14.  
    identicon
    h.264 a joke b4 the pattent n e way, May 4th, 2010 @ 9:25am

    Retailers Obligation

    This must mean that retailers should be required to put any device that uses codecs to said deliverable format eg. h.264 as not 4 sale price but @ license fee LOL !!!

     

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  15.  
    icon
    nasch (profile), May 4th, 2010 @ 10:00am

    Re: and if 100% ignore it

    I started reading it but it was looking like something from NAMELESS.ONE, which is almost always unintelligible. So I quit. Seriously though, some friendly advice. I know what you're trying to do with the caps, but it really just looks weird and doesn't work. When combined with incorrect capitalization in other places, incorrect or missing punctuation, spelling errors (despite your claim), and questionable sentence structure, it makes your post hard to understand and less likely to be taken seriously or even read.

    Consider using italics instead. This has the disadvantage of working differently on different forums, but it is a universally (AFAIK) recognized way to add emphasis. On this forum it can be done with the HTML i tag - google that if you're not familiar.

    Switch to italics, take care to punctuate and capitalize correctly, and I can almost guarantee your posts will get a lot more attention.

     

    reply to this | link to this | view in thread ]


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