FullMetal*Panic!

AT&T Warns Apple, Others, Of Patent Infringement

AT&T has begun to name names in its hunt to license its MPEG video compression patents.

AT&T possesses several patents related to video compression, which the company says are an essential component of the MPEG-4 video technology. In a bid to drive its global licensing program, AT&T has targeted Apple Computer, Inc., CyberLink Corp., DivX, Inc., InterVideo, Inc., and Sonic Solutions as unlicensed companies whose products and software utilize the MPEG-4 technology.
ADVERTISEMENT

AT&T has also contacted national retailers that distribute products from the companies listed above, to let them know that they may be held liable for infringement.

"Each of these companies has been advised that they are offering infringing products, that AT&T can provide proof of infringement, and that AT&T is offering a license under reasonable on non-discriminatory terms," Michael J. Robinson, licensing director of AT&T Intellectual Property Management, wrote in a letter sent in December 2005, and obtained by PC Magazine.

"If your company obtains MPEG-4 products or software from any of these companies, or any other unlicensed company, you are responsible for obtaining a license directly from AT&T or run the risk of distributing infringing products," Robinson wrote. "Damages resulting from the distribution of infringing products can include AT&T's lost profits, royalties and, in the case of willful infringement, treble damages and attorneys fees and costs."

Representatives from the companies named in AT&T's letter, including Apple, said they weren't aware of any notification from AT&T about possible infringement of its patents. "We believe that we have all necessary rights and licenses with respect to all of our products," a spokesman for Sonic Solutions replied.

AT&T and MPEG

For its part, AT&T has maintained that its patents underlie the MPEG-4 technology. PC Magazine attempted to contact Robinson for confirmation of the letter, but his office referred him to spokesman Jason Hillary for comment.

"The intellectual property developed by AT&T is a core component of MPEG-4 capability," AT&T's Hillary said, who declined to specifically confirm the letter's contents. "We are actively discussing and working out terms with each company for the licensing of that intellectual property, to enable them to fully take advantage of the technology."

"AT&T has intellectual property in the MPEG-4 area and are actively discussing licensing terms with a number of organizations," Hillary added. "We've announced and finalized agreements with two companies. We are having discussions with other companies but we can not provide details."

In the letter, AT&T said it can provide proof of the infringements, which could result in potential damages including lost profits, royalties and – assuming willful action – treble damages and attorneys' fees.

MPEG-4 technology is used mainly in streaming media applications and is made up of several parts. The "parts" or standards are responsible for regulating multiple multimedia units, including audio, and in this case, video profiles.

The MPEG Licensing Association (MPEG LA) oversees a patent licensing program for MPEG-2 and MPEG-4 technologies, with which AT&T is not affiliated. The separate MPEG standard falls under the auspices of the International Standards Organization (ISO) committee, which requires any company which participates in the committee to submit a letter saying they will license their patents on reasonable non-discriminatory terms, known as a RAND letter. AT&T's letter apparently doesn't cover the MPEG-2 AAC audio patents, which are administered -- along with patents from Dolby, Fraunhofer IIS, and Sony -- by Via Licensing Corp.

The MPEG-LA's MPEG-4 program is based upon patents that are essential to the standard. Licensing is voluntary, and patent holders are responsible for submitting their technology to be evaluated. If it is not deemed crucial for MPEG-4 implementation, it is not included in the MPEG LA's program.

Even if a patent is not essential to the MPEG-4 standard, it could still be important to particular product implementations, said Larry Horn, the president of licensing and business development for MPEG LA. Horn said he was not aware whether or not AT&T owned an essential patent.

"There could be many reasons that AT&T is not part of the program, maybe they didn't want to be included," Horn said. "We, as a company, don't make any assurances that all essential patents are included."

All of the companies named in the letter are involved with the editing, processing, or playback of video. With its video-enabled iPod, Apple is a high-profile target.

"This is all standard stuff, the only thing that makes it sexy is the fact that Video iPods [and similar products] are now very popular," said Greg Aharonian, editor of the Internet Patent News Service. "So if any of those companies are using this technology, they may have a problem."

Last year, AT&T announced that Pentax Corp. and Nero are among the latest licensees of its MPEG-4 patent package, allowing the two licensed companies to move ahead unencumbered by patent restrictions.

"Nero7 supports [MPEG-4 Part 2 Visual] and we needed a license in order for us to be able to include it and to sell our products to customers for OEM," a spokesperson for Nero said.

"Nero is a software maker, so they would provide encoding capabilities in their software," Hillary said. "Pentax would provide the ability to play back these types of files in the hardware that they create."

Pay-for-patents underlie standards

This isn't the first time that a company has tried to license out such a widely-used technology. Unisys, a player in the global IT industry, patented its GIF image format, asking software developers to pay royalties on programs that integrate GIF files. This eventually led to the development of PNG (Portable Network Graphics), a comparable format without legal restriction.

"In the patent world, the user of a product is responsible for figuring out which intellectual property obligations they have and how to meet them," Horn said. "They become vulnerable if infringing a patent under which they are not licensed."

With the recent explosion of products that use the MPEG-4 standard, including Apple's Video iPod and Creative's Zen Vision:M, AT&T could stand to gather a financial windfall from its patented technology. An increasing trend in mobile phone multimedia also signals potential future profits to be made through the global licensing program.

"AT&T could certainly try to go after any company that sells products like iPod - there's always a strategy with licensing technology," Aharonian said. "If you charge too much it gives people the ability to challenge the patent in court. If you charge something less, most people will just sign the license since it costs more to fight than to pay the license."

AT&T says it is looking to break from tradition by developing and delivering new services with extended capabilities. Its focus includes areas that would enable the company to deliver additional services over the existing network infrastructure.

"What we're doing is pretty common among intellectual property holders," Hillary said. "We're looking for ways to make sure others are able to take advantage of this technology and expand their capabilities and services by utilizing it, and at the same time we're able to get fair value back for the research and R&D expenses that go into developing it in the first place."

"A number of technologies have been developed, most of which relate back to the core communications services we deliver," Hillary said. "Think about video technologies. That's certainly one area we're looking to expand our capabilities for video."

Editor's Note:Additional comments by MPEG LA's Horn have been added to the story at 2:04 PM PDT on Feb. 10, 2006, in order to clarify Horn's position regarding AT&T's patents and AT&T's relationship with MPEG LA.