Group Asks FTC To Probe TV Patent Cases

The American Antitrust Institute, which lobbies for enforcement of antitrust laws, has asked the Federal Trade Commission to investigate the actions of a patent-litigation firm that has sued broadcasters and cable operators over their use of a patent pertaining to the standard for transmitting digital TV signals.

Rembrandt IP Management, based in suburban Philadelphia, acquires the rights to patents and then files infringement suits. Such firms are derogatorily referred to as “patent trolls.”

In the last two years Rembrandt has filed suit against Comcast, Time Warner Cable, Charter Communications, Cox Communications, Cablevision Systems, ABC, CBS, NBC Universal, Fox and Sharp Electronics alleging infringement of a patent—now owned by Rembrandt—that is central to the Advanced Television Systems Committee’s digital TV transmission standard.

Rembrandt has sought to collect 0.5% of all revenue generated from services that allegedly infringe on the digital TV patent, which was originally issued to AT&T, according to an attorney close to the litigation.

The American Antitrust Institute said that if Rembrandt is successful, its actions would increase the costs of the conversion to digital television for millions of consumers.

"Enforcement action by the FTC is necessary to protect the millions of consumers who will ultimately pay for the excessive royalties Rembrandt is demanding," American Antitrust Institute president Bert Foer said, in a statement. The not-for-profit group does not accept donations from private interests.

Rembrandt representatives did not respond to a request for comment on the American Antitrust Institute’s filing.

In a March 26 petition filed with the FTC, the American Antitrust Institute alleged that Rembrandt violated policies of the Federal Communications Commission and the ATSC that intellectual property involved in the digital TV standard must be licensed on a reasonable and nondiscriminatory basis.

Rembrandt in December 2004 acquired the ATSC-related patent—U.S. Patent No. 5,243,627—from Paradyne, which was once owned by AT&T.

Digital broadcast-equipment vendor Harris – which is fighting Rembrandt in Delaware state court in relation to its broadcast customers’ use of its ATSC-based gear – has argued in court documents that when AT&T owned the patent it committed to the ATSC that it would license any intellectual property to users of the digital TV specification on fair, reasonable and nondiscriminatory (FRAND) terms.

Harris alleges that Rembrandt did not offer FRAND licensing terms and is suing Rembrandt for breach of contract based on AT&T's prior commitment.

Rembrandt also alleges the cable operators infringe other patents acquired from Paradyne that the firm claims pertain to DOCSIS cable modems.

In November, six DOCSIS equipment vendors—Motorola, Cisco Systems, Arris, Thomson, Ambit Microsystems and Netgear—filed a complaint in the U.S. District Court for Delaware seeking a declaratory judgment against Rembrandt to affirm that their cable-modem products don’t infringe on the patents in question.