We’ve covered the impending digital TV transition here much, but there’s a new twist that could make it more expensive than it should be to make the change. A small company called Rembrandt, Inc. is flexing its patent muscle by suing 14 companies, including the parent companies of many networks that will broadcast the digital TV signals.
The American Antitrust Institute is asking the government to ignore Rembrandt’s patents, as it would raise the price of digital TVs for consumers, further raising a hurdle many see in the way of digital TV.
Here’s the thing that sucks: Rembrandt didn’t invent digital TV. It didn’t invent anything, really. Rembrandt is a patent company, they buy patents and then sue the pants off of anyone they think might be violating one. This type of business model is vampiric, yet legal. We’re hoping the government sides with the AAI against Rembrandt.
A patent is an asset, plain and simple. No different that a semiconductor fab or Gilette’s razor factories. They are all assets paid for by for-profit companies to earn an ROI for its investors. AT&T made money off the patent when it sold it to Paradyne, and Paradyne made money off it when it sold it to Rembrandt. If Rembrandt wasn’t there to acquire the patent and enforce it, Paradyne would end up sitting on a depreciating asset and getting nothing for it.
And don’t try and argue against Rembrandt for suing companies. Have youy ever tried to license a patent? Obviously not, because if you had, you’d realize that NOBODY wants to pay for a patent license unless they are forced to. Big companies realize that products and services work perfectly well without paying for patents. They hate it when people steal their products or cable services, but they have no problems stealing other people’s IP. Nice.
There appears to be more to this story than the knee-jerk reaction by Matt Hickey. The AAI release
http://www.antitrustinstitute.org/archives/files/AAI%20petition%20re%20rembrandt%20press%20release3.26.08_032520082005.pdf
does not state as Hickey relates “asking the government to ignore Rembrandt’s patents” but rather that these patents must be fairly licensed.
Quoting from the statement:
“AAI alleged that Rembrandt violated policies of the Federal Communications Commission (FCC) and the Advanced Television Systems Committee (ATSC), private standard setting body, that intellectual property involved in the digital television standard must be licensed on a reasonable and nondiscriminatory basis.”
Hickey’s conclusion concerning “vampiric” business practices by “a patent holding company” falls way short of constructive reporting or comment. The more interesting twist is why the original patentee in this matter, ATT, decided it was beneficial to sell these patent rights to a group that might later seek to enforce those rights. Possibly ATT was involved in establishing standards of the Advanced Television Systems Committee (ATSC) and realized the patents were valuable but unenforceable except by a third party. The patents were then sold, assuming at a profit, to Rembrandt.
That certainly would be a more interesting investigative reporting article than a simple “blame it on the patent holding company”. So exactly how did Rembrandt end up with these patents and why did ATT sell them?
As to this notion about firms that speculate in patents, let me explain. Typically when inventors or small entities approach large firms about taking a license for use of their patents they only get the run around. Elias Howe, the inventor of the sewing machine was threatened with being kicked down the stairs when he approached one infringer. The only thing a patent will do for you is give you the right to sue someone for infringement. The problem is that seldom do small entities have the money to enforce. Their only recourse is to sit on the curb and watch as the big firms thumb their noses or find a creative way to take action. One creative way is to do a deal with a patent enforcement firm. Of course big firms don’t like being held accountable. That’s where this silly “patent troll” talk comes from. Pretty childish.