Chinese DVD Makers File Antitrust Suit Over Royalties—Report

The manufacturers, Orient Power Wuxi Technology and Wuxi Multimedia, sued the 3C patent pool of Philips, Pioneer and Sony late last month, complaining Chinese manufacturers were forced to pay higher royalties than companies within the DVD patent pools, China Daily reported. The plaintiffs are seeking a refund of DVD royalties paid to date as well as treble damages under U.S. antitrust law, the newspaper said. Comments from 3C license administrator Philips or the plaintiffs weren’t available Tues.

A lawsuit vs. 3C was originally filed last June by Wuxi Multimedia, then amended Dec. 28 by adding Orient Power Wuxi Multimedia as a 2nd plaintiff. At the time, charges were also filed vs. Zenith parent LG Electronics, and several new claims were entered. Court documents hadn’t been obtained by Consumer Electronics Daily by Tues., but reports quoted an attorney Anton Handal of U.S. firm Handal & Assoc., representing the plaintiffs, as saying: “We are seeking a judgment that the 3C patent pool is invalid and are calling for a monetary refund of all DVD player royalties collected.”

Handal also reportedly said the plaintiffs would seek treble damages under U.S. law and contended their suit was likely to succeed, citing an International Trade Commission (ITC) ruling last March that questioned the propriety under the Sherman Act of another patent-pool Philips administers. He couldn’t be reached for comment Tues.

That case, as previously reported here, involves the pool-licensing arrangements of Philips, Sony and blank media maker Taiyo Yuden for their patents for recordable CD technology. Philips had sought to enforce the pool’s IP by asking the ITC to ban imports of some Taiwanese blank CDs the U.S., arguing their low cost was a result of negligent royalty payments. The Taiwanese makers counterfiled with the ITC, whose adjunct-judge hearing the case side-tracked the Philips complaint by raising questions about the legality of patent pools. Since then, Philips has appealed to higher courts, contending patent pools are an established and efficient means of granting licenses to would-be manufacturers compared with their having to negotiate individual licenses with multiple companies holding patent to any given technology.

The run-in between 3C and Orient Power’s various subsidiaries isn’t the first. That company, whose parent is Hong Kong-based Orient Power Holdings, has had several disputes with Philips and 3C since its first DVD players, marketed under the Oritron brand and various private- labels in the U.S. and elsewhere, hit retail at the then- remarkable sub-$200 price point late in 1999. Although OP Wuxi is listed as a licensee by Philips and the DVD Format/Logo Licensing Co., Philips posts the following disclaimer regarding the parent company:

“Please note that Philips’ agreement with OP Wuxi specifically excludes any other company or entity associated to the Orient Power group of companies in Hong Kong. Therefore, except for OP Wuxi, no other company associated to the Orient Power group of companies can claim that they are (by virtue of Philips’ agreement with OP Wuxi) licensed by Philips for DVD. Furthermore, no company associated to the Orient Power group of companies will be able to supply licensed products through OP Wuxi even if such products were manufactured by OP Wuxi. By means of a letter, the Orient Power group of companies have been asked to cease and desist from the use of Philips’ patented technologies in DVD.”

Meanwhile, a search of the various licensing sites turns up no trace of Wuxi Multimedia. It’s not known if Wuxi and OP Wuxi plan similar antitrust suits vs. the 6C and other patent pools.