Circuit City’s Divx Patents Up for Auction Aug. 16
The patents behind Circuit City’s failed Digital Video Express (Divx) conditional-access DVD system will be up for auction in August, starting at $750,000, perhaps signaling new life for the technology in some as-yet-unknown application.
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Imaging Transfer Co. entered the stalking horse bid for 24 issued and pending patents in U.S. District Court, Richmond, Va., setting the stage for an Aug. 16 auction. Bids are due Aug. 12, said Streambank, which was hired earlier this year to market the Divx technology by the Circuit City Stores Liquidating Trust. Streambank began marketing the Divx assets in April.
Circuit City developed Divx-based hardware that it shopped to rival retailers in 1998 and 1999, spending $300 million on it before scrapping the system, Streambank said. The manpower and resources devoted to Divx were blamed in part for landing Circuit City in financial trouble that led to bankruptcy in late 2008 and liquidation.
Despite Circuit’s having halted marketing of the system, the technology behind it, including compression, distribution, security, usage tracking of movie content and anti-piracy, “remains relevant,” Streambank said. After Circuit dropped Divx, the management behind it formed a company call Cinea to develop content protection and anti-piracy technology for digital cinema. Cinea licensed a group of Divx patents in 2003, shortly before being acquired by Dolby Laboratories. Cinea and Dolby continued to market the technology for digital cinema through the expiration of its license in 2008, Streambank said.
Among the patents included in the Divx portfolio were those granted in March 2003 and June 2005 describing a method for implementing open and closed file systems on a storage medium and a system for encrypting/decrypting data arranged in a sector. It also covers a means for tracing a source of unauthorized copying of pre-recorded proprietary material. The latter patent was granted Digital Video Express in September 2001.