AAI to FTC: Watch Rembrandt IP Management Patent Fight

American Antitrust Institute Tells Federal Trade Commission Cost of DTV Equipment Could Increase Dramatically

An antitrust think tank asked the Federal Trade Commission to step in to the patent fight between Rembrandt IP Management and the TV industry over a key element in the digital-TV transition.

In a petition to the commission, the American Antitrust Institute asked it to investigate

Rembrandt -- which holds the patent on a key element in the DTV-transmission standard -- for "anticompetitive conduct that threatens the digital-television conversion."

Rembrandt described its mission as allowing scientists, businesspeople and inventors to "obtain the true value of their innovations."

But the AAI said it is seeking much more than that, and that if the government does not step in, Rembrandt could "dramatically increase the cost of digital-television equipment and the cost of digital television generally."

AT&T held the original patent, but it was eventually transferred to Rembrandt, which filed lawsuits against TV and cable networks -- essentially the end-users -- seeking 0.5% of "all revenues" derived from the Advanced Television Systems Committee transmission standard mandated by the Federal Communications Commission.

But while the FCC conditioned acceptance of the standard on its patents being licensed on reasonable and nondiscriminatory (RAND) terms, which AT&T agreed to, the AAI said Rembrandt refused to do so and that its 0.5% is unreasonable and excessive, adding that the cost to the broadcast networks would amount to 10 times what they paid for the ATSC-compliant transmitters they bought from manufacturers.

"With such a disparity between what Rembrandt is seeking from the end-user networks and what similarly situated patent-holders charge the manufacturers, or between Rembrandt’s royalty demand and the manufacturers’ revenue from relevant sales," the AAI said in its petition, "breach of the RAND commitment is indisputable."

The AAI wants the FTC to block Rembrandt from enforcing its patent unless it does so on reasonable and nondiscriminatory terms. Not to do so, it said, could cause others with ATSC-related patents to engage in similar "patent hold-up" conduct that could "cripple" the DTV industry.

A call to Rembrandt for comment had not been returned at press time.