Set-Maker Asks FCC For Help In Patent Dispute

Vizio calls Funai’s patent fees “extortionate”
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Vizio, a leading manufacturer of value-priced HDTV sets, has enlisted the FCC’s help in its ongoing patent dispute with Funai, a Japanese manufacturer which sells HDTV sets under the Sylvania and Philips brands and which also holds some patents relating to the U.S. digital TV standard which it acquired from Thomson Consumer Electronics.

Irvine, Calif.-based Vizio, which is currently involved in patent litigation with Funai, has filed a “request for temporary relief” with the FCC asking that Funai be made to comply with the patent licensing conditions adopted by a host of technology companies which were involved with the creation of the Advanced Television Systems Committee (ATSC)’s digital TV standard. According to FCC rules, Funai is required to respond to Vizio’s request within seven calendar days.

“Vizio has requested that the FCC order Funai to cease its unreasonable and discriminatory patent enforcement policies while the FCC considers a pending petition for declaratory ruling,” said Vizio. “The declaratory ruling seeks action and protection from excessive DTV patent charges that have collectively exceeded $1 billion.”

At issue is U.S. Patent No. 6,115,074, which relates to the Program and System Information Protocol (PSIP) data which is transmitted within DTV signals to deliver program guide information and other data. Funai, which acquired the patent in 2007 from Thomson, has filed a complaint with the International Trade Commission seeking to block six manufacturers from importing their DTV sets into the U.S. on the grounds that they infringe the Funai patent.

According to Vizio’s FCC filing, Funai is asking for a license fee of $5 per each Vizio set for the patent, which Funai deems essential to the ATSC system. Vizio says that the $5 fee is “extortionate” and would force it to raise the price of its HD sets at the same time that the country’s long-running digital TV transition is drawing to a close.

“Funai plans to exclude Vizio receivers, which are among the leading low-priced digital receivers available to consumers, just before the digital television transition concludes in June,” said Vizio. “If that happened, there could be shortage of digital televisions, just when consumers need them the most, or the prices consumers have to pay for new receivers will increase. Either result will harm the smooth transition to digital that Congress sought to achieve in passing the DTV Delay Act.”

Vizio says that Funai’s requested fee doesn’t meet the reasonable and non-discriminatory (RAND) patent licensing terms that members of the ATSC patent pool, including Thomson Consumer Electronics, originally agreed to during the formation of the ATSC standard.

Vizio says that Funai’s proposed $5 fee is equal to the rate charged by the entire ATSC patent pool administered by MPEG LA, which provides licenses for at least 32 patents owned by at least seven companies including Philips Electronics, LG Electronics, Mitsubishi, Panasonic, Samsung, Scientific-Atlanta and Zenith Electronics. It also notes that the MPEG-4 compression technology which will be used by new mobile DTV handsets under a proposed addition to the ATSC standard is being licensed at no more than 25 cents per unit.

Vizio isn’t the only entity complaining about Funai’s patent pricing. A consumer interest group called The Coalition United to Terminate Financial Abuses of the Television Transition (CUT FATT), which petitioned the FCC last month to scrutinize patent licensing fees for digital TV sets, says it is supporting of Vizio’s request to the FCC regarding Funai.

“On one hand, the DTV Delay Act highlights the importance our government leaders place on a digital TV transition that avoids imposing enormous burdens on American consumers,” said CUT FATT spokesperson Amos Snead in a statement. “On the other hand, some patent holders are being allowed to impose excessive licensing fees that are being passed along to U.S. consumers at a cost of more than $1 million per day. Funai is one example of a patent holder that is exploiting the transition to digital to make exorbitant profits on digital television sales.”

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