September 1, 2009

Marlene H. Dortch, Secretary
Federal Communications Commission
Office of the Secretary
445 12th Street, SW
Washington, DC 20554

Re: Notice of Written Ex Parte Presentation
In the Matter of Petition for Rulemaking and Request for Declaratory
Ruling Filed by the Coalition United to Terminate the Financial Abuses of
the Television Transition, LLC
MB Docket No. 09-23

Dear Ms. Dortch:

A filing by the ATSC Forum dated May 27, 2009[1], asserts that the country of Argentina has adopted the ATSC digital TV standard [2], for which patent royalties are at issue in this proceeding.

In spite of numerous press reports indicating to the contrary, the ATSC Forum has further enforced its assertion about Argentina as follows:

“The claims in the May 27, 2009 submittal from Rob Glidden, an Internet blogger, that Argentina has abandoned the ATSC Standard and is poised to adopt the Brazilian version of the Japanese ISDB standard are not correct. Argentina adopted the ATSC Standard in 1998, but the government has changed several times since, and DTV broadcasting has not yet been implemented there. ATSC remains the official DTV broadcast standard for Argentina, and while the government is considering its options anew, no new decision has been announced. The ATSC Forum believes the chances are excellent that Argentina will reaffirm its choice of ATSC for the same compelling reasons that led to its adoption in 1998. Rob Glidden’s statements regarding the state of affairs in other Latin American countries also are incorrect for the reasons stated herein.” [3]

In light of announcements in recent days that Argentina is indeed moving forward without ATSC [4] and with the Japanese/Brazilian standard, it is instructive for the Commission to consider the actual reference to Argentina to which the ATSC Forum has taken such strident exception[5]:

“For example, it could be speculated that the Japanese DTV system moved in recent years towards becoming more aggressive through price cutting and trade deals. Countries considering ATSC began to have second thoughts, and in some cases like Argentina (originally mentioned in the 2004 ATSC patent pool plan as already having adopted ATSC[6] started to back away by 2005 [7].”

While it is entirely understandable that the ATSC Forum, a sister organization to the ATSC Committee, claims an advocacy role for the ATSC standard[8], and of course the ATSC Forum rightly recognizes that politics is politics the world over[9], the Commission should consider whether the ATSC Forum’s advocacy function overrides its claim that it “educates policymakers … regarding the benefits of DTV technology”[10], and look to more direct information sources about digital TV.

For as NPR quoted FCC Commissioner Michael Copps on August 25, 2009, three days before the Argentina announcement:

“[W]e’ve got the digital TV. Now what are we going to do with it?”[11]

In many parts of the world today, this is a question that hardly needs to be asked, for digital TV is an exciting, vibrant opportunity that inspires high interest and consideration that is striving to cut through the early roadblocks, challenges, and limitations represented by the patent and royalty issues of this proceeding. The Commission should be able to look to responsible organizations like the ATSC Forum to do more to fulfill such an education function.




cc: Sherrese Smith
Rick Chessen
Rudy Brioché
Rosemary Harold
Robert Ratcliffe
Eloise Gore
Steven Broeckaert
Alison Neplokh
Kiersten Kamman
Mary Beth Murphy
Brendan Murray


1 Reply Comments of the ATSC Forum, May 27, 2009, In the Matter of: Petition for Rulemaking and Request for Declaratory Ruling Filed By The Coalition United To Terminate Financial Abuses of the Television Transition, MB Docket No. 09-23, available at, hereinafter referred to as ATSC Forum Comments.

2 “Countries that have adopted the ATSC Standard are: Canada, Mexico, the United States, South Korea, Argentina,3 Honduras and most recently, El Salvador.” ATSC Forum Comments at 2.

3 ATSC Forum Comments at 2, n.3.

4 See for example, Kevin Gray, Fiona Ortiz, Matthew Lewis, Argentina adopts Japanese digital TV standard, August 28, 2009
“Argentina adopts Brazil’s digital TV standard”, August 28, 2009,

5 Reply Comments of Rob Glidden, May 27, 2009 at 14 (footnotes in original)

6 (“the ATSC digital television standard, which has been adopted thus far in the U.S., Canada, South Korea, Argentina and Mexico”). Mention of Argentina was dropped from subsequent mentions of the ATSC patent holders meetings at when the patent license was announced (“the Advanced Television Systems Committee (ATSC) and used in digital televisions sold in the United States, South Korea, Mexico, Canada and other countries”)”

7 According to published news reports, in September 2005 “Argentina decided to reverse its decision to adopt ATSC as the country’s terrestrial DTV standard and consider other options” Doug Lung, Argentina Favoring Brazilian Version of ISDB-T for Terrestrial DTV, September 12, 2008

Recent news reports indicate Argentina now appears close to adopting ISDB. “[L]ast week, the Argentine President, Cristina Fernández de Kirchner, confirmed that the country is about to follow Brazil with ISDB. “We are working to complement and agree on a common digital TV system so that part of the TV sets’ production elements can be produced in Argentina”, she announced.” Confirmed: Argentina is close to ISDB, TV TELCO Latam, April 27, 2009,

Peru Has recently chosen ISDB. See Peru chooses Japanese-Brazilian standard for digital television system, April 23, 2009,

Peru chose ISDB in part because of cost. “Jorge Cuba, the vice minister of communications explained that the Japanese-Brazilian standard had been chosen, among other reasons, for its low cost.” Israel Ruiz, Digital TV decoders to be sold in Peru for $28 in six months, Living in Peru 24 April, 2009,

8 “The ATSC Forum educates policymakers, broadcasters, equipment manufacturers, and other interested parties regarding the benefits of DTV technology and advocates adoption of the ATSC family of DTV standards. The ATSC Forum is a sister organization of the Advanced Television Systems Committee, an international cross-industry organization that develops and refines standards and best practices for DTV broadcasting.” ATSC Forum Comments at 2.

9 See for example, “New digital tv technology is a ‘major defeat,’ Solanas”, September 1, 2009 ,

Argentina is seen by some as pivotal in digital TV adoption trends at least partly because it is the second largest economy of South America (, and as the largest country outside a close US geographic or political orbit cited as ATSC-supportive could be seen as a bellwether of global interest in the ATSC standard.

10 Id.

11 Joel Rose, “Promises Unkept: Disappointments In Digital TV”, August 25, 2009,

Filings last week in the CUT FATT proceeding at the US FCC on patent overcharging in the US digital TV transition claim that royalty demands for US ATSC-standard television receivers range from $24.10 to $40.10, depending on the size of the TV receiver.

dtv royalties The numbers in the table to the right appeared in the Reply Comments of the Coalition to Terminate Financial Abuses of the Television Transition dated May 27, 2009 in a declaration by Douglas Woo, president of Westinghouse Digital Electronics, one of the two members, along with Vizio, of the CUT FATT coalition.

Interestingly, Woo, a Harvard law graduate, was a partner at Pillsbury, Madison & Sutro focusing on intellectual property matters, before joining Westinghouse.

The table mentions a license fee to Thomson, it might be speculated though it is not directly indicated in the filings that this is Thomson’s “NAFTA Digital Television” patent license that Thomson mentioned in its own filings in the CUT FATT proceedings as containing essential ATSC patents.  Thomson is a member of the MPEG-2 patent pool required in the ATSC standard, but is not a member of the ATSC patent pool.

The filings have brought claims of on-the-edge patent licensing strategies like “multi-dipping” (participating in multiple methods to gain licensing revenue or advantage on the same standards group) and “accretive disaggregation” (increasing the cost of a patent portfolio by selling some patents to other entities).

Consumer groups and others have requested the FCC look further into US DTV licensing practices.  More background on the CUT FATT proceeding is available here.


“Thomson licenses its entire patent portfolio on a product-type basis, including its “NAFTA Digital Television” patent license for the sale of DTVs in North America. This license includes, among many others, patents that are essential to practice the ATSC terrestrial broadcast standards. Virtually all leading brand manufacturers, and the majority of the rest of the DTV industry (including VIZIO), are licensed under this program. By offering very reasonable royalty terms, Thomson has achieved this success in its DTV licensing program without filing a single enforcement action in the courts or the International Trade Commission (“ITC”).

Thomson Comments Petition for Rulemaking and Request for Declaratory Ruling Filed By the Coalition United To Terminate Financial Abuses of the Television Transition, LLC, MB Docket No. 09-23, dated April 27, 2009.

“[A]ccretive disaggregation”— increasing the cost of a patent portfolio by selling some patents to other entities — is plainly inconsistent with RAND pricing.”

CUT FATT Coalition filing at 12-13, May 27, 2009.

A group of public interest and consumer groups — Public Knowledge, Consumers Union, Free Press, Media Access Project, and New America Foundation — have filed reply comments in the CUT FATT proceeding on digital TV licensing practices at the US Federal Communications Commission, asserting that the Commission should:

  • “investigate allegations that existing licenses for patents essential to the DTV standard are unreasonable or discriminatory”, and
  • “require disclosure of essential patents, the grounds by which the patents are essential, and the terms under which they are licensed.”

The groups argue that such disclosure of licensing terms is within the Commission’s jurisdiction and in the public interest:

“The public interest requires that the scope and cost of any mandatory standards be clear to those who would adhere to them.  When patent royalties can be openly investigated and compared against known benchmarks, manufacturers and consumers can be assured that licenses, and the costs that go with them, are reasonable and nondiscriminatory.  Not only does disclosure prevent cost-raising abuses, but ensuring that essential patents are known and disclosed will prevent users of the DTV standard from being drawn into disputes over patent scope and validity.  The time, uncertainty, and cost involved in navigating unanticipated patent disputes would also be minimized by further transparency and disclosure.” (emphasis added)

Reply comments here also make the case that “It is Unreasonable and Potentially Discriminatory to Shield DTV Licensing Terms Behind Claims of Private Business Confidentiality”.

Patent holders are resisting public disclosure of patent licensing terms, arguing for example:

“The FCC also cannot order the public disclosure of confidential commercial business agreements, as the Petition requests….Private licensing agreements, especially the financial terms of such agreements, are confidential and proprietary information.”

The CUT FATT coalition itself has claimed in its most recent filing that “patent holders are demanding more than $24 per set – although confidentiality requirements prevent manufacturers from disclosing each demand” and similarly argues that

“confidentiality is inconsistent with a regime requiring nondiscrimination. Indeed, simply banning confidentiality requirements is likely to curtail some of the most egregious demands.”

For more information and advocacy on the CUT FATT proceeding, see here.

I have filed reply comments in the CUT FATT proceeding (09-23).  Excerpt from the executive summary:

“The Commission’s request for comments has brought mostly highly critical opposing comments from patent holders, and mostly mild or ambivalent comments from standards groups and other interested parties. Only one commenter, Harris Corporation, themselves an acknowledged recipient of the sort of licensing practices for which the CUT FATT petition seeks redress, takes a direct stance in favor of the spirit of the petition. Perhaps more comments will surface.

There is more to this topic, however, and a different perspective ought to be aired and considered. Public standards require public accountability. America pays more for less in DTV standards. Current DTV licensing practices are not working. The FCC should engage more, not less, in standards.

These reply comments, generally supportive of the CUT FATT petition but in some ways encouraging of an even broader consideration, endeavor to provide information and reasoning that highlight concerns raised by the CUT FATT petition and request that the Commission look more, and more deeply, into these matters. Perhaps one beneficial outcome of the CUT FATT petition, beyond worthy immediate redress, might be to reawaken competitive juices and inspire a needed serious look to the future of digital TV and broadband in the network age.”

Table of contents is below, the full filing is available here, all filed comments are available at the FCC site here (enter 09-23 as the proceeding).


A. DTV Licensing Practices Have Undermined American Competitiveness
B. Petition Proposals are Modest; Commission Should Consider Doing More
C. Commission Should Become More, Not Less, Engaged in Standards

A. Guidelines and Antitrust Waivers Developed for Private, Voluntary Activities Are Not Sufficient to Protect Public Standards
B. Petition Proposals are Modest Compared to Global Best Practices
C. It is Unreasonable and Potentially Discriminatory to Shield DTV Licensing Terms Behind Claims of Private Business Confidentiality
A. Patent Overcharging Has Made US DTV Globally Uncompetitive
B. DTV Licensing Practices Have Put America in “Perpetual Catch-up”
C. Commission Should Look Beyond Suspect Appeals to American Pride to a Level Global Playing Field
A. Eleven Years is an Unreasonable Amount of Time to Establish the ATSC Patent Pool, and the Surrounding Circumstances Raise Concern
B. DTV Licensing Practices Have Caused Policy Concern Around the World, and Governments Have Stepped In
C. “Multi-Dipping” and Other DTV Licensing Gambits are Unreasonable and Discriminatory
D. DTV Licensing Practices Have Stifled Access to Public Domain and Free Technology
E. DTV Licensing Practices Are Unnecessarily Prolonging Pool Lifespans Through Questionable Tactics
A. Commenters Propose No Specific Innovation Or Other Compelling Need To Justify Continuing Current DTV Licensing Practices
B. DTV Licensing Practices Threaten to Undermine Broadband Policy
C. Our Network Age Needs Greater Policy Engagement in Standards
D. Commission Has, and Should Improve, Standards Competency
E. Commission Should Consider Going Beyond Petition Proposals
F. Commission Should Promote Transparency, A Level Global Playing Field, Open Value Chains, Ex Ante Disclosure, Proactive IP Analysis and a Preference for Royalty-Free

“RAND” — Reasonable and Non-Discriminatory — is a term often used in standards contexts to describe or set expectations of fairness in patent licensing related to standards.

But what does the term “RAND” really mean?  As one well-known commentary on standard-setting, patents, and hold-up states:  “few SSOs [standard-setting organizations] define the term ‘reasonable and nondiscriminatory’ or have mechanisms to resolve disputes about its interpretation”.

The American Bar Association, Section of Science & Technology Law, has filed a comment to the US FCC about the CUT FATT petition on patent overreaching in the US DTV system, acknowledging that:

“international royalty rates for comparable patents and standards may be a useful factor to consider in determining whether U.S. royalty rates are RAND.”

As excerpted below, the Section makes this comment with appropriate qualifications and call to recognition of the complexities of the issues (“there are many other important factors”), and acknowledges that typical RAND analysis is directed at voluntary standards rather than standards mandated by a regulatory authority.

But the Section comments go on to opine that:

“With respect to the particular factor proposed by CUT FATT (i.e.. patent pools for DVB-T and ISDB), we believe that any consideration of “comparables” should be limited to licenses of comparable patents, both in scope and quantity, for implementation of the same standard (i.e., the ATSC DTV standard, in this case).”

The comments further assume that “[c]omparable patents are likely limited to foreign counterparts of the US patents in question.”

Surely, the Section is not suggesting that the only relevant factor to consider should be limited to whether the ATSC standard adopted in the US is offered at a discount in international markets, perhaps to meet price competition from other standards like DVB-T, ISDB, or others, and then only to a comparison of the “US” ATSC royalty price to the “international” ATSC royalty price?  All things being equal, would that be “reasonable”, or just “discriminatory”?


Selected excerpts from filing by American Bar Association (“ABA”), Section of Science & Technology Law in CUT FATT proceeding (emphasis added):

“These views are being presented on behalf of the Section only and have not been approved by the House of Delegates or the Board of Governors of the American Bar Association and should not be construed as representing the position of the Association.

Section takes no position on whether or not the Commission should assume any role as requested by the Petition or modify any policies regarding DTV patent licensing but rather comments here on the complex and factual considerations that would be implicated by CUT FATT’s request that the  Commission.

One of the issues before the Commission – RAND royalties in the context of a standard mandated by a regulatory authority — has not been widely discussed or analyzed in the literature, which has traditionally focused the RAND analysis on voluntary standards. While the ABA Manual “is not directed to standards whose policies are prescribed by governments …the information may be useful in assessing the terms associated with such activities.”

Depending on the circumstances, international royalty rates for comparable patents [7] and standards may be a useful factor to consider in determining whether U.S. royalty rates are RAND. We respectfully submit that there are many other important factors that the Commission should consider in connection with its review of the Petition.

Specifically, CUT FATT suggests that “international comparable” royalty rates should be treated as “benchmarks” [8] when  assessing the reasonableness of a RAND licensing commitment.  With respect to the particular factor proposed by CUT FATT (i.e.. patent pools for DVB-T and ISDB), we believe that any consideration of “comparables” should be limited to licenses of comparable patents, both in scope and quantity, for implementation of the same standard (i.e., the ATSC DTV standard, in this case). To the extent that such comparables exist, we believe they should be one of many factors considered in evaluating the reasonableness of a particular royalty rate.

[7] Comparable patents are likely limited to foreign counterparts of the US patents in question.

[8] We do not believe that a “benchmark” is appropriate in this context, as it may imply that undue weight be given to royalties established earlier in time.”

There is much contention in the CUT FATT filings as to how much royalties are claimed on the US and other DTV systems, and what significance the differences may have in the framework of “RAND” (Reasonable and Nondiscriminatory) standards policies and government oversight.

The debated amount for royalties on the US DTV system is $23 dollars, with some debated lower amount for other systemsISDB Set Top Box Price (actually, many components are available royalty-free, see here, for example about how Japan courted Brazil to the ISDB system:  “A memorandum on the digital standard signed earlier this year between the Brazil and Japan called for Japanese firms to train local staff and allow Brazilian companies to use the technology without paying royalties”).

So hold this thought:  $23 dollars as the contented royalties per set top for the US DTV system versus a Japanese government official’s assertion last month that ISDB set tops would be available for $30 in the Philippines.

Some context. The advent of modern patent pools after a century of policy skepticism is often traced to the 1997 US Department of Justice business review letter that indicated the DOJ would not prosecute on Antitrust grounds a pool license for the MPEG-2 video codec and associated transport stream.

In subsequent years, selective readings of terms of that 1997 letter have become common sport in patent pooling circles.  Can a contractor paid to determine essentiality of a patent really be independent from their employer?  No increase of royalties by more than 25%, “most-favored-nation” clause for licensees?  Does making the list of patents available require posting the list to a web site?  What about the potential for hold-up after a standard becomes popular?

Now a particularly interesting assertion is made in the filing by Mitsubishi Electric (emphasis added):

“patent policies cannot become retroactively anticompetitive because of changes in market conditions, such as the prices charged by comparable technology standards.”

Department of Justice takes the position that the patent policies of a standards development organization (“SDO”) are to be analyzed ex ante for potential anticompetitive effects.

In other words, the DOJ’s antitrust analysis focuses on the state of the world when the SDO’s patent policies are established.

To paraphrase, it appears that Mitsubishi Electric reasons something like that patent pools can charge whatever they think is fair, because there is no objective way to determine what is unfair.  What an interesting interpretation of the policy underpinnings of the Department of Justice authorization of ex ante procedures in standards organizations, and one that RAND-based organizations will want to take a note of.

What a far distance this is from the original DOJ business review letter authorizing the MPEG patent pool in 1997 on specific, narrow terms, which contemplated that because royalty rates would be “a tiny fraction” of product prices, collusion or downstream price coordination was highly unlikely:

“Further, since the contemplated royalty rates are likely to constitute a tiny fraction of MPEG-2 products’ prices, at least in the near term, it appears highly unlikely that the royalty rate could be used during that period as a device to coordinate the prices of downstream products. “

So there you have it:  in just 12 years from a proscriptive assumption of royalties being a “tiny fraction” to assure no downstream collusion to a claim of “cannot become retroactively anticompetitive” even if royalties are over fifty percent of total product price.  Attorneys for Moore’s law should take note.


“Even if one were to assume the accuracy of this unsubstantiated report and the unstated methodology underlying it….[t]his falls far short of showing a systemic breakdown in licensing essential DTV patents…there are legitimate reasons for differences in royalty rates between U.S. and foreign pools” (Philips / Qualcomm)

“For purposes of these Comments, it can be assumed that the royalty rates alleged in the petition are accurate. However, it is noted that the petition errantly describes the royalty for ISDB as 100 yen per unit, even though the actual royalty for ISDB is 200 yen per unit. See <>. ” (Mitsubishi Electric)

“misleading at best … categorically false … not credible …differences in the patent acquisition and enforcement systems around the world and the fact that the ATSC standard is different from those used for DTV elsewhere in the world … “NAFTA Digital Television” patent license … very reasonable royalty terms”  (Thomson)

Mitsubishi Electric, a patent holder in the ATSC patent pool, in commenting in the CUT FATT DTV patent consideration, makes the statement (emphasis added):

Neither Congress nor a U.S. government agency has ever compelled patent holders to form a licensing pool defined by government-mandated royalties.  In essence, this would be a grant of a compulsory license for what the licensee wants to pay. Such ex post regulation of prices runs contrary to the patent system’s goal of encouraging innovation and, quite frankly, to the American free market system. … Since World War I, we are unaware of any situation where the government has either regulated royalty rates or compelled pooling.”

Consider, however, the case of RCA, originally structured in 1921 as the patent pool for radio patents.  After government proceedings in 1924 (FTC  and “packaged licensing”) and 1930 (Department of Justice consent decree separating RCA from its owners), RCA entered into a consent decree in 1958 concerning color TV patents (for which RCA was then the key owner), described in Time magazine:

“In a sweeping civil consent decree in one of the biggest Eisenhower Administration Sherman Act suits to date, RCA agreed to 1) put some 100 color TV patents into a royalty-free pool, 2) make available to all comers on a royalty-free basis at least 12,000 other existing radio-TV patents, 3) license all new patents during ‘the next ten years at a “reasonable” royalty rate.”

Some interesting commentary on the context and consequences are described in “Inventing the Electronic Century: The Epic Story of the Consumer Electronics and Computer Industries”, a 2001 tome by Alfred D. Chandler Jr, often cited as the “dean of American business historians”:

“The 1958 consent decree [with RCA] was part of a drive by the Justice Department’s Antitrust division to open the new electronics-based industries to competition by making the patents of IBM, AT&T, and RCA available to all… [The consent decree] made licenses available to domestic companies without charge… Foreign buyers would continue to pay full freight. … RCA Labs, in order to maintain licensing income after the consent decree, began to concentrate on licensing to Europe’s Philips and Japan’s leading consumer electronics makers.”


“Republican Attorney General William Rogers’ decision to go after RCA with a criminal indictment was undoubtedly encouraged by RCA’s $10 million out-of-court settlement with Zenith, when it got a look at the facts Zenith had collected to support its charges of monopoly.”

“RCA Under Fire”, Time Magazine, March 3, 1958,,9171,893902,00.html

“In March 1921, Westinghouse and AT&T joined GE to use GE’s newly formed Radio Corporation of America as a patent pool.  One of RCA’s initial purposes was to hold and allocate radio-related patents”  Chandler, p.15

“Owen Young [GE’s general counsel and vice president] believed that the growing number of legal battles over patents could only slow the continuing development of radio technologies.  His solution was for RCA, which already held GE’s patents and those of the navy, to obtain those of GE’s competititors in exchange for obtaining shares of stock in RCA and having representatives on its board.” Chandler, p. 16

FCC Docket 09-23, Petition For Rulemaking And Request For Declaratory Ruling Filed By The Coalition United To Terminate Financial Abuses Of The Television Transition, has drawn filings from Mitsubishi, Valley View, Philips/LG Electronics, Funai, Thomson, ATSC, Harris, Zenith, MPEG LA, Philips/Qualcomm, and Retire Safe.

A starting point in reviewing this material is the joint filing by Philips Electronics North America Corporation and LG Electronics USA, Inc., which makes five arguments, excerpted below (emphasis added).

1) “Vibrant market” for DTV receiver models

“The success of Vizio and Westinghouse Digital Electronics strongly indicates that royalty costs are not preventing the production and sale of inexpensive DTV sets…. [They] have been quite successful in offering DTV receivers priced among the lowest in the industry despite the fact that neither holds a single patent essential to practicing the DTV ATSC standard.”

2: “[P]rivate pools and privately negotiated licensing agreements are working well”

“[P]rivately-administered DTV patent pools, including the MPEG LA MPEG-2 and ATSC portfolios, offer patent licenses to hundreds of essential DTV patents on reasonable and nondiscriminatory terms. These pools provide timely and cost-effective access to scores of manufacturers that have delivered millions of affordable DTV sets to U.S. consumers. The Petition provides no real evidence to the contrary.”

3: FCC has “limited experience and expertise in the intricacies of patent law and the determination of patent royalty rates”

“[C]omplex and closely intertwined issues of patent validity, claim construction and the setting of reasonable patent royalty rates require careful deliberation for just a single patent”

4: “[C]onsistency in decisions involving patent law”

“[T]he federal courts and other federal expert agencies, such as the International Trade Commission and the United States Patent and Trademark Office, understand fully the complexities of the patent laws. In order to ensure consistency in decisions involving patent law, the federal courts and these other agencies – not the FCC – should address the concerns raised by the Petitioner.”

5: “[D]iscourage continued development of DTV technology”

“Commission action to lower patent royalties associated with DTV technology would have long-term detrimental effects because it would discourage continued development of DTV technology.  Petitioner’s proposals thus would be harmful to U.S. consumers because they would chill the innovation that engendered American consumers’ embrace of the new digital broadcast technology” technology over the past decade.

The “FATT” is fighting back this week in comments filed at the US FCC against the “Coalition United To Terminate Financial Abuses of the Television Transition” (CUT FATT) proposal to address patent overreaching in the US DTV system.

Filings from Valley View, Philips/LG Electronics, Funai, Thomson, ATSC, Harris, Zenith, MPEG LA, Philips/Qualcomm, and Retire Safe merit future comment by the Reply Comment date of May 27 (see here).

But polemics risk overshadowing a broader and more fundamental point that is skirted in the filings:

ISDB presentation to Philippines, 3/09
ISDB presentation to Philippines, 3/09

The US ATSC DTV system, once touted as a model for US global prowess, has fallen behind rivals DVB and ISDB, priced out of the world market and under-featured, and now if some of these filings are to be taken at face value stubbornly saddled with an uncompetitive process based on lack of transparency and protracted litigation.

Indeed, these filings raise a darker picture that ATSC may at least to some become seen as little more than a cash cow royalty milking opportunity for a small number of foreign vendors at the same time that their home countries promote competing standards to gain market shares in burgeoning DTV markets and opportunities around the world in South America, ASEAN, and elsewhere.

In particular, several of these filings paint the picture that the only viable or appropriate forum to consider and address patent licensing issues are litigation forums like the International Trade Commission or federal courts, and anything else would be unprecedented, unworkable, and so forth.

But this has never been the case — patent and licensing issues have always been a major topic of ongoing concern by standards groups, regulators, vendors, and users in DTV.  The rival European DVB for example, has always played a variety of facilitating roles relating to IPR  — for a long and illuminating discussion on this topic by Carter Eltzroth, Legal Director, DVB Project see here.  If anything, the direction in recent years has been to reexamine, and some cases modify and become more proactive, in these facilitating roles, in light of well-known patent pool disputes like MHP.

And the Japanese-Brazilian ISDB system has recently played effective catch-up with DVB and ATSC by offering royalty free components, trade deals, proactive government-to-government involvement and faster time to market with new features (for background, see here).

So it may be helpful in reviewing these filings to consider a simple question — if you were looking to adopt a DTV system today (as many countries are), would these filings persuade you that the US DTV system, and the process and contentions surrounding it, would be worth adopting today?


“Good technical specifications are not enough
– DVB needs to be more proactive on IPR issues”

“15 years of the DVB Project”, Presentation at DVB World 2008 by Philip Laven, Vice-Chair, DVB (subsequently elected Chair of DVB)

Other notable features of the IPR policy of DVB are arbitration and fostering of patent pooling. This article provides a commentary on the DVB’s IPR policy and on its application. It also describes the work of the DVB in resolving IPR “gateway” issues when the perceived dominance of technology contributors, notably through control over IPRs, risked, in the view of some members, distorting new digital markets. In two cases DVB has created a licensing mechanism to dispel these concerns. In addition to the quality of its technical work, DVB’s success lies in its novel IPR policy and its ability to achieve consensus to resolve gateway issues.

“IPR Policy of the DVB Project: Commentary on Article 14 of the DVB MoU”, Carter Eltzroth, Legal Director, DVB Project,

What a telling and timely juxtaposition.

On the day responses are due to the US FCC’s request for comments to the CUT FATT request for an official inquiry into patent overcharging in the US digital TV transition (the “ATSC standard”), Argentine President, Cristina Fernández de Kirchner, is reported to have confirmed that Argentina is about to follow Brazil with the rival and lower cost Japanese-Brazilian Digital TV system.

This is hardly a surprise — some three years ago Argentina decided to reverse its decision to adopt ATSC as the country’s terrestrial DTV standard and consider other options.

And this follows last week’s announcement by the government of Peru that it is also adopting the lower cost Japanese-Brazilian Digital TV system, after a meeting between President Alan García and Shunichi Yamaguchi, a special envoy of Japan’s Prime Minister.

As tempting as it might be to write off the CUT FATT petition as part of a tactical patent dispute between CUT FATT founder VIZIO and Japanese rival Funai (over patents Funai acquired from Grand Alliance  member Thomson Consumer Electronics), it is important that the US government, and the FCC in particular, look deeper and systematically rethink the confused and obsolete 1980’s-era “America-is-better-than-Japan” DTV policy that now risks seeping over into a next generation of US broadband policy.

One can hardly blame the U.S. Trade Development Agency to have funded in September 2008 a half-hearted promotion of ATSC to Peru, after all promoting ATSC abroad must seem to be nearly official US FCC policy and many still wrongly believe that because the US FCC officially adopted the ATSC standard, the “A” in ATSC must stand for America (it actually stands for “Advanced“).

But as the CUT FATT filing aptly points out (Exhibit 2), even as of May 2008, in a written response to the US Congress, then FCC Chairman Kevin Martin outlined clearly that the FCC has little idea of who even owns the patents in the ATSC standard, and must rely on news reports and second and third hand information.

Finally, as advocated in several places on this blog, a royalty-free standards process, rather a patent-pool based process, is worthy of serious consideration by the US FCC as a preferred process — and to see how this royalty-free process has already helped Brazil and other countries in Digital TV, see this article.


“Peru follows Brazil with ISDB”, Friday, April 24, 2009

“On the other hand, the DVB Coalition sent a press release by means of which it is highlighted that DVB is the cheapest set top box (U$S 28), whereas for the Brazilian standard, such cost amounts to U$S 138 and for the Japanese standard it amounts to $82. According to the Coalition, Peruvians would have invested U$S 161 millions in their digital TV transition if they had turned to DVB, whereas the Japanese-Brazilian standard will involve U$S 795 millions and the Japanese one will involve U$S 472 millions.”

“Confirmed: Argentina is close to ISDB”, Monday, April 27, 2009

“[L]ast week, the Argentine President, Cristina Fernández de Kirchner, confirmed that the country is about to follow Brazil with ISDB. “We are working to complement and agree on a common digital TV system so that part of the TV sets’ production elements can be produced in Argentina””

“Government selects Japanese-Brazilian digital TV standard”, Monday, Apr 27, 2009

“Digital TV decoders to be sold in Peru for $28 in six months”

“[T]he Andean country’s Ministry of Communications (MTC) stated decoders would begin being sold for $28….Jorge Cuba, the vice minister of communications explained that the Japanese-Brazilian standard had been chosen, among other reasons, for its low cost.”

“European Commission offers Peru €500,000 to implement digital TV standard”, 2 April, 2009

“[President of the European Commission] José Manuel Durao Barroso … offered Peru five hundred thousand Euros if the South American country decided to implement the European DVB-T standard instead of the Japanese-Brazilian SBTVD one.”

“José Manuel Durão Barroso, the current president of the European Commission, offered Peru €500,000 if Peru decided to implement the DVB-T standard instead of the Japanese-Brazilian SBTVD one.” (retrieved April 27, 2009)

Peru Digital Television Standards – In 2008, USTDA funded an orientation visit to support the Government of Peru’s efforts to update the country’s telecommunication regulatory framework, including the adoption of a national digital satellite television (DTV) standard. The visit was designed to provide the Peruvian delegates with an opportunity to learn about the U.S. approach to telecom regulatory issues such as long distance licensing, broadband networks, Voice-over-Internet-Protocol (VoIP), digital television, convergence, spectrum, allocation, and local loop unbundling.

“TRI manages and provides technical, logistical, and communications
support to the U.S. Trade Development Agency (USTDA) Orientation Visit on Digital Television Standards”, September 21-27, 2008

“The purpose of this Orientation Visit is to educate and promote the ATSC Standard, which is the standard developed and used by the U.S. for digital television and to encourage the Peru policy makers to choose this standard when Peru makes the transition from digital to analog.”

“Argentina Favoring Brazilian Version of ISDB-T for Terrestrial DTV”, 09.12.2008

“Three years ago this month Argentina decided to reverse its decision to adopt ATSC as the country’s terrestrial DTV standard and consider other options.”