8 ms·

US Department of Justice investigating MPEG LA

89 points by russell_h 16y ago

mustpax 16y ago
But the group says it isn't acting to kill a competitor. It said it's simply offering a service for patent holders and is agnostic about which video format prevails. "We are effectively a convenience store" for licensing patents, said Larry Horn, MPEG LA's chief executive. "We have no dog in that fight." So, MPEG LA has no interest in extracting maximum possible amount of royalties for its patent holders?
- imbriaco 16y ago
  If you keep reading, it's clear that MPEG-LA believes it has patents in the portfolio that cover VP8. If they expect to extract licensing revenue from those patents it's altogether possible that they don't care which format ultimately wins.
  - mustpax 16y ago
    Well, that claim is completely disingenuous. In reality MPEG-LA oversees licensing for a set of known codecs, the most prominent being H.264. When a somewhat-viable competitor comes to town they just claim they own the competitor and therefore don't even need to compete. Behind the "we're impartial" facade what they're really saying is, "you're going to have to pay us anyway, so why not just use H.264 instead?" (By the way, I voted you up, I think you summarize their position better than I did.)
  - marshray 16y ago
    But probably they aren't really 100% sure their patents will hold up against the scale of legal challenge that could be brought down by Google. Of course, they have 1700 of them so they could keep the legal trouble going indefinitely. It would certainly be easier for them if the Google and the world continued to just cut them checks for ancient technology. But it will never be to their advantage to admit the extent to which they are bluffing and they probably don't even know themselves. Video has been digitized and compressed for how many decades now? Weren't patents supposed to expire at some point?
  - iujyhfgtrtgyhju 16y ago
    The MPEG-LA doesn't charge royalties to it's members. The members also all hold patents - it's just an agreement not to sue each other. They do charge royalties to anyone not in the association - those royalties can of course be >100%. In the old days we used to call this a cartel - but that's illegal.
    - Anechoic 16y ago
      The MPEG-LA doesn't charge royalties to it's members Is that true? I though members had to pay royalties even if they had a patent in the pool.
      - iujyhfgtrtgyhju 16y ago
        It's a complex and secret process - but MSFT and Apple are not paying $10 for each copy of windows/iOS that includes an H264 player!
        kenjackson 16y ago
        There's a royalty cap. I believe MSFT is paying the maximum royalty cap for H264. And Apple only has one patent in the patent pool of 1000+ patents.
        tomsaffell 16y ago
        $10? If I understand the license[1] right - it's more like $0.10 to $0.20. [1] - http://www.mpegla.com/main/programs/avc/Documents/AVC_TermsSummary.pdf http://www.mpegla.com/main/programs/avc/Documents/AVC_TermsS...
      - nullc 16y ago
        This isn't the case. See the HP and MPEG-LA testimony before the FTC. The pool agreement isn't exclusive. The members are free to license their patents through other venues, including cross licensing. In fact, one of the points MPEG-LA made in their initial review letter with the DOJ is that he pool would not be used to force anyone to pay for a license to a patent which they were already licensed for some other means. So a pool member only has to pay royalties iff they've been unable to achieve complete cross-licensing with the other pool members.
  - hristov 16y ago
    That is not clear from the article. Their representatives said that they believe that there are patents that cover vp8, but they never said they control those patents or which patents those are. At another place the article says that mpeg-la is asking people to submit patents that cover vp8 in order to form another patent pool. So it seems that they may not have the patents that cover vp8 but want other companies to give them to them.
  - ZeroGravitas 16y ago
    Actually Mr Horn, who is a lawyer, is very careful never to say that. He does regularly get quoted as saying things are covered by patents, but never says who they belong to. I'm astonished that he might actually be talking about Google's own patents, knowing that he'll be quoted by the press in a way that turns a true, but pointless statement into FUD. Since most of his quotes sound like a Dickensian bad guy I think he might just be doing this. I mean who talks like this: "In view of the marketplace uncertainties regarding patent licensing needs for such technologies, there have been expressions of interest from the market urging us to facilitate formation of licenses that would address the market's need for a convenient one-stop marketplace alternative to negotiating separate licenses with individual patent holders in accessing essential patent rights for VP8 as well as other codecs, and we are looking into the prospects of doing so."
wtn 16y ago
This is hilarious! If patent enforcement is an illegal anticompetitive action, then the patent system itself is a contradiction.
- marshray 16y ago
  Yeah really. This looks to me like the patent system operating as designed. I guess if you're Google you can get the government to make an exception for you in the interest of fairness. But it's cold legalistic capitalism for the rest of us.
  - runevault 16y ago
    As someone else pointed out, the one thing that makes this interesting is, instead of bothering to do the legal legwork first to PROVE they cover vp8, they simply make vague threats to scare people out of using it, which I highly doubt is how the patent system was meant to be used.
    - kenjackson 16y ago
      Are vague threats illegal? Do legal threats have to be specific? It seems like one of the most common threats I know of is, "I'm going to sue you!" It's usually not a specific, "I'm going to sue you based on violation of XYZ". It's usually a very vague statement. Is that generally illegal, but just not enforced?
      - marshray 16y ago
        Are vague threats illegal? Do legal threats have to be specific? Not in general, if they're vague enough. But when they come from the lawyer pool of a massively-funded cartel sitting on 1700 patents, they're inherently credible threats.
- dchest 16y ago
  "Antitrust enforcers are investigating whether MPEG LA, or its members, are trying to cripple an alternative format called VP8 that Google released last year— by creating legal uncertainty over whether users might violate patents by employing that technology, these people added." (Emphasis mine). This is fair, I think. Basically, they are being investigated for spreading FUD against their competitor. Imagine that you developed an application, and I'm your competitor. You're trying to sell your app to corporations. I call journalist and tell them that your app infringes patents (not mine, I don't have any patents). I also tell them that the patent pool is being assembled. I put a notice on my website: "Do you have any patents that [you app] might infringe? Let us know!", and let it hang there for a long long time. While there's an uncertainty, corporations won't buy your app. Anticompetitive? To me, yes.
ChuckMcM 16y ago
MPEG LA exists to extract patent royalties. By patent terms they are a 'legitimate' monopoly as the patent system was created to allow an inventor a temporary monopoly over their technology (20 yrs) on the condition that it passes to the public domain after that. Given the early MPEG patents are in the mid - 90s they will begin to start expiring in 2015. Once we reach 2021 there will be a dozen free codecs with source code on the market. In the meantime, MPEG LA does what it can to maximize its revenues.
- sitmack 16y ago
  Dont count on it. They will patent the encoders, the decoders, the container. Unless you code to the exact bitstream using the same exact software to encode that bitstream they could go after you. You are precluded in entirety from doing anything novel if you want to "use the patented inventions." These patents don't compose, they compost America's ability to innovate.
- danbmil99 16y ago
  While patents do confer a form of monopoly protection to an inventor and their assignees, that does not give anyone the right to form a cartel of multiple patent holders who work in concert to fix the price for the combined product. MPEG-LA's workaround for that, which is what is at stake here, is some sort of carve-out with the FTC, stipulating that because it's an emerging standard, MPEG should not be subject to the normal restrictions on patent pooling.
kinofcain 16y ago
Instead of the government investigating the MPEG LA for anti-trust violations, how about they spend some time fixing the patent system. This whole h.264/VP8 brouhaha is a symptom, not the disease.
- lallysingh 16y ago
  Let's remember that different actors in the government have their own motivations. Investigating the MPEG LA is a DOJ issue. The DOJ's full of long-term government employees who are motivated by their own career metrics. Fixing the patent system will require legislation, which is a function of our elected officials. These officials, really (and tragically) by necessity at this point, are driven by funding their re-election campaign.
tomlin 16y ago
"I can tell you: VP8 is not patent-free," Mr. Horn said. "It's simply nonsense." These statements are conscience injections, red herrings, and convenient sound bites for zealots like Gruber to use in their "see I told you" agenda-driven opinion pieces. Truth is, patents for a video codec to be used on the web is simply nonsense. It's a stifle of creativity and hopefully we end up winning with a free, open codec that can be used in open source software. This is the formula that encourages innovation. H.264 hardware inconveniences, gripes - to the wind.
- fryguy 16y ago
  I think you gravely misunderstand the patent system. When you can get a patent on drawing a line onto the screen (http://www.google.com/patents/about?id=KYwhAAAAEBAJ&dq=render+line+raster+display http://www.google.com/patents/about?id=KYwhAAAAEBAJ&dq=r...), it means that anything in your codec might be patented by some ridiculous patent already.
  - tomlin 16y ago
    Granted. I know very little about patents, I still see these loaded statements as conscience injections, red herrings, and convenient sound bites for zealots like Gruber. Might is different that is, but on Gruber's blog it's a testament to an agenda. The MPEG LA knows this.
    - fryguy 16y ago
      There is no doubt in my mind that someone has a registered patent that the VP8 codec infringes on, due to the terrible state of the patent system as a whole. Now whether that is a valid patent is something that lawyers and lots of money will determine. However, someone needs to front that money, and AFAIK Google isn't providing patent indemnity for using the codec. It really is a smart business move to pay the relatively small license fee to MPEG LA than risk losing your entire company to a lawsuit (or lawyer fees)
      - ZeroGravitas 16y ago
Kylekramer 16y ago
I'm pretty firmly on WebM's side in this whole patent flame war thing, but getting the Justice Department looking into MPEG-LA already just makes me think Google's got some damn good lobbyists in Washington. I never heard of the government getting involved at this early stage of a patent battle before. Of course, MPEG protection racket-esque comments in the article makes this a bit easier to swallow.
- VomisaCaasi 16y ago
  I guess even Google would be pissed if an investment of 125M was to be flushed down the toilet. Also, I'm pretty sure they had far-reaching strategy right from the beginning, and had prepared themselves for such issues that might eventually leading them into battle.
  - danbmil99 16y ago
    It's a win/win for Google. The long game is this: either they win the fight outright and webM becomes the video standard, or they use webM and the specter of long, drawn-out (and expensive) litigation to force MPEG-LA to rethink their royalty policy.
- ZeroGravitas 16y ago
  MPEG-LA asked the DOJ for clearance before they set up, since patent cartels of that type had been busted under anti-trust legislation in the past. They made some concessions to the DOJ in order to be able to operate, which at least one licencee claims they've failed to honor. You can Google for the Nero AG vs MPEG-LA antitrust case for more info. (edit: a link, http://www.osnews.com/story/23346/Nero_Files_Antitrust_Case_Against_MPEG-LA http://www.osnews.com/story/23346/Nero_Files_Antitrust_Case_...) So it makes perfect sense for the DOJ to be involved. It's not just a patent dispute.
alexkcd 16y ago
WebM is an inferior codec to h264. As much as I'd like a patent-free alternative, it's unlikely that consumers will be willing to take a step back in video compression/quality. The fact of the matter is that large companies can afford to pay royalties, and end users don't have to. There's very little incentive to move to something new, let alone inferior in quality and of dubious future. Now imagine a patent-free codec came along that had substantially better quality per bit-rate and was at least as efficient as h264. You wouldn't need lobbying to move us over. The pirates would embrace it first, and everyone else would follow. At the end of the day, moving forward is the only way we know. Sadly, WebM is leading in the opposite direction.
- marshray 16y ago
  WebM is an inferior codec to h264. One of the most important properties of my media formats is it's accessiblility. The fact that h264 is heavily patented by these creeps makes it inferior for my purposes by a large measure. What business wouldn't pay a slight file-size penalty (to maintain the same quality) in order avoid being bound to some per-seat licensing agreement with all its associated administrative and reporting obligations? Drive space is most-rapidly-decreasing cost in the world and bandwidth isn't too bad either. Patents take twenty years to expire. Do the math.
  - alexkcd 16y ago
    "One of the most important properties of my media formats is it's accessiblility." Great! H264 is what you want then. It's not only supported, but also hardware accelerated, on most devices out there. WebM isn't, and won't be for a long time. "What business wouldn't pay a slight file-size penalty (to maintain the same quality) in order avoid being bound to some per-seat licensing agreement with all its associated administrative and reporting obligations?" Every business that would rather pay royalty fees than for extra bandwidth required by a shitty codec. You probably also want the majority of your customers to actually be able to view your content. So there's also that "minor" inconvenience. But aside from that, what business wouldn't go the WebM route, right? :P "Do the math." Actually, I'll let you do it.
amitraman1 16y ago
Video formats should be open and free to use/redistribute. Otherwise, startups can't get off the ground quickly (YouTube being the exception). Charge for encryption/licensing formats.

89 points by russell_h 16y ago

But the group says it isn't acting to kill a competitor. It said it's simply offering a service for patent holders and is agnostic about which video format prevails. "We are effectively a convenience store" for licensing patents, said Larry Horn, MPEG LA's chief executive. "We have no dog in that fight." So, MPEG LA has no interest in extracting maximum possible amount of royalties for its patent holders?

imbriaco 16y ago
If you keep reading, it's clear that MPEG-LA believes it has patents in the portfolio that cover VP8. If they expect to extract licensing revenue from those patents it's altogether possible that they don't care which format ultimately wins.
- mustpax 16y ago
  Well, that claim is completely disingenuous. In reality MPEG-LA oversees licensing for a set of known codecs, the most prominent being H.264. When a somewhat-viable competitor comes to town they just claim they own the competitor and therefore don't even need to compete. Behind the "we're impartial" facade what they're really saying is, "you're going to have to pay us anyway, so why not just use H.264 instead?" (By the way, I voted you up, I think you summarize their position better than I did.)
- marshray 16y ago
  But probably they aren't really 100% sure their patents will hold up against the scale of legal challenge that could be brought down by Google. Of course, they have 1700 of them so they could keep the legal trouble going indefinitely. It would certainly be easier for them if the Google and the world continued to just cut them checks for ancient technology. But it will never be to their advantage to admit the extent to which they are bluffing and they probably don't even know themselves. Video has been digitized and compressed for how many decades now? Weren't patents supposed to expire at some point?
- iujyhfgtrtgyhju 16y ago
  The MPEG-LA doesn't charge royalties to it's members. The members also all hold patents - it's just an agreement not to sue each other. They do charge royalties to anyone not in the association - those royalties can of course be >100%. In the old days we used to call this a cartel - but that's illegal.
  - Anechoic 16y ago
    The MPEG-LA doesn't charge royalties to it's members Is that true? I though members had to pay royalties even if they had a patent in the pool.
    - iujyhfgtrtgyhju 16y ago
      It's a complex and secret process - but MSFT and Apple are not paying $10 for each copy of windows/iOS that includes an H264 player!
      - kenjackson 16y ago
        There's a royalty cap. I believe MSFT is paying the maximum royalty cap for H264. And Apple only has one patent in the patent pool of 1000+ patents.
      - tomsaffell 16y ago
        $10? If I understand the license[1] right - it's more like $0.10 to $0.20. [1] - http://www.mpegla.com/main/programs/avc/Documents/AVC_TermsSummary.pdf http://www.mpegla.com/main/programs/avc/Documents/AVC_TermsS...
    - nullc 16y ago
      This isn't the case. See the HP and MPEG-LA testimony before the FTC. The pool agreement isn't exclusive. The members are free to license their patents through other venues, including cross licensing. In fact, one of the points MPEG-LA made in their initial review letter with the DOJ is that he pool would not be used to force anyone to pay for a license to a patent which they were already licensed for some other means. So a pool member only has to pay royalties iff they've been unable to achieve complete cross-licensing with the other pool members.
- hristov 16y ago
  That is not clear from the article. Their representatives said that they believe that there are patents that cover vp8, but they never said they control those patents or which patents those are. At another place the article says that mpeg-la is asking people to submit patents that cover vp8 in order to form another patent pool. So it seems that they may not have the patents that cover vp8 but want other companies to give them to them.
- ZeroGravitas 16y ago
  Actually Mr Horn, who is a lawyer, is very careful never to say that. He does regularly get quoted as saying things are covered by patents, but never says who they belong to. I'm astonished that he might actually be talking about Google's own patents, knowing that he'll be quoted by the press in a way that turns a true, but pointless statement into FUD. Since most of his quotes sound like a Dickensian bad guy I think he might just be doing this. I mean who talks like this: "In view of the marketplace uncertainties regarding patent licensing needs for such technologies, there have been expressions of interest from the market urging us to facilitate formation of licenses that would address the market's need for a convenient one-stop marketplace alternative to negotiating separate licenses with individual patent holders in accessing essential patent rights for VP8 as well as other codecs, and we are looking into the prospects of doing so."

wtn 16y ago

This is hilarious! If patent enforcement is an illegal anticompetitive action, then the patent system itself is a contradiction.

marshray 16y ago
Yeah really. This looks to me like the patent system operating as designed. I guess if you're Google you can get the government to make an exception for you in the interest of fairness. But it's cold legalistic capitalism for the rest of us.
- runevault 16y ago
  As someone else pointed out, the one thing that makes this interesting is, instead of bothering to do the legal legwork first to PROVE they cover vp8, they simply make vague threats to scare people out of using it, which I highly doubt is how the patent system was meant to be used.
  - kenjackson 16y ago
    Are vague threats illegal? Do legal threats have to be specific? It seems like one of the most common threats I know of is, "I'm going to sue you!" It's usually not a specific, "I'm going to sue you based on violation of XYZ". It's usually a very vague statement. Is that generally illegal, but just not enforced?
    - marshray 16y ago
      Are vague threats illegal? Do legal threats have to be specific? Not in general, if they're vague enough. But when they come from the lawyer pool of a massively-funded cartel sitting on 1700 patents, they're inherently credible threats.
dchest 16y ago
"Antitrust enforcers are investigating whether MPEG LA, or its members, are trying to cripple an alternative format called VP8 that Google released last year— by creating legal uncertainty over whether users might violate patents by employing that technology, these people added." (Emphasis mine). This is fair, I think. Basically, they are being investigated for spreading FUD against their competitor. Imagine that you developed an application, and I'm your competitor. You're trying to sell your app to corporations. I call journalist and tell them that your app infringes patents (not mine, I don't have any patents). I also tell them that the patent pool is being assembled. I put a notice on my website: "Do you have any patents that [you app] might infringe? Let us know!", and let it hang there for a long long time. While there's an uncertainty, corporations won't buy your app. Anticompetitive? To me, yes.

ChuckMcM 16y ago

MPEG LA exists to extract patent royalties. By patent terms they are a 'legitimate' monopoly as the patent system was created to allow an inventor a temporary monopoly over their technology (20 yrs) on the condition that it passes to the public domain after that. Given the early MPEG patents are in the mid - 90s they will begin to start expiring in 2015. Once we reach 2021 there will be a dozen free codecs with source code on the market. In the meantime, MPEG LA does what it can to maximize its revenues.

sitmack 16y ago
Dont count on it. They will patent the encoders, the decoders, the container. Unless you code to the exact bitstream using the same exact software to encode that bitstream they could go after you. You are precluded in entirety from doing anything novel if you want to "use the patented inventions." These patents don't compose, they compost America's ability to innovate.
danbmil99 16y ago
While patents do confer a form of monopoly protection to an inventor and their assignees, that does not give anyone the right to form a cartel of multiple patent holders who work in concert to fix the price for the combined product. MPEG-LA's workaround for that, which is what is at stake here, is some sort of carve-out with the FTC, stipulating that because it's an emerging standard, MPEG should not be subject to the normal restrictions on patent pooling.

kinofcain 16y ago

Instead of the government investigating the MPEG LA for anti-trust violations, how about they spend some time fixing the patent system. This whole h.264/VP8 brouhaha is a symptom, not the disease.

lallysingh 16y ago
Let's remember that different actors in the government have their own motivations. Investigating the MPEG LA is a DOJ issue. The DOJ's full of long-term government employees who are motivated by their own career metrics. Fixing the patent system will require legislation, which is a function of our elected officials. These officials, really (and tragically) by necessity at this point, are driven by funding their re-election campaign.

tomlin 16y ago

"I can tell you: VP8 is not patent-free," Mr. Horn said. "It's simply nonsense." These statements are conscience injections, red herrings, and convenient sound bites for zealots like Gruber to use in their "see I told you" agenda-driven opinion pieces. Truth is, patents for a video codec to be used on the web is simply nonsense. It's a stifle of creativity and hopefully we end up winning with a free, open codec that can be used in open source software. This is the formula that encourages innovation. H.264 hardware inconveniences, gripes - to the wind.

fryguy 16y ago
I think you gravely misunderstand the patent system. When you can get a patent on drawing a line onto the screen (http://www.google.com/patents/about?id=KYwhAAAAEBAJ&dq=render+line+raster+display http://www.google.com/patents/about?id=KYwhAAAAEBAJ&dq=r...), it means that anything in your codec might be patented by some ridiculous patent already.
- tomlin 16y ago
  Granted. I know very little about patents, I still see these loaded statements as conscience injections, red herrings, and convenient sound bites for zealots like Gruber. Might is different that is, but on Gruber's blog it's a testament to an agenda. The MPEG LA knows this.
  - fryguy 16y ago
    There is no doubt in my mind that someone has a registered patent that the VP8 codec infringes on, due to the terrible state of the patent system as a whole. Now whether that is a valid patent is something that lawyers and lots of money will determine. However, someone needs to front that money, and AFAIK Google isn't providing patent indemnity for using the codec. It really is a smart business move to pay the relatively small license fee to MPEG LA than risk losing your entire company to a lawsuit (or lawyer fees)
    - ZeroGravitas 16y ago

Kylekramer 16y ago

I'm pretty firmly on WebM's side in this whole patent flame war thing, but getting the Justice Department looking into MPEG-LA already just makes me think Google's got some damn good lobbyists in Washington. I never heard of the government getting involved at this early stage of a patent battle before. Of course, MPEG protection racket-esque comments in the article makes this a bit easier to swallow.

VomisaCaasi 16y ago
I guess even Google would be pissed if an investment of 125M was to be flushed down the toilet. Also, I'm pretty sure they had far-reaching strategy right from the beginning, and had prepared themselves for such issues that might eventually leading them into battle.
- danbmil99 16y ago
  It's a win/win for Google. The long game is this: either they win the fight outright and webM becomes the video standard, or they use webM and the specter of long, drawn-out (and expensive) litigation to force MPEG-LA to rethink their royalty policy.
ZeroGravitas 16y ago
MPEG-LA asked the DOJ for clearance before they set up, since patent cartels of that type had been busted under anti-trust legislation in the past. They made some concessions to the DOJ in order to be able to operate, which at least one licencee claims they've failed to honor. You can Google for the Nero AG vs MPEG-LA antitrust case for more info. (edit: a link, http://www.osnews.com/story/23346/Nero_Files_Antitrust_Case_Against_MPEG-LA http://www.osnews.com/story/23346/Nero_Files_Antitrust_Case_...) So it makes perfect sense for the DOJ to be involved. It's not just a patent dispute.

alexkcd 16y ago

WebM is an inferior codec to h264. As much as I'd like a patent-free alternative, it's unlikely that consumers will be willing to take a step back in video compression/quality. The fact of the matter is that large companies can afford to pay royalties, and end users don't have to. There's very little incentive to move to something new, let alone inferior in quality and of dubious future. Now imagine a patent-free codec came along that had substantially better quality per bit-rate and was at least as efficient as h264. You wouldn't need lobbying to move us over. The pirates would embrace it first, and everyone else would follow. At the end of the day, moving forward is the only way we know. Sadly, WebM is leading in the opposite direction.

marshray 16y ago
WebM is an inferior codec to h264. One of the most important properties of my media formats is it's accessiblility. The fact that h264 is heavily patented by these creeps makes it inferior for my purposes by a large measure. What business wouldn't pay a slight file-size penalty (to maintain the same quality) in order avoid being bound to some per-seat licensing agreement with all its associated administrative and reporting obligations? Drive space is most-rapidly-decreasing cost in the world and bandwidth isn't too bad either. Patents take twenty years to expire. Do the math.
- alexkcd 16y ago
  "One of the most important properties of my media formats is it's accessiblility." Great! H264 is what you want then. It's not only supported, but also hardware accelerated, on most devices out there. WebM isn't, and won't be for a long time. "What business wouldn't pay a slight file-size penalty (to maintain the same quality) in order avoid being bound to some per-seat licensing agreement with all its associated administrative and reporting obligations?" Every business that would rather pay royalty fees than for extra bandwidth required by a shitty codec. You probably also want the majority of your customers to actually be able to view your content. So there's also that "minor" inconvenience. But aside from that, what business wouldn't go the WebM route, right? :P "Do the math." Actually, I'll let you do it.

amitraman1 16y ago

Video formats should be open and free to use/redistribute. Otherwise, startups can't get off the ground quickly (YouTube being the exception). Charge for encryption/licensing formats.