Consumer Groups Ask FCC to Probe CUT FATT’s DTV Patent Abuse Charges
Five consumer groups sympathize with the Vizio and Westinghouse Digital petition that asks the FCC to regulate DTV patents and punish those that don’t license the technology on reasonable and nondiscriminatory terms, the groups said in joint reply comments filed Wednesday. Americans are overpaying for DTV sets because patent holders extract excessive royalties for licenses, Vizio and Westinghouse have told the commission in a petition filed under the name of a group they call the Coalition United to Terminate Financial Abuses of the Television Transition, CUT FATT.
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The FCC should investigate the “allegations that existing licenses for patents essential to the DTV standard are unreasonable or discriminatory,” said the consumer groups -- Consumers Union, Free Press, Media Access Project, New America Foundation and Public Knowledge. The commission also should “require disclosure of essential patents, the grounds by which the patents are essential and the terms under which they are licensed,” they said. If the FCC finds that patent holders license their DTV technology on unreasonable and discriminatory terms, the commission would be well within its authority to enforce its rules requiring reasonable and nondiscriminatory licensing, they said.
“The public interest requires that the scope and cost of any mandatory standards be clear to those who would adhere to them,” the groups said. “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.”
CUT FATT thinks it’s “critical” that the FCC “insist on licensing under RAND principles, it said in its reply comments. When the commission imposed the ATSC standard, it “established conditions that encourage abuse by entities holding patents essential to the ATSC standard because manufacturers have no legal alternative to the use of that standard,” CUT FATT said. The FCC doesn’t know “who holds patents that are essential to the ATSC standard,” nor does it know how much patent holders charge DTV manufacturers “and ultimately consumers” for their licenses, it said. It said the commission “must remedy its ignorance of these basic facts.”
But the American National Standards Institute said forming the “government-sanctioned patent pool” that CUT FATT proposes would add many “complexities” to the market. “Furthermore, the antitrust laws respect a patent owner’s decision to avoid joining a patent pool,” the institute said. CUT FATT'S proposed mandatory patent pool could “have unintended consequence that will only be known in hindsight,” it said. “ANSI submits that the formation of patent pools should be left to the voluntary association of rights holders who individually recognize their precompetitive interest in joining such a pool.”