Nero Files Antitrust Complaint Against MPEG-LA

hkmwbz writes "German technology company Nero AG has filed an antitrust complaint against the MPEG-LA, the company that manages the H.264 patent pool. Nero claims that the MPEG-LA has violated the law and achieved and abused 100% market share, by, among other things, using 'independent experts' that weren't independent after all, not weeding out non-essential patents from the pool (in fact, it has grown from the original 53 to more than 1,000), and retroactively changing previously-agreed-on license terms."

Comments

About time.

[Anonymous Coward]

Good luck guys, may the force be with you.

Re:About time.

[DavidR1991]

Agreed. MPEG-LA is a glorified protection racket - any corp. brave enough to take a stand against it (and the myriad of other companies it 'shields') is worth standing behind

Re:About time.

[DavidR1991]

That said:

"According to the MPEG-LA, Nero's case is nothing special. "I think we're looking it as a typical response by a company that has not abided by the terms of the license they've taken,"

Have Nero not abided by their licence deals? Or are MPEG-LA going to paint it this way to try and throw the case out as a tit-for-tat?

Re:About time.

[yincrash]

FTFA, Nero claims that MPEG-LA has not abided by the license and changed it's policies against what there was previously written agreement of.

Re:About time.

[hairyfeet]

Not to mention thanks to software patents being broad to the point of insanity it is pretty much impossible for anyone doing video compression of ANY software to not trip over an MPEG-LA patent mine. If the MPEG-LA patent pool is upheld it will hold the entire Internet hostage, as to do pretty much anything with AV one with have to pay the MPEG-LA "toll". Hell they even claim patents on part of the firewire spec, it is just nuts!

So here's to Nero, may they kick some serious MPEG-LA ass. and for the "corporation Yay!" trolls that usually scream when anyone dares to risk corporation profits and scream "nobody will innovate!" there is a BIG difference between real hardware patents and the mess that is software patents. And with the major corps forming a cartel via MPEG-LA they have made a barrier to entry in AV that only corps with seriously deep pockets can afford to traverse, which is the exact opposite of the original purpose of patents, which were to keep the little guy from being crushed like a bug by big corps that could steal their ideas and beat them on price.

As we have seen with some of the crazy things being patented by big corps like Amazon, IBM, and MSFT, such as the wave of "...on the Internet!" patents we had a few years back, software patents have become WMDs in the software world, with cartels like MPEG-LA and patent warchests making anything truly innovative in the field simply too expensive for anyone but the fortune 500.

Re:About time.

[pipedwho]

...there is a BIG difference between real hardware patents and the mess that is software patents.

People keep saying this, but it is a semantic argument more than anything else.

The reality is that the patent system is so systemically broken due to its lack of scalability, that the effects are most heavily felt by the fastest growing/moving industries.

Patents have always been there to describe both processes and physical manifestations, so there's nothing new there. However, the term lengths and acceptance of obvious ideas are too far removed from what could be considered sane in the current technological climate.

Concepts such as:

1. 'future' patents, or patenting the 'goal' instead of the steps to get there.

2. being allowed to patent something that has already been published (for up to 12 months)

3. obvious 'innovations' (eg. $prior_art$ on the internet)

4. non-immediate disclosure of the patent at the time of submission (eg. submarine patents - disclosure that occurs after numerous other parties have 'innovated' along the same line.)

5. an incredibly low bar for novelty (eg. 'inventive' steps that are a natural evolution of the state of the art and will be discovered in short order (if they haven't been already) by multiple independent parallel 'inventors')

6. etc, etc.

The above are unsustainable in an industry where the half life of a product is under 3 years and the shear volume of 'inventors and implementors' number in the millions. As the number of players grows, the bar for acceptability must be raised proportionally. There is still room for patents on ideas that are truly clever and novel and would have little chance of being 'rediscovered' by multiple other parties without significant effort, investment and/or serendipity. But, the more players there are, the more likelihood that what is being claimed is far from being unique. (To quantise this, term lengths could be made relative to how inventive the patent actually is. More inventiveness, longer protection. Very little inventiveness, very short term length. However, measuring 'inventiveness' is probably just as difficult a question.)

In addition to fixing the above, it should also be recognised that anything that ends up being deemed an industry standard should be considered a special case and handled by the public trust.

'Fixing' the patent system by trying to create a disconnection between software/hardware/manufacturing processes/business processes/etc is not the right way to go about it. Even if a distinction can be made, it is so arbitrary as to end up flip/flopping every time a clever legal argument is made or sneaky 'word-around' starts getting written into new patents. (eg. "A device that ..." or "A method to create ...")

So, the answer is not to "deny all 'software' patents". The answer is FIX the system. Now.

Re:About time.

[Anonymous Coward]

> The answer is FIX the system. Now.

The answer is to delete the system. Completely. End the patent system.

http://levine.sscnet.ucla.edu/general/intellectual/againstfinal.htm

Re:About time.

[dwarfsoft]

I would think that if MPEG-LA has 'retroactively changing previously-agreed-on license terms' that in doing so they may have turned Nero from an abiding Licensee to a 'non-abider' rather quickly, and that perhaps this was what Nero was upset about.

I should RTFA, and all that though...

Re:About time.

[msclrhd]

FTFA, Nero got a license from MPEG-LA saying that they didn't have to pay license fees for trial software. Now, MPEG-LA has changed their minds and has demanded payment retroactively for all the free trials Nero has provided before the change.

I didn't know Nero AG had time for this

[Anonymous Coward]

They seemed so busy turning their superior burning tool into another bloated intrusive dog.

Re:I didn't know Nero AG had time for this

[MBGMorden]

They seemed so busy turning their superior burning tool into another bloated intrusive dog.

There are other completely free products that have matched Nero's (former) minimalist approach. CDBurnerXP is great on Windows. Brasero works great on Linux. On OS X, Burn is not quite as much my style, but it's simple and get it's job done.

Essentially, Nero got priced out of the "dirt simple I just wanna burn a damned CD" market. Bloatware is all that's left.

Re:I didn't know Nero AG had time for this

[theArtificial]

Another worthy Windows mention is InfraRecorder and it's opensource to boot.

I don't have any affiliation with this project.

Re:I didn't know Nero AG had time for this

[mindbrane]

There are other completely free products that have matched Nero's (former) minimalist approach.

I don't disagree and would add in CDex as another example, but Nero is one of the few for profit companies that seem to have made an effort to put out a good product at a fair price. There's always been a few companies whose PC products are reasonably priced and worth the cost. Norton Utilities was perhaps the most shining example. I almost always get a free light version of Nero software when I buy a high end optical drive or a TV card/ripper. I'll pick up their latest full suite when it pops up on my radar screen at half price because the lite version still measures up well against the free stuff. One of the biggest problems vendors like Nero face is that MS knows it has to keep adding brain candy apps for the point and click crowd and MS will drive niche vendors out of business to keep their OS/Office products afloat. It's just a temporary bother because an OS in 10 years time will come with a full suite of audio video scrapbook apps for mom and pop and the kids to play with.

just my loose change

Re:I didn't know Nero AG had time for this

[charliemopps11]

yea, it's pretty sad when I wont even pirate your software. The final straw with Nero was "Nero Scout"

Re:I didn't know Nero AG had time for this

[djdanlib]

Zomg, what will the pirates do if they can't burn DVDs??

OK, for real though, here's the other side of the debate.

Higher end tech is too expensive - BD-ROM is the current highest end consumers can buy, but the entrance cost to using that technology is sufficiently high that Joe Middle Class Consumer with his wife and 2.5 kids and a mortgage can't afford it.

Why buy a BD-R or flash drive when you only have 1 GB of photos to give to Aunt Mabel, anyway? A blank DVD only costs a few cents.

Burning CDs to listen in your car is cheaper than buying an mp3 player. Those are still a luxury item, especially with the outrageous cost of the kits you have to use to hook them up to your car. (Let's face it - I'm not going to buy a luxury car just because it plays mp3s.) Hitting the next track button on your stereo is safer than fiddling with your handheld mp3 player, too.

CD/DVD-ROM discs will outlast a frequently-used USB drive. I've had some Flash devices that lasted, some that didn't make it 2 years.

In the business world, $100,000+ software is still distributed on CD and DVD, or an image thereof. Drivers for certain brands of servers are downloaded as ISO format, so you are supposed to burn them. Firmware drivers come in bootable ISO form now. Yes, I know, 7-zip can unpack all of the above. But when you're setting up an OS on a new server or zeroing a disk or recovering a failed machine, you usually need a disc because they DON'T boot off the USB ports.

USB drives cannot normally be write-protected without arcane magik tricks, and not many can be write-protected at all. Read-only media is more secure when you're up against malware. This is important when performing security breach remediation, such as antivirus on a live system.

And now, for Slashdot brownie points: Linux installs are available as CD/DVD ISO images. ;) Of course you could use USB for this, but when you can give someone Linux for essentially free (CDs are dirt cheap) how could you go wrong there?

I've seen people using floppies and tapes as recently as last year. So, just because something's obsolete on the cutting edge, doesn't mean hordes of people aren't still using it.

Must be nice to have the money and time and modern hardware to get rid of optical media!! :)

Re:I didn't know Nero AG had time for this

[Sylver Dragon]

You can even keep a copy of it on a thumbdrive and run it from there without installing:
PortableApps Version

Also not affiliated with the project or the portable apps folks, just like both.

Re:I didn't know Nero AG had time for this

[Dragoniz3r]

Finally, effective piracy countermeasures! Someone alert Ubisoft!

Re:I didn't know Nero AG had time for this

[hairyfeet]

Uuuuhhhh...You DO know that if all you want is the burner Nero will let you have it for free, yes? Or that if you want an even more simple interface there are great free choices such as IMGBurn which you can even install with a one click unattended installation thanks to Ninite that will install nearly all the major apps folks need/want, like FF,.NET/Flash/Silerlight/Java, even IM, AV, and Media Players, all in an interface so simple even your grandma can use it?

So while the full Nero may not be YOUR cup of tea, there are enough folks buying it that Nero thinks it is the correct way to go for their customers, but they are still nice enough to offer the basic version for $0. And just because you think it is "bloated" doesn't mean the masses do. Just look at home pages, which working PC repair I can tell you the average Joe by a good 99 out of 100 have set to this instead of this because they actually LIKE it that way!

MPEG_LA Isn't the devil

[Useful Wheat]

Although I disagree with most of what that company does, their MPEG licensing fee is on the order of $2 per manufactured device to use their technology. This isn't really extortion. HDMI is 4 cents per device, but you're required to maintain a $10,000 license fee on top of that. I think gross abuse would be more on the order of $50/device.

Either way, I support the free and open standard provided by displayport, which dispatches with the fees.

Re:MPEG_LA Isn't the devil

[Anonymous Coward]

MPEG_LA's official stance is that nobody can create a codec for compressed video of any sort without violating at least one of their patents.

Re:MPEG_LA Isn't the devil

[MBGMorden]

Any non-zero fee is bad for free (as in beer, and as in speech) software. When you have no price you're charging, then you can't really add in any fee on top of your price.

It basically means that if you want to distribute software, you have to implement a means to SELL it. If you goal is to distribute software free of charge, then even a $0.01 licensing fee totally cripples that.

A better solution for "free as in beer" software would be to make the fee a percentage of the sale price, though that still is somewhat problematic from the "free as in speech" angle.

Re:MPEG_LA Isn't the devil

[El_Muerte_TDS]

That's like saying Satan is not evil because there's also Cthulhu.

Re:MPEG_LA Isn't the devil

[Darkness404]

The problem is principle, even if I use totally clean-room reverse-engineering without even taking one look at their patents, I still am guilty of patent violations, how?

Not to mention their patents become so broad that if you want to create your own compressed video standard you still have to license it out.

Really, they should license certain software for $2 and if you use clean-room reverse engineering, you should be perfectly entitled to distribute and use it. And if you make a different standard, you should be able to distribute and use that without fear of patent lawsuits.

Any company that does not make use of their patent "portfolio" to advance art and sciences is an abuser of patent laws plain and simple.

Re:MPEG_LA Isn't the devil

[ObsessiveMathsFreak]

Although I disagree with most of what that company does, their MPEG licensing fee is on the order of $2 per manufactured device to use their technology. This isn't really extortion.

There are numerous other terms attached to MPEG licening, including requirements that you not facilitate the infringement of copyrights, your device respects HDCP, etc, etc. You either do as they say and pay their fee or they sue you. Sounds like extortion to me.

Re:MPEG_LA Isn't the devil

[tepples]

The problem is principle, even if I use totally clean-room reverse-engineering without even taking one look at their patents, I still am guilty of patent violations, how?

Among copyright, patent, and trademark, only copyright cares about the pedigree of any copy. Patents and trademarks can be infringed whether you have had any contact with covered goods or not.

Re:MPEG_LA Isn't the devil

[Darkness404]

Which is an abuse of law.

Even if it is technically legal, I can't support it. I probably can't help supporting it financially (as so many products have it included) but I certainly can't support it morally.

The entire point of patents are to instruct how something works and how to make it. However, these patents are too broad and cover far too much.

Patents are supposed to encourage different ways of doing things, however, with "patent pools" like MPEG-LA and large corporations having far to many patents and lawyers plus patent trolls, you can't do anything without running into one of them.

If you don't do things exactly like the patent papers say and make non-trivial modifications, you should be able to use it. That is the only way in this day and age that patents can "promote the sciences and the useful arts"

Re:MPEG_LA Isn't the devil

[Darkness404]

No they wouldn't be pointless, they would be useful to promote the progress of the sciences and useful arts.

Think about it this way, there are a number of ways to create an image, you can use ink, CRT, LCD, LED, etc. but with patents like the patent pool that MPEG-LA has, they have a patent for a "technology to display an image" with the result of being an etch-a-sketch, if I want to make a CRT, I still have to pay them money because it is "technology to display an image" despite me not even using their technology at all.

So unless I feel like paying extortion money, the technology lags behind because patents are preventing me from creating "technology to display an image" even if I want to do it in a radically different way.

Not to mention that half the time it isn't the people who would have created the etch-a-sketch technology but rather a business out in Texas or someplace which does nothing to do with display technology and they only target me once I'm making money with my CRT monitors.

Granted, this is a terrible example, but when you look at software patents and such, they are effectively cornering the market with an "etch-a-sketch" because a CRT or LCD would violate the "technology to display an image" patent.

Re:MPEG_LA Isn't the devil

[ae1294]

That's like saying Satan is not evil because there's also Cthulhu.

Cthulhu is not evil... He's just misunderstood...

Here! Have a Taco, they are deliriously delicious, although a tad non-euclidean.

Re:MPEG_LA Isn't the devil

[forkazoo]

Although I disagree with most of what that company does, their MPEG licensing fee is on the order of $2 per manufactured device to use their technology. This isn't really extortion. HDMI is 4 cents per device, but you're required to maintain a $10,000 license fee on top of that. I think gross abuse would be more on the order of $50/device.

If Vinny and Guido show up at your business with a baseball bat and remark that you have really unbroken knees, and it would be a shame if anything happened to them, it doesn't really matter if they demand $2 or $50. Once they show up at your business, willing to make threats about how they need a cut of the sales of a business that they may not have contributed anything to, they have gone too far. MPEG-LA are, at this point, basically operating under exactly the same business model as Mafia running a protection racket. They just invested enough in politics to make their game somehow legal.

Re:MPEG_LA Isn't the devil

[EyelessFade]

well no, not yet anyways. But if you make a shortfilm with your camera and decide to sell it, then you have to pay up big time.

Re:MPEG_LA Isn't the devil

[DrSkwid]

You might think differently if you got the manual your $8000 Pro HD camera out and read the manual

http://www.facebook.com/photo.php?pid=584693&l=d37e6ecc2a&id=1429834573

and then once you got that sorted out you read the manual to your $999 copy of Final Cut Pro

http://www.facebook.com/photo.php?pid=584692&l=a8a46fa560&id=1429834573

MPEG-LA is a virus

Re:MPEG_LA Isn't the devil

[unix1]

If you don't do things exactly like the patent papers say and make non-trivial modifications, you should be able to use it. That is the only way in this day and age that patents can "promote the sciences and the useful arts"

There's no such thing as "exactly" with software patents. Most of them are so broad and hopeless, they claim ideas, not specific implementations. Most software patents do not state and present any actual software that is being patented - i.e. no code, and no algorithm. In fact, it wouldn't make sense for them to list any actual code to patent because copyright already gives them a far greater protection than patents would.

Software patents don't make sense.

Re:MPEG_LA Isn't the devil

[JAlexoi]

That is the whole problem, because patents were not intended to be applied to users of said invention, but only to protect the inventor against copycats.

Re:MPEG_LA Isn't the devil

[Darkness404]

And how do they do that? With a limited monopoly on the idea, not the implementation. It's the exact opposite coverage of copyright, which grants a limited monopoly on the expression but not the idea. Trademarks is a monopoly over a name under certain conditions.

And what are the points of those?

In the US constitution, patents are secured to "promote the sciences and useful arts", trademarks are used to protect consumers. The point of patents was to prevent guilds and companies from monopolizing knowledge by providing an incentive for them to release it to the public. Trademarks are useful because they let people understand what they are getting: if I want a Nintendo Wii and the package says Nintendo Wii, I should be getting a Nintendo Wii, not http://www.blogcdn.com/www.engadgetmobile.com/media/2007/12/vii-2-white.jpg , trademarks are useful.

What patents are today, are not what patents were when they were first designed. They were to add to the public knowledge and let people do great things with it as building blocks. Today though? We have the internet, we have communication, etc. We need to seriously consider if patents are even worth it today because they fulfill none of the constitutional requirements and don't benefit the original idea of patents.

Re:MPEG_LA Isn't the devil

[westlake]

You might think differently if you got the manual your $8000 Pro HD camera out and read the manual

Your camera shipped with the generic end-user consumer license.

Your costs for MPEG 4 distribution look like this:

Shorts 12 minutes and under -

$0

Retail sales by title -

The lower of 2% of the price paid to the Licensee (on first arms length sale of the video) or $0.02 per title.

If you aren't grossing $150K+ in sales they have no interest in you whatever.

Subscription sales [The Geek's Strip Club Channel or DVD of the Month] -

100,000 subscribers or less - $0/yr.
100,000-250,000 - $25,000/yr
250,000-500,000 - $50,000/yr
500,000=1 million -$100,000 - $50,000.
Over 1 Million - $100,000/yr

Free TV Broadcast -

1-Time $2,500 fee for each AVC encoder
OR
Annual Fee For Markets Of 100,000 and Over - Starting at $2,500/yr

Internet -

End user does not pay by title or subscription - $0/yr [May in the future rise to the equivalent of Free TV Broadcast]

Enterprise Cap [Commonly owned legal entities] -

$5 million/yr

That is the real cost of H.264 licensing to a service provider the size of Disney or Google. Which means that production, storage and distribution of VP8 video is going to have to be mighty damn cheap to be competitive. SUMMARY OF AVC/H.264 LICENSE TERMS

Non-infringing video

[crow]

Well, you probably would have trouble getting a modern compression system that doesn't infringe on one or more of their patents, but you can use an older video format.

Consider that DVD was developed in 1995, so the base MPEG-2 patents expire within 5 years, if not earlier.

The draft MPEG-1 standard was out in 1990, so a codec based on MPEG-1 technology should be free of patent issues.

H.264 dates from 2003, so we probably have another 13 years there.

Ultimately, it may take a legal battle with Google to invalidate or narrow some of the H.264 patents such that VP8 or something similar can compete patent-free.

Re:Non-infringing video

[reebmmm]

Consider that DVD was developed in 1995, so the base MPEG-2 patents expire within 5 years, if not earlier.

Patents last 28 years (in the US at least), that puppy has another 13 years or so on it.

Huh? US Patents don't last 28 years. New patents have a term of 20 years from the earliest filing date. Patents filed before June 8, 1995 have a term that is the longer of (i) 20 years from the earliest filing date; or (ii) 17 years from the date of issue.

What timing!

[Anonymous Coward]

This couldn't have come at a worse time for MPEG-LA. They're just now preparing for an epic struggle with Google over VP8 and Nero comes from behind and sticks a dagger in their spine.

The supreme court would say MPeg LA is illegal

[gr8_phk]

The supreme court just ruled today that the NFL can't license the team trademarks collectively. It seems to me this should extend to any collective pool of IP - including patents. Each patent holder should have to license their patents individually.

Re:The supreme court would say MPeg LA is illegal

[Bigjeff5]

It seems to me this should extend to any collective pool of IP - including patents.

Possibly, it depends on how broad the SCOTUS ruling was. The laws for trademarks and the laws for patents are very different, and each are different from the laws for copyrights.

We'll have to wait and see, but it definitely sounds like this case could be used for a strong argument in Nero's case.

Re:The supreme court would say MPeg LA is illegal

[AK Marc]

The supreme court just ruled today that the NFL can't license the team trademarks collectively.

No. They ruled that the Sherman Antitrust Act would apply for collective licenses. They could still collectively license trademarks without a problem. The specific issue was that the NFL argued they didn't need to worry about antitrust issues while issuing an exclusive collective contract. They may still be able to do exactly what they've already done, and there was no ruling banning collective licensing at all (and nothing that could even be construed to hold back any collective agreement of any kind).

But if you have a collection of competitors agreeing to to work together, antitrust issues apply. It may have some impact on this case if it's found that the cross licensing is an antitrust issue, but there's nothing that would prevent any group from collective licenses (presuming other laws not examined in this ruling aren't broken).

Re:The supreme court would say MPeg LA is illegal

[Teancum]

The problem is the exclusive nature of the agreements signed by the various parties, where those joining the pool are barred by contract from joining another licensing pool. That is significant and may apply to the NFL as well if there were to be a team that would want to independently license its logos and mascots or team uniforms under a separate licensing agreement.

It is this exclusive arrangement that is at the heart of the MPEG-LA lawsuit by Nero. The major media companies and consumer media equipment manufacturers certainly have been engaging in acts for some time that locks potential competitors out of the market for some time.

It is good that this regime is being called on the carpet and being called exactly what it should be: A trust in the classic sense like the rail barons of a previous century were doing that caused the anti-trust legislation to be enacted in the first place. It is about bloody time!

That's just what Microsoft did to Spyglass

[Rob Y.]

When Microsoft bought the spyglass browser and turned it into IE, they agreed to pay spyglass a percentage of the sale price. Ultimately, they made the sale price $.00, wiping out spyglass's revenue stream in a classic MS double-cross.

I don't know why Spyglass never sued. IE was made a part of Windows, which was definitely not free. Sure, they made IE available as a free download, but they also included it on every Windows CD. Maybe there was a quiet suit and settlement?

Re:That's just what Microsoft did to Spyglass

[Fnkmaster]

They did sue. The settlement, however, was for a pathetic $8M according to this source.

Re:Citation, please?

[Kalriath]

Actually, they don't indemnify at all. I've seen stories that apparently they are forming a patent pool for Theora and WebM/VP8, but the only place I can't find any confirmation of that is from MPEG LA themselves. The "official stance" referred to by the AC was mentioned in the story about them forming a VP8 pool, but said statement (and VP8 plan) doesn't exist on their site.

And they sue. A lot.

They are founding a patent pool for human gene patents though. That can't be evil at all.

Re:HOLY SHIT.

[Bigjeff5]

"My name is Khyber, and Nero's anti-trust complaint was my idea."

the NFL decision from the court

[ciaran_o_riordan]

Here's the Supreme Court's decision:

http://www.supremecourt.gov/opinions/09pdf/08-661.pdf