Vrijschrift/FFII.nl warns 1.3 billion mobile phone users for submarine patents

Software patents make a product 1000 times more expensive in this case.

In a letter to the GSM Association (GSMA), the global trade association for the world's GSM operator community, Vrijschrift warns for problems with submarine patents. The GSMA wants to develop a Digital Rights Management standard for 1.3 billion mobile phone users. However, afterwards the standard may turn out to violate patents. The patent holders could then demand any sum they want, since a patent is an exclusive right.

Digital Rights Management is a method to protect digital music and image files against copying. One standard, developed by a group in which Philips and Sony play a major role, is regarded as excessively expensive by the GSMA. GSMA is therefore soliciting proposals from all DRM solution providers by 11th April 2005. Unfortunately, it is difficult to say whether such a standard will not be excessively expensive as well.

There exist companies who, minimally spending on research, apply for patents in fields that will become popular. After a few years they check whether the technologies that they patented are in use by others. Companies who developed their own software, unaware of those patents, can then be sued for absurdly high amounts. Such companies who do not contribute to innovation and do not make any products themselves, are called patent trolls. It is very hard for companies to protect themselves against such practices, since searching patent databases is difficult, and the patents in question are often broad and vague.

Apple makes a highly successful mp3player, the iPod. Apple is now being sued by a Hong Kong based company that demands 12% of the iPod and iTunes gross revenue, allegating that Apple violates its DRM patent.

A few years ago Philips and Sony bought the American company Intertrust for 453 million dollar. Intertrust's only asset were 23 patents, applied for after an elaborate brainstorm session. Intertrust had sued Microsoft over alleged patent violation. Microsoft settled the case for 440 million. Philips and Sony proposed a DRM standard to GSMA. Since this standard would cost billions, GSMA declined the offer. Another standard may however turn out just as expensive, because of an overlooked patent.

Says Vrijschrift spokesman Ante Wessels:

What does it cost to make a DRM standard? A few million would be pretty well paid. Mobile phone users will pay billions... Software patents make a product 1000 times more expensive in this case.

In a letter Vrijschrift/FFII.nl warns GSMA for patent trolls that have patented DRM technologies, but choose to keep silent, only to strike harder later on. Submarine patents derive their name from the fact that they unexpectedly surface. Vrijschrift/FFII.nl calls on GSMA to support FFII's call to the European Parliament to create a balanced software patent directive.

According to Vrijschrift spokesman Ante Wessels, software patents are often a swindle.

Take a simple software idea and patent it. Claim a product as broad as possible, so that nobody can circumvent it. After that, demand money from any violator. The best thing that can happen is that a patent ends up in a standard. Then everybody has to pay. Philips and Sony hope to earn billions with their speculative purchase. We are watching the total degeneration of the patent system.

Update

Later on, a new licensing scheme was proposed. The price went down a bit, it does not change the story basically. With the original scheme, billions would have to be paid in the first few years already. Now it may take a little longer to earn those billions.

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20050412006041&newsLang=en

Phone DRM: the most expensive royalty operation ever:

"there would be a price to pay" "in January we pointed out that the OMA had initially suggested that this technology might be free of royalties, until the MPEG LA collected together five companies that all felt that their patents were essential for offering
the technology. Those companies were ContentGuard, Intertrust, Matsushita, Philips and Sony and none of them were part of the OMA work to create the technology, but they had always warned that there would be a price to pay since they held most of the patents in this area."

http://www.theregister.co.uk/2005/04/21/oma_drm_patent_holders_offer_reduced_royalty/

Open Mobile Alliance Distinguishes Itself From DRM Patent Pool

"In response to ongoing industry concerns about licensing terms proposed by MPEG LA for the Open Mobile Alliance (OMA) Digital Rights Management (DRM), OMA reiterates its earlier statements distinguishing itself from MPEG LA and its licensing terms for OMA DRM. OMA is a specification setting organization focused on interoperability. It exists as a means for companies involved in the mobile industry to develop open, interoperable mobile specifications based on market requirements."

http://www.perssupport.anp.nl/cgi-bin/perssupport/poc_anp.cgi?2005104125_N9H.1N.GLL.out21

Macrovision DRM patents challenge fails

"A few years ago Macrovision bought a handful of patents from a bankrupt European company and realized that many of the filing dates had date precedence over Intertrust's core trust chain patents in digital rights management. Subsequently the company filed an interference suit."

http://www.theregister.co.uk/2005/04/20/macrovision_drm_patents_challenge_fails/

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Vrijschrift/FFII.nl warns 1.3 billion mobile phone users for submarine patents

Update

Vrijschrift letter to GSMA:

GSMA's call on DRM solution providers, describing the problems:

FFII's call on the EP:

European Intertrust patents:

Vrijschrift Dutch press release:

Apple DRM problems