Company joins Microsoft, Time Warner as shareholders

French media technology firm Thomson said Monday it would buy a third of U.S.-based antipiracy software maker ContentGuard in a deal aimed at spurring the entertainment industry to move business to the Internet.

At an undisclosed price, Thomson would join shareholders Microsoft and Time Warner, who were in the process of taking over ContentGuard from Xerox.

Bethesda, Md.-based ContentGuard is one of the world’s key patent holders of software that protects digital content, including music, films and documents. Without this digital rights management (DRM) software, media companies will not be able to protect or earn money on their film and music libraries.

Internet shops like Apple’s iTunes and Microsoft Music Store are equipped with DRM software to prevent consumers from making unlimited digital copies.

After the deal, Thomson, Microsoft and Time Warner will own equal stakes in ContentGuard. TW will help persuade other music and film producers to move their business to the Internet with the help of DRM. Microsoft needs DRM in all its software products, such as Windows Media Player and Office.

Thomson, which provides media technology and decoders to broadcasters and other network owners, will approach its customers. As a company that has helped to invent popular music and video compression technologies, Thomson also can help ContentGuard manage and sell patents, it said in a statement.

Antitrust probe

The takeover by Microsoft and Time Warner is still subject of a European Union antitrust probe, as the European Commission wants to investigate if the new owners would attain a dominant position in the crucial field of DRM software.

Microsoft did not want to speculate if the entry of Thomson as an investor would change the commission’s stance. The deadline for the probe is Jan. 6.

The patents of ContentGuard and that of its rival InterTrust put them at the center of the digital age, at least until 2014, when ContentGuard’s first patents start to expire.

ContentGuard chief executive Michael Miron said ContentGuard would not abuse its position. “We will have sub-optimal growth of DRM if we don’t play in the right way. We haven’t planned for punitive pricing.”

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