DVD patent letter stirs biz

Multi-Format Inc. informs recipients of license, fees

More than 200 retailers, replicators, suppliers and others in the home entertainment industry received a surprise letter this month claiming that two inventors own a patent relating to the process of playing DVDs.

The letter, dated May 30 and representing two inventors operating under the auspices of Multi-Format Inc. of Dumont, N.J., was sent by the Los Angeles law firm Hennigan, Bennett & Dorman. That firm represents Sharman Networks, owner of the Internet file-sharing service Kazaa, among other high-profile clients.

The one-page letter alleges that the standard method of playback used in consumer DVD decks infringes the Multi-Format patent. The letter charges the industry recipients with inducing or contributing to the infringing activity.

“As you undoubtedly know,” reads one letter addressed to Technicolor Corporate Offices in Camarillo, Calif., “the end user purchasers of DVD discs view the video programs stored on those discs. We believe that the activities of these purchasers, when they view the video program stored on the discs, are covered by claims 14 and 20” of the patent.

The patent, which originally dealt with certain professional editing and image-processing techniques, was filed in 1994 and issued in July 1996. An amended version was reissued in April and expanded its scope to cover commercial DVDs.

“The reissue is an opportunity for the patentee to amend its claim, because there were errors made during prosecution of the original patent,” Multi-Format attorney Alan Block said. “It didn’t include as broad a claim as it could have.”

Included in the reissued version is a reference to “producing” a video program by following the steps outlined in the patent is changed to “processing” the video, a function allegedly performed by all DVD playback devices.

Among other things, the steps outlined in the patent deal with converting the video output into different configurations, such as widescreen, letter-boxed and HDTV.

Block said the letters are “merely notices, just informing (the recipients) we have the patent, and we believe they’re required to pay a license. We have informed them we have a licensing program, and we intend to contact them again.”

Responding to the letters — and an early agenda that seems to target retailers — Video Software Dealers Assn. president Bo Andersen said, “I suspect the reason they’re interested in retailers is because their focus is on the infringement by consumers … in an unclear way. Retailers as potential licensees are much more manageable than consumers.”

Sorting it out

Andersen said VSDA “will provide understanding and assistance to our members to the degree that they find it useful, and we’ll work very closely with the existing DVD patent holders and rights holders to sort out this claim and determine its viability and respond appropriately.”

Block said the specifics of Multi-Format’s planned licensing program are being worked out. “We’re talking to the DVD6 (patent group), and we’re also thinking of talking to retailers as well,” he said. “By selling the DVD, they’re contributing to the infringement.”

A source at one of the DVD6 companies said last week that he was unaware of Multi-Format or its claims. A spokesman for the Motion Picture Assn. of America said the group also had not heard about the claims.