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Electronics Titans Clash Over Digital Licensing Fees

A Chinese electronics giant claims in a federal antitrust action that its competitors colluded with a U.S.-based patent holder to inflate the licensing fees for digital televisions.

(CN) — Accusing a patents holder of inflating the cost of digital-television licenses, a Chinese consumer electronics giant filed a federal antitrust suit against its other major-brand competitors.

Headquartered in Qindao, China, Haier Group Corporation is a transnational consumer electronics company that reported $201.6 billion in revenue last year. One of its subsidiaries, Haier America Trading, brought a federal complaint Monday in Albany, New York, regarding protocols known as ATSC standards.

Short for Advanced Television Systems Committee, ATSC standards govern digital TV transmission over terrestrial, cable and satellite networks.

Haier claims that five of its biggest competitors — Samsung, Panasonic, Philips, LG and Zenith — crowd out competition through their cozy dealings with the patent-holders, the Delaware-based MPEG LA and the New York-based Trustees of Columbia University.

“Although companies whose patents are part of the ATSC and MPEG-2 patent portfolios retain the right to license their patents outside the structure of the licenses, approaching such companies individually to license necessary technology is a fruitless endeavor — Haier has approached licensors LG, Samsung, and Thomson Licensing about licensing necessary patents for its TV tuners; all have refused to negotiate individually and referred Haier back to MPEG LA,” the 48-page complaint states.

Haier does not contest the practice generally of setting uniform technological standards.

“Developing uniform standards can encourage innovation as technical specifications for the standards become widely accepted,” the complaint states. “But technical standardization also creates a ‘lock-in’ effect and the risk of ‘patent hold-up.’”

To avoid this, Haier says, the standard setting process participants typically commit to license their rights under FRAND terms, short for standards that are “fair, reasonable and nondiscriminatory.”

The complaint accuses MPEG LA of not upholding this process.

“MPEG LA along with LG, Samsung, Philips, Panasonic and other licensors have conspired in restraint of trade to affect, raise, fix, maintain, and stabilize prices in the downstream product market by demanding an excessive, non-FRAND royalty rate for the ATSC standard,” the complaint states.

“The effect of this unlawful conduct has been and will continue to be to restrain or eliminate competition and reduce output, and to decrease the production of ATSC compliant DTVs at low prices, all to the detriment of U.S. consumers and competition in the consumer electronics market,” it continues.

MPEG LA and Samsung did not immediately respond to requests for comment.

Haier alleges violations of the Sherman and Donnelly Acts, as well as breach of contract and other charges.

It is represented by Elliot Hayak, from the firm Harris Beach.

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