616-2771
WWW.USDOJ.GOV
TDD (202) 514-1888
JUSTICE DEPARTMENT APPROVES JOINT LICENSING OF PATENTS
ESSENTIAL FOR MAKING DVD-VIDEO AND DVD-ROM DISCS AND PLAYERS
WASHINGTON, D.C. -- The Department of Justice today approved a proposal
by three electronics firms that will allow them to jointly license patents to other
companies so those companies can make discs and players that comply with the Digital
Versatile Disc-Video and Read-Only-Memory (DVD-Video, DVD-ROM) standards.
According to the proposal, Koninklijke Philips Electronics N.V. (Philips) will offer
package licenses on behalf of itself, Sony Corporation of Japan (Sony), and Pioneer
Electronic Corporation of Japan (Pioneer). The license will allow makers of DVD-Video
and DVD-ROM discs and players to use the technology the three firms own that is
essential to comply with DVD-Video and DVD-ROM Standard Specifications.
In a business review letter issued today by Joel I. Klein, Assistant Attorney
General in charge of the Antitrust Division, the Department said the proposed patent
pool is designed to capture the efficiencies that may come from joint licensing of
complementary technologies. It will reduce the costs associated with obtaining licenses
on the three firms' essential patents, while raising little possibility of competitive harm.
A DVD is the same size as a compact disc, but with more than seven times the
capacity. Utilizing compression technology, a single DVD-Video disc can hold a two-hour feature film.
The Standard Specifications were established by Philips, Sony, Pioneer and
seven other firms to define the Digital Versatile Disc for video and ROM applications.
These Specifications also include rules, conditions and mechanisms for players to read
the discs and convert them into images for screen display. The Standard
Specifications implicate the intellectual property rights of a number of firms, including
Philips, Sony and Pioneer.
Through the license from Philips, makers of discs and players that comply with
the Standard Specifications will be able to license the essential patents of Philips, Sony
and Pioneer in a single transaction. The license will tell potential licensees exactly what
patents are in the portfolio, that a license on each portfolio patent is available
independently from its owner, and that the licensee will need to obtain licenses from
other technology owners as well in order to comply with the Standard Specifications.
Philips, Sony, and Pioneer have retained a patent expert to review their patents
to ensure that the license conveys rights only to patents that licensees will need in
order to comply with the Standard Specifications. Based on information that is obtained
from the three firms, others in the industry, and the expert's own advisors, it will be
decided which of the three firms' patents are necessary for compliance with the
Standard Specifications. By doing this, the Department noted, the expert will help
ensure that the patent pool does not combine patents that would otherwise be
competing with each other.
Under the Department's Business Review Procedure, an organization may
submit a proposed action to the Antitrust Division and receive a statement as to
whether the Division will challenge the action under the antitrust laws.
A file containing the business review request and the Department's response
may be examined in the Legal Procedure Unit of the Antitrust Division, Suite 215,
Liberty Place, 325 7th Street, N.W., U.S. Department of Justice, Washington, D.C.
20004. After a 30-day waiting period, the documents supporting the business review
will be added to the file.
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