When Technicolor this week filed a patent infringement case against Samsung, it was made to look deliberately like this was an attack on Samsung’s largest volume businesses, phones and TV manufacture. To us this is really about set top boxes, getting royalties for codec patents and is about trying to keep Samsung at bay in a business where Technicolor has “doubled down”.
Technicolor was faced with a huge decision 18 months ago, when it was clear that rival Pace had been snapped up by Arris, in a move we said added the kind of scale it would need to keep consumer electronics companies like Humax and Samsung out of the set top business. If Technicolor bought the Cisco set top business, it too would have scale, but it would double its exposure in a market where it was suddenly competing with huge businesses which could live on lower margins. It went ahead and bought it.
If that logic is right, then “borrowing” ideas from the innovative set top community, and not paying its “patent” dues, was one shortcut that companies like Samsung have been taking for years, and Samsung has been virtually “invited” into this market to bring its scale and lower pricing points, by operators like Liberty Global, Time Warner Cable and Comcast, when they commoditized set tops by creating single RFPs with very large numbers, and taking away software stack issues by using RDK and other independent software stacks.
There are hundreds of tricks that any company which has grown up in decoding MPEG 2 and H.264 have learned, to make their set tops robust. Some of these will have involved patents, and among smaller set top makers they amount to software stacks that are “trade secrets,” even where they are not patented. So this suit was just a matter of time.
Technicolor said it has initiated several actions, in both Dusseldorf and Mannheim in Germany and another in First Instance Court in Paris in France, across a range of Samsung products. It cites ten patents, covering technologies related to video coding, communications and associated technologies.
Technicolor has always been involved in every step of development in video patents, including MPEG 2, H.264 and HEVC. But a year ago, it dropped out of the HEVC Advance patent pool so that it could pursue patent licenses separately. Fundamentally it did not want to sit idly by and watch rivals adopt its technology, and not pay patent royalties, just because there was confusion over multiple HEVC patent pools. It reported in 2016 that it had one major HEVC patent license and now it looks like this is part and parcel of another patent licensing deal that went wrong – Samsung refusing to sign, possibly because of the confusion surrounding HEVC.
Of course, Samsung makes a juicy target, given that it is the global leader in smart TVs and also until the last quarter, in smartphones – all of which require codecs which allow them to show video. But as we say, one of the issues here will also be set tops, as Samsung is one of perhaps four players in the world which can take single orders for as many as 1 million set top boxes, Technicolor being one of the others. If it cannot always win deals, it must ensure it has other revenues sources.
Given that one major (unnamed, but possibly Apple or Sony) has signed with Technicolor over encoding patents, then its litigation will have far more credibility and the pause over HEVC patents may not affect this suit.
Technicolor points out it holds some 30,000 patents and patent applications, in the areas of video coding and image processing, telecommunications, user experience, security and displays.