[Patents] MP3 patent owners threatening Ogg Vorbis

[PILCH Hartmut phm@a2e.de]

http://news.cnet.com/news/0-1005-200-4101023.html

...

   Analysts say the open-source effort has gained more ground in its
   short existence than many had expected. Some say it's more likely to
   succeed in applications such as video games since developers loathe
   paying MP3's licensing fees and can take advantage of the free format
   without worrying about whether consumers have players.

   Even if Vorbis takes off, however, its future as an MP3 alternative is
   not guaranteed. If the format gains enough popularity, it will almost
   certainly face a patent infringement challenge from the owners of the
   MP3 standard, analysts said.

   "I had been skeptical that anything would come of it," said Forrester
   Research analyst Eric Scheirer. "But it is a (technology) that is
   competitive with MP3...The question is how well it will stand up to
   patent challenges."

   MP3's challenge
   The owner of most of the intellectual property inside the MP3 format
   is Germany's Fraunhofer Institute, a massive research organization
   with interests far beyond audio technology. It's licensed its rights
   to Thomson Multimedia, which collects the growing patent royalties.

   That company already charges MP3 download companies about 1 percent of
   royalties, while hardware companies must pay 50 cents per unit
   shipped. MP3 encoder companies, such as Musicmatch, pay Thomson about
   $5 per unit, contributing to the relative scarcity of free MP3
   "rippers."

   Thomson hasn't yet decided what to charge Webcasters using the MP3
   format. Vice president of new business Henri Linde says that fee will
   likely be 1 percent of annual revenue, or an annual fee of $1,000 for
   small companies.

   Despite those payments, the MP3 format is still soaring in the
   marketplace. Thomson's figures show that 10 million hardware devices
   supporting the format have been manufactured, and roughly 150 million
   software units have been downloaded or otherwise distributed.

   That gives Thomson and Fraunhofer a huge head start in the market even
   as other music formats such as Windows Media are gaining ground. It
   also gives them a huge stake in protecting that lead against any sign
   of encroachment by Vorbis.

   The Ogg developers staunchly defend the notion that they have created
   everything from scratch, or at least have built their system without
   using any of the Fraunhofer-owned technology. But their rivals say
   they aren't so sure.

   "We doubt very much that they are not using Fraunhofer and Thomson
   intellectual property," Linde said. "We think it is likely they are
   infringing."

   Whether this is true, analysts say Thomson and the German company are
   likely to file patent lawsuits the moment Vorbis appears to be a
   viable market candidate. By creating a perception of uncertainty
   around Vorbis' future, MP3's parents could prevent conservative
   digital music companies from adopting it.

   "If you're going to go into a marketplace where people play hardball,
   that's what hardball looks like," Scheirer warned.

-phm