Microsoft VC-1 Codec May Face Patent Suits

Jeff Berg
REDMOND, Wash. — Microsoft may be finding itself in the middle of a costly legal battle soon over the VC-1 video codec, based on Windows Media Version 9 and recently adopted by the Society of Motion Pictures and Television Engineers as an industry standard.

Rethink Research revealed in late January that the software giant’s codec is currently the target of claims from 12 separate companies that the new standard relied on their technology. The claims are currently on file with the MPEG Licensing Authority, an industry organization specializing in one-stop codec licensing agreements.

While MPEG LA would not comment on the claims or name the companies involved, they did tell Rethink’s Faultline news service that there were ongoing negotiations to create a “fair” license.

Speculation on the companies involved include those with prior MPEG codecs, including Samsung, Sharp, Philips, Sony and Toshiba.

Insiders at MPEG LA are now saying that the talks have broken down and at least two of the companies, thought to be Sony and Philips, are considering litigation against Microsoft.

The two companies received at least $440 million as part of an out-of-court settlement with Microsoft in April for another patent infringement claim related to Digital Rights Management concepts.

Sony and Philips have not yet commented on the most recent issue, but a legal squabble over VC-1 technology may have grave implications for the video community. Currently, the VC-1 codec is used on approximately 400 million different devices and was recently adopted by both the Blu-ray Disc Association and HD-DVD for use in their high-definition, high-capacity optical storage standards.

“Questions need to be asked such as : ‘Did Microsoft have access to this technology? Would interference suits against Microsoft filings mean that many of its inventions reverted to other companies? How might a court allocate damages? What other remedies would a court impose if it found Microsoft guilty of patent infringement?’,” said Rethink. “This last could include a consent decree to keep out of the digital market entirely.”

A court ruling against Microsoft in the case could result in licensing fees for all new copies of Media Player and as much as $5 billion in damages.