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Chinese DVD Makers Sue Over Royalties 208

Posted by timothy from the drain-on-society dept.
Viceice writes "Afterdawn.com and DigiTimes are among many other news outlets reporting that DVD player makers from China are suing the 3C DVD Patent Group over royalties on patents held by the consortium. The suit accuses 3C alliance for price-fixing, unlawful tying of essential and non-essential patents together, group boycott and conspiracy to monopolize. According to the Chinese companies, typically U.S. patent licensing fees for other products are between 3 and 5 percent of the item's wholesale price, compared to the 50 percent for DVD players."
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Chinese DVD Makers Sue Over Royalties More

Chinese DVD Makers Sue Over Royalties

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  • At least they have the guts... (Score:4, Interesting)

    by kusanagi374 ( 776658 ) on Saturday January 22, 2005 @03:20PM (#11442743)
    It's obvious that the 3C Patent Group is guilty, but then... that's how things work in the western world, and such acts are protected by local governments.

    I only see this as the chinese companies trying to defend their position, nothing more. They want to be competitive, even more than they already are.
    • Just look under your Micro$oft keyboard, and you will know why. Made in...
      Surf the Internet via the robots.txt, it is a lot more fun.
      Peace.
    • So, which fat cat in China is getting richer because of this.

  • Is it just me? (Score:4, Insightful)

    by nihilistcanada ( 698105 ) on Saturday January 22, 2005 @03:24PM (#11442781)
    What does it say about the times we are in that the greatest champions of intellectual property freedoms are the constituents of the biggest dictatorship of the world?

    • This is neither surprising nor representative (Score:1, Insightful)

      by Anonymous Coward
      of anything.

      You have to understand:

      The CCP isn't a champion of intellectual property freedom.

      They are champions of their intellectual property freedom.

      There's a big difference there.

      Dictatorships are always champions of their own freedom to do what they want, often at the expense of other peoples' freedom to do what they want. The whole China-Versus-Patents thing is just another example of that.

      • Re:This is neither surprising nor representative (Score:5, Insightful)

        by Jeff DeMaagd ( 2015 ) on Saturday January 22, 2005 @03:45PM (#11442946) Homepage Journal
        I have mixed feelings about "intellectual property freedom". Thus far, the only thing China is really good at is copying and making things very cheap. I really don't think they innovate, because there is seems to be no incentive to do so. It takes too much time and effort to make a "better mousetrap" if you will, and so little time and effort to copy that it isn't worth it unless there is some protection on the design

        I don't like how US patents are abused, but I don't think doing away with patents will fix anything. You'd need a constitutional ammendment to do that anyway.
        • For all the evil that patents may create, they stop an even greater evil. Many ./ers may go off about how the world may be a better place if we didn't have patents (software &&|| otherwise). I predict, that if we abolished patents, it would take three weeks for the US to tank (like being thrown into a gravity well).

          What people (in the US) fail to understand is how their jobs would totally not be there if patents were abolished. When anyone can copy your design, or make minor changes (it's blue, not
          • Your argument is invalid. You dont need any workers to own a patent.

            The countries with the cheapest labour still win, except now some rich guy gets richer, the products cost more for the consumers, and the rich guys money gets invested in low-wage countries anyway.

            Unless, of course, you're talking about illegal immigrants cleaning the houses of the patent owners for less than minimum wage.
        • Note: I am deliberatly not commenting on what we should do or any other complexities. I am strictly addressing a point of fact.

          doing away with patents... You'd need a constitutional ammendment to do that anyway.

          No, you wouldn't. Nor would you need to ammend the constitution to abolish copyrights.

          If you look at the constitution, section 8 says "The Congress shall have Power..." and clause 8 says "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors t

          • Nor would you need to ammend the constitution to abolish copyrights.

            Some have claimed that the Takings Clause of the Fifth Amendment ("nor shall private property be taken for public use, without just compensation") prohibits abolishing or abridging copyrights in existing works or patents in existing inventions unless the federal government buys the copyrights or patents at market price and PDs them. James v. Campbell, 104 U.S. 356 (1881) [findlaw.com].

            • If the gov't really wanted to abolish copyrights and/or patents (unlikely in the extreme), I think the "without just compensation" clause could be met by simply refunding the application fees. Beyond that, the gov't is simply "taking" back what they granted in the first place: a promise to use govt force if necessary to ensure the author's/inventor's temporary monopoly. That's not exactly "private property", and is why the term "intellectual property" is oxymoronic on its face.
              • Supposing they only gave out one quarter for every patent the country would go bankrupt. There are an awful lot of patents out there.
                • Less than seven million. I hardly think that giving out less than $2 million would bankrupt the country. And of course, most of those patents have expired.
            • Patents and copyright are not private property. They're a government granted temporary monopoly. By definition the concepts of copyright and patents themselves take private property by reducing natural property rights, and by prohibiting people from realizing the fruits of their own labor.

              The powers given do not come out of thin air. What the copyright owners and patent owners are granted is taken from everyone else. And frankly I dont see we get much compensation for that these days.
            • Yes, an interesting point.

              First let me make a lesser non-contestable point. The government could abolish copyrights and patents at least in terms of terminating any grant of new ones.

              As for existing ones, your link makes a good point but I think it was signifigantly linked to the circumstances. It was in terms of maintaining current law and that the government was not exempt from the existing structure. I would like to point out that some portions of copy rights have at times been "diminished" or "taken a

        • Re:This is neither surprising nor representative (Score:4, Insightful)

          by Mad Hughagi ( 193374 ) on Saturday January 22, 2005 @05:19PM (#11443668) Homepage Journal
          I really don't think they innovate

          This is wrong [theglobeandmail.com] on many levels.

          The barrier to implementing research in China is much lower than in the rest of the developed world. Not only in an industrial sense, but in almost every field. Check out the foreign investment and developments in Beijing. People who think that China is just another cheap labour base are not taking in the big picture.

          A professor was telling me that one of his collegues in China has graduate students willing to work 14 hour days 7 days a week, and lining up at his door to get a position in his lab. Contrast this with the declining number of graduate students (and the lack of funding for) in many fields in North America.

          Now that we have globalization these patents really only help the management crust of the corporations. Everything else will get outsourced if it optimizes the finances, barring the so called "federal" corporations who are heavily subsidized by the government. Welcome to the new global community.

        • Thus far, the only thing China is really good at is copying and making things very cheap.

          Like the Japanese used to be?
        • This is the only way to get out of the ugly marketting crapfest that is U.S. consumer society...

          I'm sorry but until U.S. advertising is talking about new developments instead of appearances there really isn't grounds for complaint..
        • "the only thing China is really good at is copying and making things very cheap."

          I remember the same was said of the Japanese in the 70s.
        • You know, it's interesting that Americans have thought the exact same thing about Japan before WWII - and they were shocked when faced with Mitsubishi Zeros that outperformed their aircrafts.
    • What does it say about the times we are in...

      Appropriately enough, it says that they are interesting times.

    • Re:Is it just me? (Score:5, Interesting)

      by Jameth ( 664111 ) on Saturday January 22, 2005 @03:31PM (#11442831)
      It's interesting to note that, as India is an even bigger proponent of these freedoms than China, that the real champions of intellectual property freedoms are those in rising third world nations. This is the exact same position the US was in when it began its rise and it is interesting to consider that the economic situation of the country could so outstrip the cultural components in this manner. If you compare the three places, there are extremely few similarities, yet they all chose the same path when in the same situation.

      • Re:Is it just me? (Score:3, Informative)

        by ad0gg ( 594412 )
        This is the exact same position the US was in when it began its rise and it is interesting to consider that the economic situation of the country could so outstrip the cultural components in this manner.

        Proof? Oh wait this is slashdot. Edison's 1000 patents [rutgers.edu]. So when was the US championing freedom of IP?

        • Re:Is it just me? (Score:3, Informative)

          by Jameth ( 664111 )
          When the US originally declared independence and flat-out ignored all the restrictions Europe tried to place on such things.

          The US declared independence in 1776. Edison was born in 1847. By the time Edison was patenting things, the US was among the richest countries in the world. It still had a long way to go to where it is today, but it was doing quite well.

          Also, the US ignored it's own patents when Edison was around. Edison had patents on the camera which is why Hollywood is on the west coast: they didn

        • Francis Cabot Lowell (Score:5, Interesting)

          by mcc ( 14761 ) <amcclure@purdue.edu> on Saturday January 22, 2005 @04:25PM (#11443268) Homepage
          Believe it or not, the world still existed before 1900. Ever hear of Francis Cabot Lowell? In the early 1800s Britain's industry had some of the best industrial technology in the world, and they viciously protected their trade secrets, trying to make sure that no one else could get hold of their stuff. Francis Cabot Lowell around 1810 wanted to start some modern textile mills in New England, so he went over to England, got a job in a textile mill, examined the machines until he understood them, reverse-engineered the schematics and then memorized them, and came back to New England knowing how to build them himself. This is how the powered loom came to North America, It was the first example of industrial espionage in history that I'm aware of.

          If you look at the period during which the U.S. began its rise as an international economic power-- not the post-Reconstruction period during which it had already completed that rise, which is where Edison existed-- you see LOTS of examples of stuff like this, over multiple areas of intellectual property. Witness Charles Dickens' desperate attempts to get America's book publishers to actually respect his copyrights...

          • Re:Francis Cabot Lowell (Score:4, Interesting)

            by cheesybagel ( 670288 ) on Saturday January 22, 2005 @05:14PM (#11443635)
            This is how the powered loom came to North America, It was the first example of industrial espionage in history that I'm aware of.

            Industrial espionage goes way before that [popula.com].

            Quote:
            The methods of securing silk and weaving fabrics from it were held secret by the Chinese for nearly two thousand years. Alexander the Great was credited with discovering it in India during the Third Century B.C., though for centuries afterward Westerners could only import this mysterious new fabric. It was among the Chinese a capital offense to reveal the secrets of the trade or to export the eggs from which the worms were hatched, but that didn't stop two priests from smuggling some eggs in the hollows of their bamboo staffs and bringing them to Constantinople in 555 A.D. However, silk continued to be imported from Asia, as silk production in Europe was fraught with disaster and danger. Attempts to raise silkworms consistently failed, due to the difficulty of growing healthy mulberry trees. Even today, while many efforts have been made to produce silk in the United States and Europe, most raw silk still comes from China, Japan, Bengal, and other Asian countries, where labor is cheap, and the requisite Bombyx mori and mulberry leaves are plentiful.

      • Time to start brushing up on mandarin and japaneese i guess.
        Say sayonara to english internet and english boot messages, time to buck down and purchase that japaneese dictionary you were eyeing for a while! ;-)
        • I wouldn't worry about that. The British Empire spread English all over the globe. The United States spread it even further. All international pilots and ATCs must speak English. Though it is difficult to learn to speak fluently, it does have a good phonetic alphabet and it readily assimilates new words to describe new concepts. In short, English is the Borg of languages.

          In terms of geopolitical power, Great Britain has been eclipsed, and the U.S. is at it's high water mark. Nevertheless, I think the

        • Ummm...Japanese? The guys that have been in a recession for thirty straight years? Don't you mean Hindi?
        • Japan is in roughly the same position as the US with respect to China, and they are more interested in English for business than anyone except maybe the Koreans.

          The only reason you should brush up on your Japanese (besides WANTING to, 'cause while it may not get bigger it ain't going away) is that it will help you learn Chinese.

      • yeah, there chamoion freedoms for the consumer..sure.

        What they are doing is trying to get into the game without playing by the rules.
        Once they relly start to peak, you bet your ass they will want very tight IP laws.
      • Big surprise, each side is pulling for a bigger piece of the blanket.

    • > What does it say about the times we are in that the greatest champions of intellectual property freedoms are the constituents of the biggest dictatorship of the world?

      Wait a minute. The article says:

      "DVD player makers from China are suing the 3C DVD Patent Group over royalties on patents held by the consortium."

      I keep telling you folks: China is the beta test site for America 2.0. We let them make the mistakes, then we implement what worked over here. If we can get the Chinese to adopt our s

    • What does it say about the times we are in that the greatest champions of intellectual property freedoms are the constituents of the biggest dictatorship of the world?

      Without any other context than your question, I'd say it means Linus, the whole EFF, the more enlightened members of IMB's management team, and a handful of Groklaw's more active members must have moved to North Korea.

    • I have made this suggestion before, but it will bear repeating.

      This should be required reading before posting on IP law and China: Ministry of Science and Technology: Laws and Regulations [most.gov.cn]

      In Emglish translation:

      The Patent Law of the People's Republic of China
      Trademark Law of the People's Republic of China
      Coyright Law of the People's Republic of China
      Technology Contract Law of the People's Republic of China
      Product Quality Law of the People's Republic of China

    • I did I pay way too much for that $50 DVD
      player I got that was made in China?

      If the Chinese win a reprieve from the WTO,
      maybe my next DVD player wil be free - just
      bundled with a movie 3-pack from MGM ...
    • What does it say about the times we are in that the greatest champions of intellectual property freedoms are the constituents of the biggest dictatorship of the world?

      I don't understand; the US isn't "the greatest champion of intellectual property freedoms".

  • China will be the death of the patent hegemony (Score:3, Insightful)

    by Anonymous Coward on Saturday January 22, 2005 @03:25PM (#11442788)
    Just because the Chinese government is a murderous fascist 800-pound gorilla, and it is increasingly beginning to decide that Chinese industry shouldn't have to be burdened by the limitations of western patents. After all, since China is not going to become a research and development hub as long as they pursue the whole "stalinism lite" thing and all their best and brightest continue leaving for American universities, it isn't like China is benefiting from the patent regime at all. So why not just start ignoring it whenever it gets inconvenient?

    We've already seen this with the Red Dragon chip; this DVD thing may be the next big crack in the wall. Once Chinese industry is unburdened by patents, the rest of the world is going to have some other way to compete than government-granted monopolies on ideas in order to keep up.
    • Except that if they ignore patents completely they will be unable to export their wares into any of the large markets (US, Europe, Japan, etc).
    • " After all, since China is not going to become a research and development hub" There's a lot of research (and increasingly so) going on there already. A long way to go, though.
    • What about the Red Dragon chip? As far as I can tell, it's vaporware. Last news I heard was from about June 2004.
      Course, I could be wrong. I mean it could be running Duke Nukem as we speak.
    • So why not just start ignoring it whenever it gets inconvenient?

      Because when your economic growth is structurally dependent on export revenues, you don't want to give the governments of your markets an engraved invitation to shut down trade. And since respecting patents is a GATT/WTO obligation, ignoring them would be such an act.

      China exports most to the US and Japan. The patents it would be ignoring would be mostly US and Japanese patents. US and Japanese corporations would be really, really ticked
      • But China is already paying exhorbitantly to keep the export market. They own a large percentage of the US debt, artificially strengthening the dollar and weakening their own currency for this very reason. But that expense can get too high.

        One may really question what positive contribution the US makes to the world economy, and whether that balences what it costs the world economy to support it. If China decided that it was too expensive to support the dollar, they could start demanding to be paid in, e
    • "Once Chinese industry is unburdened by patents"
      Once the Chinese refuses to be part of the patent process then no western nation will do business with them. There products will be outlawed and there export business will crumble. Any incentive for research in China will pretty much disappear since anything they develop will be considered up for grabs by the other nations. If they do respect other nations patents no one will respect theirs.
      So it will not happen. China will go through the courts and work with

  • cheaper DVD players (Score:1, Funny)

    by Anonymous Coward
    I can't wait for the $5 DVD players after the China DVD makers win their lawsuit! My $20 DVD player is too expensive!!!
    • Heh.

      This was moderated as funny, but don't laugh too much. Technically there's nothing stopping DVD players from costing the same amount as a low-end chinese discman knockoff.

  • It's a fixed amount, not a percentage (Score:5, Insightful)

    by jdhutchins ( 559010 ) on Saturday January 22, 2005 @03:35PM (#11442860)
    The summary is a bit misleading- the 3C group charges $20 per DVD player, not 50% of the cost. Although $20 may end up being 50% of the cost of a DVD player, a $100 DVD player still only has to pay $20. Their argument of "but everyone else does it this way" sounds like whining that they can't make $5 DVD players.

    Maybe part of the reason the 3C is charging a flat fee is to prevent Chinese companies from severely undercutting their own offerings. They do have the patents on some DVD stuff, and I'm sure it's more than just worthless software patents. When you get a patent, part of the rights that you get is to prevent other people form using them, or making them pay a price of your choosing to use it.

    • Re:It's a fixed amount, not a percentage (Score:5, Informative)

      by jonny4001 ( 144859 ) on Saturday January 22, 2005 @03:42PM (#11442924)
      Getting a patent does not give you the right to violate other laws, including antitrust laws. If you do, it is within the power of the courts to impose compulsory licensing.
    • > They do have the patents on some DVD stuff, and I'm sure it's more than just worthless software patents

      Right, useless code (css) and a logo (how creative!).

      Amazing stuff, I wish I could come up with things like that. Hang on... I can.
    • Thank you dude, you just proved 3C is price fixing at $20..they can do that because they don't have any competition.

      Maybe part of the reason the 3C is charging a flat fee is to prevent Chinese companies from severely undercutting their own offerings.

      Cry me a river, unfair competition ? It's curious how association of workers for workers rights is an unfair competition in a "free labor" (read cheap) market BUT chineses actually offering real competition (= sale price competition, competition to seize pro
    • The summary is a bit misleading- the 3C group charges $20 per DVD player, not 50% of the cost. Although $20 may end up being 50% of the cost of a DVD player, a $100 DVD player still only has to pay $20. Their argument of "but everyone else does it this way" sounds like whining that they can't make $5 DVD players.

      Shouldn't they be whining about it, though? DVD players have gotten a whole lot cheaper than they were when they were first introduced. They used to be $300 or more, but now they're just $40, and
  • This is a great time for the chinease to make an issue out of this. When blu-ray and HD-DVD become available the consortiums will think twice before trying to rip them off again. I guess they are just ensuring that this doesnt happen to them again.
    • the dvd-consortium made the standarts, convinced the studios, established a market just waiting for hundreds of million players for those companies to produce and sell. A market that wouldnt have existed without the standart.

  • CSS Anyone? (Score:4, Insightful)

    by sepluv ( 641107 ) <blakesley&gmail,com> on Saturday January 22, 2005 @03:37PM (#11442878)
    Maybe, this lawsuit could also be an opportunity to challenge their forcing the use of CSS (and regions) (in violation of the DVD video standard, misleading-advertsing laws and anti-trust laws) on most films to further their monopoly.

  • Another creepy twist of fate... (Score:3, Insightful)

    by Weaselmancer ( 533834 ) on Saturday January 22, 2005 @03:44PM (#11442938)

    A Chinese company pushing for consumer rights.

    • The Chinese just don't want to pay for intellectual property. What else is new? My father did business in China back in the 80's. The first thing that had to be ironed out was the fact that certain processes in the factory were designs that were obviously stolen from his company (well, obvious to an engineer anyway. It all looked like drawings of pipes and wires to me). Apparently it took a while to get them to understand what the problem was.

  • 50 % (Score:2)

    by zymano ( 581466 )
    Didn't know that.

    That's just ridiculous. Just another form of price fixing monopolies.

  • It's not a US technology (Score:4, Informative)

    by Animats ( 122034 ) on Saturday January 22, 2005 @03:52PM (#11443009) Homepage
    This has nothing to do with US technology. The 3C patent group is Sony, Pioneer, and Philips.

    You cannot build a CD or DVD device without licensing technology from Japan. Or even a VCR, as Go Video found. American companies no longer own the key consumer electronics technologies.

  • Handal & Associates, [..] indicated that its national class action lawsuit against the 3C DVD Patent Group [..] may eventually be successful, according to lead attorney Anton Handal
    Somehow I can't imagine him saying that they don't stand a chance. And I wonder how long "eventually" will be.
  • In the past, a lot of "no-name" DVD players were manufactured by chinese companies that just flat out ignored the patents held by the DVD consortium.

    By going to court over the issue, these companies are tacitly accepting the western-style patent regime that the USA is trying to force on the rest of the world.

    This new acceptance is probably part of the fallout of the Secretary of Commerce, Donald Evans's recent trip to Beijing. [xinhuanet.com] As was the recent arrest of bittorrent user in HK. [slashdot.org]
  • If the Chinese companies win, will we see the PlayStation 2 and Xbox prices drop to those of the GameCube?
    • Well, Sony is part of the 3C group, so they either get their license fees for the ps2 back or don't pay the full amount from the start and there are no DVD patent charges on the xbox, you pay them when you buy the remote. (One reason why the third party remotes have no trouble being a lot cheaper than the original, they just don't pay these fees.)
      So very likely the reason why the XBox is at $150 is that it is selling enough at that price, it is expensive to make and Microsoft doesn't want to lose more on ha
  • Ok go China! but what I don't understand is why more manufactures don't make un-licensed DVD players? Just because something doesn't have the 'DVD' logo on the front doesn't mean people won't buy it, especially if their friends buy it and ok it and especially if it costs bloody 50% less than a normal player! Chinese manufacturers could wipe the market - at least in china, and the demand for these players everywhere else would be enormous - surely customs/governments could be COUGH persuaded into diverting a
  • If the DVD cartel doesn't work this out, we'll all get screwed when the Chinese Central Mafia Committee declares that good Communists use only the official Chinese (royalty-free) competitor to DVD. And decline to prosecute DVD pirates.
  • I can't help thinking that they are going to get laughed out of court by the judge. Their suit presumes a bunch of "rights" that I've never heard of. If I'm a patent holder, I can be a total bastard about licensing the patent. If the prospective licensees don't like it, too bad.

    The article assumes that Chinese DVD makers are paying licensing fees on their current products. I've read that many don't pay or are way behind in their payments. That's part of the reason that their products are so cheap.

  • The [ebay.com] first [ebay.com] time [ebay.com] that Chinese haven't just pirated what they couldn't afford. ;-)
  • Content control disturbs me enough to re-flash my DVD drives with hacked firmware to kill region encoding, even though all my DVDs are Region 1. Why should I be limited to a small number of region changes on equipment I've BOUGHT and that I OWN OUTRIGHT and even (in some places) PAY EXTRA MONEY FOR because of "piracy tax"? Anything at all that messes with the content cartels makes me extremely happy. I hope they fucking burn.

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