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Apple Loses Video Over IP Patent Scuffle in Germany

By Peter Suciu
Mar 18, 2016 1:19 PM PT
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A German court on Wednesday determined that Apple had infringed a patent owned by the Kudelski Group's OpenTV division.

Apple products sold in Germany can't use streaming technology that infringes OpenTV's patents, the court reportedly ruled.

The suit was brought in 2014 in Düsseldorf District Court over three patents held by OpenTV and its sister company, Nagra. The plaintiffs alleged that Apple products and services -- including iOS devices, Apple TV and the App Store -- had infringed their video streaming patents.

OpenTV filed a similar complaint last year in the U.S. District Court for the Northern District of California.

Video Over IP Patent Infringement

At the heart of the case is OpenTV's intellectual property that allows the streaming of video over IP. OpenTV has claimed that Apple illegally used content streaming technology covered by five patents that date back to the late 1990s and early 2000s. Those patents specifically apply to digital video, broadcast and satellite transmissions.

The Kudelski Group has not taken aim solely at Apple. It has filed lawsuits against Netflix in Europe and the United States. The parties last year agreed to a settlement under which Netflix would be integrated into Kudelski's pay-TV set top boxes.

"There is a precedent from that perspective," said Roger Entner, principal analyst at Recon Analytics.

"With that in mind, it is clear that Apple will now have two choices: They can appeal or they will settle," he told the E-Commerce Times.

"Usually this kind of action results in one, a settlement or cross-licensing agreement of some sort for Apple to access the patents; two, an extended patent challenge in a couple of high-value regions, such as the U.S. and the EU; or three, technology innovation to work around the patents and perhaps find a more elegant solution in the process," said Paul Teich, principal analyst at Tirias Research.

"Sometimes it's a combination, such as paying for option two while deploying option three," he told the E-Commerce Times. "It depends on whether they are prohibited from shipping infringing products while negotiations and challenges are taking place."

To Appeal or Not

This week's ruling in Germany could be the beginning of a long and drawn-out battle over the intellectual property.

"It's unclear whether Apple might appeal the judges' decision or request a stay to have more time to review the situation or pursue a settlement with Kudelski," said Charles King, principal analyst at Pund-IT.

"Without a settlement or a favorable ruling from a higher court, Apple products -- including iPhones, iPads, Macs and Apple TV devices -- could all be affected, either by being removed from the market or having core video streaming functions disabled," King told the E-Commerce Times.

Patently Well-Founded

Tracking the chain of custody of the infringed patents -- as well as the companies that have licensed the technology behind the patents -- also could be a consideration.

"The patent the panel considered in its ruling was granted in 1997 to ACTV, which was later acquired by OpenTV, which was acquired by Kudelski in 2010," King noted.

"Since then, the company has successfully pursued and resolved patent licensing agreements with Google, Cisco and Netflix. Besides Apple, Kudelski is also pursuing similar litigation against Verizon," he added.

"Given the nature of the panel's ruling which found Kudelski's claim 'predominantly valid and well-founded,' Apple might be best served by agreeing to a patent license," King suggested.

Beyond Borders

The case could be one to watch, especially as it may not be confined to Germany.

"Kudelski has already filed a similar complaint against Apple in the U.S. Given the history of IP cooperation between the two countries, the ruling in Dusseldorf could strengthen Kudelski's suit in the U.S.," King said.

However, the ruling might not go the same way across the Pond.

"It can spread across borders; however, more recently we have seen cases that go in favor of the plaintiff in one country or region and in favor of the defendant in another," said Jim McGregor, principal analyst at Tirias Research.

"Also note that these cases typically drag on for years because of appeals; as a result, even the German case may still be in its infancy," he told the E-Commerce Times. "But for now, the only location that could be impacted would be Germany."

Then again, it could be resolved quickly with a settlement.

"Apple would have to pay to use Kudelski's patented technology," said Recon Analytics' Entner. "It would be a small amount for Apple but a much more significant amount for OpenTV."


Peter Suciu is a freelance writer who has covered consumer electronics, technology, electronic entertainment and fitness-related trends for more than a decade. His work has appeared in more than three dozen publications, and he is the co-author of Careers in the Computer Game Industry (Career in the New Economy series), a career guide aimed at high school students from Rosen Publishing. You can connect with Peter on Google+.


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