…as if you didn’t think it was already.
The infotech industry is grinding to a crushing, squealing halt due to the current suffocating patent war being waged by all comers and at all levels. The latest implications of this sucker come fresh from Motorola, who both Microsoft and Apple are claiming to be gouging the prices for their patents that are currently being used for industry standards.
The H.264 codec, an industry-wide standard video codec kept aloft by a consortium of companies with around 2,300 patents, is a background player in just about every piece of technology people use. Currently, Motorola controls 50 of these patents, and has decided to charge Microsoft and Apple an alleged 2.25% of total system cost for its use. By comparison, the rest of the 2,300 patents are currently being licensed for two cents per. Two cents.
The reason the rest of these patents are being licensed so cheaply is because of FRAND (Fair, reasonable, and non-discriminatory) use. Industry-wide standards from IEEE, ANSI, ASCII, and other groups generally fall under this categorization. From old-school serial ports to USB, Bluetooth, and even WiFi, everything is controlled by these groups to ensure interoperability between different machines. Companies license these cheaply for the general benefit of all, both small startups and large corporations.
If you’ve been paying attention to mobile news then you already know Microsoft is engaged with several patent disputes with Android manufacturers. The ugliest of these is of course the current Barnes & Noble embroglio which has gone by the quiet licensing backdoor deal and seems to be headed to court. You may also know that Microsoft seems to be charging quite a bit per handset from other companies, and you’re probably questioning how Motorola’s 2.25% royalty is unfair. It’s simple: The patents that Microsoft and Android manufacturers are disputing over (Whatever the hell they might be) are not used in industry-wide standards and are not covered under FRAND policies (Which are not laws, but considered highly encouraged in the realm of business ethics).
If every patent holder for H.264 charged like this, the estimated cost for a $1000 laptop would inflate $600-$1000 dollars.
If that’s not worrisome enough, then a more specific scare would be Big Moto’s current patents in 3G GSM networking. I’ll let you think about that for a minute.
The biggest problem that Microsoft and Apple have with the 2.25% of total system cost is just that… total system cost. The H.264 patent holds no validity over the kind of RAM used, the size of the hard drive, the speed of the processor, or the quality of the housing, so the company trying to make money off of components their patent has no part of seems dubious at best. That and Motorola is charging a couple of order of magnitudes more than the rest of the patent pool owners for 2% of the patents is troubling.
New owners Google don’t seem to be too concerned with this, but they should be. While dog sitting for a friend and coming home to find the dog has crapped all over the carpet can’t be blamed on the dog sitter, not cleaning it up can be. The open codec Google has been pushing (After refusing to support H.264. Awkward!) can benefit greatly if the current standard codec falls out of favor due to high licensing costs. On the other hand, with antitrust litigation being filed with the EU and the DOJ already shaky on Google’s intentions, one could surmise that pursuing this course of action could be harmful to Googorola… potentially disastrous. Using industry-wide standards to bolster up your own bottom line could very likely be seen as a huge antitrust violation, and purposely making it fall out of favor then using the alternative codec you own the patents to (Google has a full pocket of WebM patents) could also be seen as an anti-competitive move.