Fear Of Lawsuits Is Killing Digital Content Innovation: Entertainment Pros

Most garage entrepreneurs are worried about getting hit with lawsuits from the big studios or other patent holders, speakers said at a conference this week.

Fear, marketing and spin are killing innovation in the digital content arena, according to entertainment industry executives speaking on several panels at Digital Hollywood Spring conference Wednesday in Santa Monica, Calif.

The startup entrepreneur creating new product in his garage lives under "incredible fear" that some large company will hit him with a lawsuit because his ideas "threaten existing business models," said Jeff Joseph, vice president of communications and strategic relationships at the Consumer Electronics Association.

"The guy in the garage is very concerned about getting sued, I known because I talk to these startups every day, and they are just trying to facilitate what the consumer wants," said Jamie Perlman, manager of business development at Snocap Inc., during a discussion on Piracy and Digital Rights Management (DRM). The Snocap registry, created by Napster founder Shawn Fanning, allows those who own music rights to place them onto online peer-to-peer (P2P) networks and retail sites.

Yes, agreed Fritz Attaway, executive vice president and special policy advisor at the Motion Picture Association of America (MPAA). "The poor guy in the garage who's trying to innovate new technologies does live with the fear of litigation, but not from content owners, rather litigation from patent holders," he said. "There are very few and most are cases like Grokster where the defendants clearly intended to facilitate piracy."

In the trial initiated by Metro-Goldwyn-Mayer Studios Inc. against Grokster Ltd, the United States Supreme Court ruled on June 27, 2005, based on intent, it's illegal to trade copyrighted material using the site.

The piracy ruling plugged a loophole that allowed companies to take a "see no evil, hear no evil approach," by claiming to not know the file the video games, movies and music being shared through the peer-to-peer (p2p) network, Ian Ballon, intellectual property attorney at law firm Greenberg Traurig LLC, explained in an earlier panel on rights-holder options.

But it's not just the cases traveling through the court system, but rather "the threat," argued Perlman. "Grokster might have been bad for inducing infringement, but there are the millions of users of peer-to-peer networks that don't want to steal the content." Perlman said. He argued that consumers turned Napster into an easily accessible service for digital content because they "if you won't do it for me, I'll do it myself."

Digital technology continues to press up against limits set by companies in the entertainment industry, said Philip Lelyveld, vice president digital industry relations in the New Technology and New Media Division The Walt Disney Co. Lelyveld pointed out that one industry's definition of innovation isn't always good for all.

Not surprising, the discussion circled back to innovation when Lelyveld challenged technologists to develop a method allowing movie, music and video game developers to distribute content based on consumer identity, rather than device.

Offering up innovation challenges in the digital television content market, panelist from Philips Semiconductors, National Semiconductor, Advanced Micro Devices (AMD), Freescale Semiconductor and Magnum Semiconductor agreed discussions between chip manufacturers, device makers and content providers need to cut through inaccurate delivery timelines that could stifle wide-spread delivery until 2009.

"The marketing spin is killing the reality of market development," said Fritz Jordan, director of strategy and emerging markets in the Wireless & Mobile Systems Group at Freescale Semiconductor Inc. "You will find out that mobile TV digital service is merely another service of video."

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