While the Alliance's approach is designed for mobile handset applications covering a relatively limited segment of the broader digital rights landscape, industry observers viewed the latest announcement as the critical first step for sorting out disputes among competing DRM technologies.
Larry Horn, MPEG LA's vice president of licensing, said the patent pooling announcement "addresses the patent overhang issue."
MPEG LA identified ContentGuard Holdings Inc., Intertrust Technologies Corp., Matsushita Electric Industrial Co. Ltd., Philips Electronics and Sony Corp. as "an initial group" of key patent holders. They will commit their technologies to the joint patent portfolio license for use in the Alliance's DRM version 1.0.
Under the proposed patent pool, MPEG LA said royalty rates for patents essential to digital rights management functionality will be $1 per device. That amount would be paid by product manufacturers. Service providers would pay 1 percent of any transaction in which users pay for digital content employing OMA's version 1.0.
A growing number of technology companies have entered the DRM market "in hopes of getting their patents locked up," said Michael Paxton, In-Stat/MDR's senior analyst for converging markets and technologies. He said it remains unclear who owns which essential patents for different DRM schemes.
Paxton called the Alliance's DRM patent pool "a small success story" since the group has proven that an industry- specific DRM standard can be developed. However, Paxton questioned whether the Alliance's DRM technology designed for the wireless environment and cellphone applications can protect billions of dollars worth of video or data from cable or satellite operators.
MPEG LA's Horn nevertheless called the effort a "breakthrough" since the new patent pool brings together key DRM players who have agreed to a joint patent portfolio. "The industry can't afford" no access to essential patents for DRM, Horn added. "This will give the market a push," including much needed interoperable DRM implementations.
The OMA's DRM is the first tangible result emerging from MPEG LA's DRM reference model initiatives launched in 2003. Horn said seven unidentified companies are participating in the DRM reference model discussions.
Microsoft, which last April settled litigation with Intertrust by paying a $440 million settlement, is absent from the list of companies identified as essential IP holders for the Alliance's DRM. Microsoft, together with Time Warner and Thomson, is a strategic investor in ContentGuard.