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Compaq $60m lawsuit centres on DVD violation

Drives contain unlicensed MPEG 2 IP - allegedly

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More details have emerged concerning Compaq's legal tussle over alleged video compression patent violations - action that could see the PC vendor being forced to cough up at least $60 million in damages.

When the story broke yesterday, we wondered what it might relate too - and now we know. The seven companies who have come together to tackle Compaq - and Apple, Dell and Hewlett-Packard (though they have only been sent warning letters) - claim it is ripping off their MPEG 2 patents.

MPEG 2 compression technology underpins DVD, and the suit claims that certain DVD drives shipped in Compaq PCs - and, presumably, Apple, HP and Dell machines too - contain unlicensed intellectual property.

The plaintiffs are Matsushita, Mitsubishi, JVC, General Instrument, Philips, France Telecom and the US' Columbia University, all members of MPEG LA, a patent pool of 16 MPEG intellectual property owners.

As MPEG is a global standard, you might think it comprised open intellectual property. Not so. Contributors can maintain ownership of their technology which was later incorporated into the specification.

A case in point is Germany's Fraunhofer Institute which owns the compression algorithm behind MPEG 1 Audio Layer 3 - better known as MP3. MP3 playback IP is freely licensed, we recall, but if you want to ship a commercial MP3 encoder application, you have to pay up.

Compaq seems to have incurred the wrath of the plaintiffs by refusing to license their IP. "Compaq has refused to enter into any licence with plaintiffs or the licence offered by MPEG LA.," is how the suit puts it.

Fair enough, we say. Compaq bought the DVD drives it ships in good faith, we imagine, so surely the seven should be pursuing the DVD manufacturer, not Compaq? It's a bit much to expect PC vendors to check every component to make sure that it rightfully uses relevant patents.

And if Compaq can make such a mistake, we imagine many much smaller, more pricing-conscious vendors will have too. So, as we noted yesterday, it does indeed seem that The Big Q is being made an example of. ®

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