Gemstar fends off monopoly probe
OFT backs VideoPlus firm
The Office of Fair Trading has refused to investigate VideoPlus-creator Gemstar for alleged anti-competitive practices, despite two anti-trust cases in the US and complaints of monopolistic behaviour in the UK, Andrew Smith writes.
Gemstar created and controls the rights to the VideoPlus system which allows easy recording of TV shows using unique identity codes. The system has become a standard feature on VCRs and Gemstar licenses the code numbers to listings magazines.
The complaint against Gemstar to the Office of Fair Trading has been made by Devon-based GipsyMedia and follows Gemstar's refusal to license VideoPlus codes for use in the company's TV listings software, < DigiGuide.
GipsyMedia claims that without VideoPlus codes, some customers will not pay to register DigiGuide: "We have thousands of (message board) postings from consumers who feel our product is incomplete because we can not carry the video plus codes."
Gemstar defended its decision not to license the codes to GipsyMedia, telling the Office of Fair Trading that it doesn't provide licenses to any Internet-based services, with the exception of the Radio Times web site.
However, the codes are in fact licensed to several other online services, including home-shopping network QVC and Telewest's content division, FlexTech.
Gemstar's own listings software, TV Host, also include VideoPlus codes. Although TV Host currently provides only US listings, GipsyMedia believes this "reinforces the dominant position Gemstar have within our market place".
The Office of Fair trading rejected the complaint, saying: "We agree that it is likely that Gemstar are dominant. However, there is no evidence to suggest that at the present time it is abusing that position."
According to GipsyMedia spokesman Russ Freeman, VideoPlus numbers are licensed to print magazines for 1p per thousand copies, whereas manufacturers of electronic guides such as those used by set-top boxes must pay $15 per unit.
This has proved to be a stumbling block when negotiating deals to supply customised versions of DigiGuide to third-parties, says Freeman: "The first thing they ask is, can you get around the cost of the Gemstar license?"
GipsyMedia was at one point negotiating with a Dutch listings service to supply a branded version of DigiGuide, but VideoPlus codes were required. "I
think it's fair to say that without Video Plus numbers, doors are closed," Freeman commented, although he pointed out that this was not the only reason why the deal didn't go through.
Gemstar is currently the subject of two anti-trust suits in the US, filed by Pioneer and EchoStar. The cases accuse Gemstar of abusing its position by making egregious patent infringement claims against competitors, including Pioneer and EchoStar. By preventing use of its intellectual property in certain products, or charging very high per-unit fees, it is claimed that Gemstar has behaved illegally.
Last month, an Office of Fair Trading spokesman told GipsyMedia: "Gemstar Europe has informed us that it is not refusing to licence the use of the video codes, but is developing its strategy for so doing. It appears that Gemstar Europe has a number of issues it needs to address before offering licences to electronic programme guides."
"We have no reason to suspect that Gemstar, when it has resolved these outstanding issues, will not make licences available to other electronic programme guides."
Gemstar has been "reviewing its global strategy" on licensing for over eleven months. GipsyMedia is now seeking an investigation from the Federation of Small Businesses.
In the meantime, one DigiGuide user has taken matters into his own hands, creating a plug-in file that will allow the program to display VideoPlus numbers. It is based on an open-source encoder/decoder.
Gemstar is a major interest of Rupert Murdoch's News Corp, which has a 43 per cent stake. It controls several patents required for supplying interactive TV guides on a set-top box and is a big player in the world of hand-held e-book readers. ®