Chinese DVD Player Makers Fight Royalty Payments

Handal & Associates, a law firm based in San Diego, USA, indicated that its national class action lawsuit against the 3C DVD Patent Group, consisting of Philips Electronics, Sony, Pioneer and LG Electronics, may eventually be successful, according to lead attorney Anton Handal at a conference on anti-monopoly of DVD patents, held in Hong Kong on January 19, as reported by Xinhua Online.

Wuxi Multimedia and Orient Power (Wuxi) Digital Technology, two China-based manufacturers of DVD players who retain Handal & Associates filed the class action lawsuit on behalf of other China-based DVD manufacturers, and against Philips, Sony and Pioneer, with the US District Court in the Southern District of California in June 2004.

In late December 2004, the firm filed an amendment to the lawsuit adding LG Electronics as a new defendant and several new claims. The amended complaint stated the following causes of the legal action: price fixing, unlawful tying of unessential and essential patents, group boycott, conspiracy to monopolize in violation of Sections 1 and 2 of the Sherman Act, request for judicial declaration that the patents in the 3C DVD patent pool are invalid, claims for violation of the California Unfair Competition law.

Xinhua Online cited the China Audio Industry Association (CAIA) as indicating that China produces 60 million DVD players and exports 45-50 million of them a year, with the exported DVD players subject to a royalty charge of US$20 per player. Pursuant to related patent laws in the US, royalty fee rates are normally 3-5% of revenues from sales of the subject products rather than fixed amounts, CAIA pointed out.

If the two plaintiffs win the lawsuit, they plan to ask for a refund of the royalty payments by Chinese DVD player makers over the past three to four years, plus a punitive claim of triple this amount.

Story source: digitimes.com.

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