For decades, the Motion Picture Association (MPA) has been Hollywood’s main protector of intellectual property rights, especially when it relates to piracy. In a recent federal lawsuit, however, the roles are reversed. Siding with Disney, the MPA calls out alleged IP abuse and "extortionary" patent demands linked to the H.264 and H.265 codecs, which they fear might inflate subscription fees of streaming services.
For many online pirates, the H.264 and H.265 standards are synonymous with high quality pirate…
For decades, the Motion Picture Association (MPA) has been Hollywood’s main protector of intellectual property rights, especially when it relates to piracy. In a recent federal lawsuit, however, the roles are reversed. Siding with Disney, the MPA calls out alleged IP abuse and "extortionary" patent demands linked to the H.264 and H.265 codecs, which they fear might inflate subscription fees of streaming services.
For many online pirates, the H.264 and H.265 standards are synonymous with high quality pirate releases.
The underlying codecs and compression technologies they describe have established themselves as the preferred video piracy formats, appearing in thousands of online releases.
There are even dedicated ‘Scene’ rules for releasing pirated content in these formats. Yet, at the same time, streaming services such as Netflix, Amazon Prime, and Disney+, rely on the same technology.
Disney Sued for Patent Infringement
InterDigital owns more than 10,000 video and codec patents, including those essential to H.264 and H.265. To play content encoded in these formats, device makers such as computer and TV vendors must license their use.
Netflix, Prime Video and Disney+ use these codecs to encode their videos but, according to Interdigital, this is not always done with permission.
In February, the Pennsylvania-based patent corporation sued Disney for patent infringement. A complaint filed at a California federal court accused Disney of using the patented codecs for ESPN, Hulu, and Disney+.
InterDigital reached out to Disney in July 2022 to discuss a licensing agreement, but after that led nowhere, the company felt compelled to take legal action.
“Today, Defendants continue their widespread infringement of the Asserted Patents by utilizing the claimed technology that enables the efficiency and efficacy of Defendants’ video streaming business.”
Disney is not alone in this. Last month, InterDigital filed a nearly identical lawsuit against Amazon, accusing the retail giant of unauthorized use of the same video compression technology for Prime Video.
MPA Backs Disney
These high-stakes lawsuits strike at the core of the video streaming landscape. There is widespread concern, including at the Motion Picture Association (MPA), which submitted an amicus brief in the Disney lawsuit last week.
The MPA’s filing is submitted as part of Disney’s counter-lawsuit, filed in a Delaware federal court in August, which accuses InterDigital of antitrust practices.
The MPA, which counts Disney and the other major video streaming services among its members, is typically known for protecting IP-rights. In this case, however, it rallies against what it believes to be IP-abuse.
The brief notes that InterDigital stands accused of orchestrating a “global holdup campaign” designed to generate windfall profits, using extortionary demands and actions to force streaming services on board.
From MPA’s brief
MPA sees InterDigital’s aggressive patent tactics as an antitrust violation. Their brief argues that InterDigital is effectively “double-dipping” by attempting to charge streaming services for the same video transmissions device manufacturers have already paid for.
Essentially, the patent holder wants to get paid for encoding and decoding the same video.
“InterDigital has sought to ‘double-dip,’ demanding that streaming providers take royalty-bearing licenses even where those providers stream content to devices whose manufacturers already are paying InterDigital to license the same patents,” the MPA writes.
InterDigital notes that, while the H.264/HEVC standards are mandatory for device makers, they are technically “optional” for streaming services. The company argues that Disney and others can use non-standard technology if they want to avoid the fees.
The MPA dismisses this counterargument as a “contrived excuse,” noting that the use of non-standard technology would make these streaming services incompatible with virtually every TV and smartphone on the market.
Beyond the “double-dipping” mechanics, the MPA’s brief supports Disney’s broader allegations that InterDigital engaged in a deceptive scheme where RAND obligations were effectively bypassed.
Price Hikes for Streaming Services
Ultimately, the MPA warns that this legal battle over patents will have real-world consequences for consumers. The movie industry group argues that, if “unscrupulous” patent holders are allowed to stack fees on top of fees, streaming services will face higher costs.
In its brief, the MPA draws a direct line between InterDigital’s conduct and the monthly bills paid by streaming subscribers.
“All of this involves substantial costs, which could lead to higher subscription fees or a reduction in the production and dissemination of content that is streamed,” the MPA notes.
Needless to say, the stakes in this patent battle are high, and the effects are felt globally. InterDigital has already obtained injunctions to block Disney’s content in both Germany and Brazil.
The Delaware court must now decide whether Disney’s antitrust claims should be dismissed, as requested by InterDigital, or if the case can continue.
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A copy of the MPA’s amicus curiae brief, filed at the Delaware federal court last week, is available here (pdf)