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Movielink Patent Suit May Be Just the First

22 Apr, 2003 By: Holly J. Wagner

Movielink may not be the last target of litigation built on a “store and forward” patent that USA Video Technology Corp. claims entitles it to royalty payments from video-on-demand providers, the attorney representing USA said.

“We're going after Movielink. Movielink has the technology in place and is engaged in sales of VOD,” said Erik Cherdak, attorney for USA. Though Movielink's technology is directly covered by the patent, “it also covers VOD over cable systems and satellite as well as Internet Protocol. The delivery vehicles are all mechanisms under the patent,” he said. “We think our client has a very strong patent, a very broad patent, and patents grant or convey on their owners the rights to licenses and royalties.”

Movielink public relations manager Rachel Heffron said the company does not comment on pending litigation.

The case, filed April 10 in U.S. District Court in Delaware, seeks payment of license and royalty fees, triple damages for any past infringement proved and court order barring further use of the technology without payment to USA.

“Like the movie industry that has to demand respect for copyrights and patent rights, we have to protect our patent rights,” Cherdak said. “You can't have your cake and eat it, too. You can't demand respect for copyrights and then not respect other people's patent rights.”

Language in the patent at issue clearly describes on-demand ordering and downloading of movies and other video entertainment via telephone lines.

If USA Video Technologies, a subsidiary of USA Video Interactive, prevails in its claim, telephone-based transmission alone could leave services like Lions Gate-backed CinemaNow.com, Kanakaris Wireless' CinemaPop.com and Blockbuster-backed Netmovies.com vulnerable to a legal assault.

USA Video Technology developed the technology and patented it in 1990, Cherdak said, but the patent lay dormant until broadband systems and adoption caught up to create a market for VOD.

While Movielink's studio backers are mentioned in the lawsuit, they are not named as parties. USA does assert, however, that its attorneys notified executives of the five studios — Warner Brothers, Paramount Pictures Corp., Metro Goldwyn-Mayer, Universal Studios and Sony Pictures Entertainment — of the USA patent. What made Movielink the primary target is the potential it gets from premium studio content.

“Are we shopping? We don't want to give that impression because we're not,” Cherdak said. “The future of VOD will be defined by those who have significant input into the content. Those that don't are just technology plays.”

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