MPEG-LA’s patents exhausted by camera sale? (to be updated)

When you buy a digital camera, can holders of video patents claim ownership of your videos? They certainly claim to. When looking into this, I found an interesting 2008 opinion from the US Supreme Court that suggests, to me (IANAPL), that "exhaustion" through "first sale" might save our bacon: Quanta v. LGE.

Here’s the article that raised the problem of cameras coming with "for non-commercial use only" patent licences:

And here’s the 2008 court opinion I’m reading:

Patent exhaustion is a well-known principle. It says that the patent holder’s rights/powers are exhausted after the first sale of the patented item.

CAVEAT: One problem I see is, if A sells an item with a limited patent licence to B, and B sells the item to C, my interpretation is that C is completely free of patent problems. But if that’s true, it leads to the absurd situation where C could sell the item back to B in an unrestricted way, so B would then escape the restrictions. Thus, anyone who received a limited patent licence could escape the restrictions by selling it to a friend and buying it back. Maybe this problem is sufficiently avoided by the requirement that:

components that essentially, even if not completely, embody an invention (PDF page 11, after half-way)

First, LGE claimed that exhaustion doesn’t apply to methods. The court replied that, yes, it applies to methods, and processes.

this Court has repeatedly held that method patents were exhausted by the sale of an item that embodied the method

and

We therefore reject LGE’s argument that method claims, as a category, are never exhaustible. (PDF page 14, top paragraph)

The court also cites and affirms a 1873 case, Adams v. Burke, which says:

[W]here a person ha[s] purchased a patented machine of the patentee or his assignee,” the Court held, “this purchase carrie[s] with it the right to the use of that machine so long as it [is] capable of use.

And the court also says:

once lawfully made and sold, there is no restriction on [its] use to be implied for the [patentee’s] benefit

The court says this case is comparable to Univis, where special glass was sold to makers of spectacles. In that case, the patented glass was:

without utility until [they were] ground and polished as the finished lens of the patent.” Ibid. Accordingly, “the only object of the sale [was] to enable the [finishing retailer] to grind and polish it for use as a lens by the prospective wearer.

So, since the point of selling someone a camera is to enable them to make videos, wouldn’t this mean that MPEG-LA’s patent rights are exhausted once the camera gets sold?

(I’ll come back to finish this article soon. Comments very welcome.)

6 thoughts on “MPEG-LA’s patents exhausted by camera sale? (to be updated)

  1. Les

    You say that some patent is involved, but you don’t identify the patent. Someone can license a camera with restrictions without there being a patent involved. What patent do you think is involved in preventing commercial use of a patent?

    1. Ciaran Post author

      It’s a thicket of 900 patents, managed by the MPEG-LA group.

      The patents cover the various MPEG video formats, and according to the OSNews article, pretty much every camera uses those formats.

  2. Natanael L

    Interesting. This could mean that if they charge the camera manufacturer for a patent license, the customer could claim to not be affected by it since the device’ implementation of the patent has been paid for.

    But it’s not that easy. The manufacturers *do* pay, but they sell *different, limited licenses* for *different purposes*.
    It looks like the MPEG LA is *only* selling the right/license for the camera manufacturers to include a h264 encoder with the camera and the right to *pass on* a *personal non-commercial license* to the user of the camera.

    Commercial use require one license (the one filming), any kind of commercial redistribution require one license (Youtube, blogs), and all decoders (VLC, DVD players) require one (this is paid for by the distributor of the encoder, or the end user for free programs like ffmpeg).

    You could however challange this method by asking if this is a reasonable demand. AFAIK, most contries have laws against uinreasonable and unbalanced contracts and licenses. *THIS* is where you would want to attack them.

  3. The Mad Hatter

    Another issue is the patents themselves. Most of the MPEG LA patents apparently cover some specific hardware implementations. A different hardware implementation would not be infringing, nor would a software implementation. Of course MPEG LA will claim that they’ve patented every conceivable method of doing H.264, however I strongly doubt that they are that smart.

    And of course since the purchaser of the camera isn’t advised by the sales representative at the time of purchase, the purchaser is free to do whatever they want, since they didn’t sign a contract limiting their actions, since if they were buying the camera for commercial use, they wouldn’t have made the purchase if they were fully informed. MPEG LA won’t like this argument, but it has held up in court before.

    Wayne

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