HD Radio finds itself under attack in the courts from an unlikely agitator: the patent troll.
What is a patent troll? In a nutshell, they are scumbag bottom-feeders in the land of intellectual property law. Patent troll companies have no real business; they buy up existing patents and then launch campaigns of lawsuits against others that are using "their" technology, claiming that the defendants have violated "their" intellectual property rights.
The idea is to intimidate defendants into making quick settlements, avoiding a potentially costly lawsuit. Even though their claims often have no legal merit—or the patent itself is so vague as to be difficult to define—companies targeted by patent trolls will often settle just to get the nuisance out of their hair. While this might be tactically acceptable, it sets a terrible strategic legal precedent, as it gives a patent troll more courage to continue and expand their campaigns.
Legal scholars have estimated that patent trolls raked in some $29 billion from their nefarious activities in 2011. That same year, WBEZ’s This American Life produced an excellent episode that breaks down patent trolls and their modus operandi. The top five patent trolls in the country have collectively sued several thousand companies large and small over the last five years.
In the case of HD Radio, earlier this month a Delaware-based patent troll named Wyncomm, LLC, representing its "subsidiary," Delaware Radio Technologies (for all intents and purposes, both are shells established for the purposes of patent-trolling), sued several broadcasters using HD Radio. The primary patent at issue was initially awarded to AT&T in 1996 and covers "side channel communications in simultaneous voice and data transmission." The patent itself vaguely refers to telephony and wireless data services.
Broadcasters are just the latest in a long line of targets for Wyncomm et al.: earlier this year the troll sued several computer and electronics manufacturers, including Apple, alleging infringement of the same patent. Wyncomm upped the ante tin the spring by going after a larger set of targets, focusing more on the wireless phone market, including France Telecom, HTC, LG, Motorola, NEC, Nokia, and Panasonic, among many others.
Then just this week, Wyncomm et al. added automobile manufacturers who’ve adopted HD Radio to its growing list of defendants. In total, more than 100 companies are in the sights of Wyncomm in the HD case.
Interestingly, these trolls have not targeted HD Radio’s actual proprietor, iBiquity Digital Corporation, in any of these lawsuits. If HD Radio is iBiquity’s baby, why not just go straight to the primary patent violator? The answer lies in the practices of patent trolls: play the odds and sue as many folks as possible, in hopes that some will pay out—multiple settlements stand to make more money than one. Had iBiquity actually been in violation of Wyncomm’s patent, the company could have conceivably been on the hook in a big way—but the fact that iBiquity dodged this bullet is telling about the actual merits of the case.
However, there are some delicious ironies to all of this, for iBiquity itself is subverting patent law to keep its technology perpetually proprietary. Although the HD Radio system is covered by several patents, and these will expire in 20 years’ time (or less), a crucial component of the system—the algorithm used to encode and decode HD Radio audio itself—has gone undocumented. Look at the National Radio Systems Committee’s standards-documents for HD Radio and you will find no normative or informative references to this codec (dubbed HDC). Effectively, HDC is a black box that cannot be pierced by any means.
This creates a conundrum best described by Jonathan Hardis, a physicist at the National Institute of Standards and Technology and long-time HD Radio watcher who fought a lonely battle during the system’s formative policy-years, trying to warn the FCC and the public about the intellectual property distortions of iBiquity. He recently summarized the dilemma in a very effective way:
[Patenting technologies] is not a problem, provided that the patent owner has agreed to license the patents on "reasonable and non-discriminatory terms." iBiquity has so agreed. Another flavor [of intellectual property] is called "trade secrets." This is where the problem lies, as [HDC] is protected as a trade secret. Unlike patents, trade secrets don’t expire. . . .Being granted a right to operate a tollbooth in perpetuity (the economists would say, being able to "extract rents" forever) is inherently unreasonable. The FCC should not have allowed it, and is completely unprecedented as best as I can tell. Never before has the FCC allowed a broadcaster on the public airwaves to use secret code (except for supplemental subscription services). Even worse, the record indicates that the FCC hasn’t even thought about the issue in this context.
Any threat to the adoptive attractiveness of HD Radio, especially as it relates to broadcasters and consumer electronics manufacturers, is an existential threat to the technology. For the good of HD’s future, anyone targeted by Wyncomm et al. should vigorously dispute this trolling, lest it chill the already cold reception HD has among these constituencies critical to its success.
But if settlements start happening, that’s the other irony: a parasite on iBiquity’s system stands to make more money off of it than iBiquity itself has.