Philips, Sony Say They’ll License Video Disc Patents on Their Own

In a development that could delay the introduction of a long-awaited consumer electronics technology, Philips Electronics and Sony Corp. on Friday broke ranks with a consortium of eight other electronics giants and announced they will begin licensing their patents for digital video disc systems on their own.

Jan Oosterveld, president of the Philips Key Modules division, said at a news conference from Amsterdam that the two companies were fed up by the pace of discussions with the other companies--notably Toshiba Corp.--that hold key patents for the technology, which is expected eventually to replace the videocassette recorder and the computer CD-ROM drive.

He said continued delays are putting a burden on manufacturers who want to start producing DVD players in time for the lucrative Christmas shopping season but have not been able to license any of the technology required to do so.

The disagreement is an unwelcome reminder of the yearlong battle among industry leaders to agree on common standards for digital video discs, which are the size of CDs but can hold 10 times as much data. Philips and Sony--creators of the original compact disc--had one DVD design and an industry alliance led by Toshiba Corp. and Time Warner had another.

A compromise based mainly on the Toshiba technology but incorporating some elements of both was finally agreed on last fall. But relations among the many parties involved remain difficult, and disagreements over copyright protection issues had threatened to delay the DVD launch even before the patent-licensing stand-off became public.

Bruce Ryon, a multimedia analyst at Dataquest Inc. in San Jose, said Philips and Sony were trying to “dictate the royalty structure.”

The two companies are planning to charge a royalty of 2.5% of the factory cost for their player licenses and 4.5 cents for each disc, Oosterveld said.

Among the areas of disagreement among DVD parties is how big the licensing fees should be altogether and how that amount should be divided among the inventors. Negotiators from 10 companies have been working to resolve these and other issues for more than six months, Oosterveld said.

Ryon raised the possibility that Philips and Sony might be trying an end-run around Toshiba, aiming to get to market quickly with a machine that won’t include any Toshiba technology and thus scuttling last fall’s compromise and setting up a standards battle.

But Gary Shapiro, president of the Consumer Electronics Manufacturers Assn., said that manufacturers would be able to license the necessary technology with just as much ease as if they pooled all their patents.

“Patent licensing is not an issue that has ever held up manufacturing,” Shapiro said.

Philips’ and Sony’s announcement caught other consortium members by surprise.

“We don’t know why Philips and Sony have chosen to do this,” said Ken Jones, director of marketing for Toshiba America Information Systems’ disc products division in Irvine. “Toshiba is still working with the other members of the consortium--including Sony and Philips--to come up with a pooled licensing arrangement” that would be more convenient for manufacturers of DVD discs and drives to deal with.