ANALYSIS/OPINION:
What is a large and powerful company to do when it no longer wishes to pay the licensing fees for the technology it is selling? In the case of Comcast, the answer is simple - just steal the technology and ignore the law.
TiVo, here, is the victim of Comcast’s theft. TiVo, which recently merged with Rovi, invents cutting-edge technology that cable and broadcasting companies are able to license in order to offer better products to their customers. Comcast uses TiVo-owned technology such as the customized channel guide and remote access for programming a DVR. These are two of Comcast’s more popular features - only they aren’t Comcast’s technology; they are Tivo’s intellectual property.
While all of Comcast’s competitors in the industry pay TiVo’s licensing fee for the patented technology, Comcast has unilaterally decided it will no longer do so.
Not willing to have its technology stolen, TiVo brought a complaint before the International Trade Commission (ITC). The agency of the federal government charged with enforcing intellectual property and trade rights for imported goods, the ITC has jurisdiction over this matter because Comcast produces its cable boxes overseas and then imports them into the United States.
Last month, the ITC ruled in favor of TiVo, putting in place an “exclusion order,” which prohibits Comcast from bringing cable boxes into the United States if they infringe on TiVo’s patent rights.
Throughout the entire process, TiVo has consistently argued that Comcast has two choices to avoid the exclusion order - pay the licensing fee due to TiVo, or disable the features that infringe upon TiVo’s patent rights. Those are both reasonable options, and Comcast was free to choose either course. What Comcast was not free to choose to do, however, was the path it took - ignoring TiVo’s patent rights and using the technology without paying the license fees.
During the public interest comment period, Comcast and its supporters disingenuously argued that an exclusion order would create a negative effect on local economics and impair access to necessary services. But absent from Comcast’s argument was any mention that the only reason these technological features would be disabled is that Comcast refuses to pay for them.
Since the ITC’s ruling, Comcast has complied and has disabled the infringing features. In a testament to how popular and important TiVo’s technology is, Comcast costumers have expressed frustration that these features are no longer available. (See, for example, this discussion on an Xfinity forum. But Comcast’s customers’ displeasure about the absence of TiVo’s technology reiterates a key point about the free market. Comcast is making the free-market decision to stop offering certain functionality and features, and Comcast’s customers should feel free to shop around and take their business elsewhere, or look at other digital broadcasting options.
The ITC’s ruling in favor of TiVo buttresses one of our Constitution’s most important protections - the protection of private property. Property, including intellectual property, is a right that our founding fathers took very seriously. In the plain words of James Madison, “Government is instituted to protect property of every sort.” Government has a fundamental responsibility to ensure that property rights are respected, and that the rule of law is enforced. That is precisely what the ITC has done here.
The consequences of this ITC ruling will be felt far beyond the digital broadcasting space. The ITC’s decision to uphold TiVo’s right to its own intellectual property is a major victory for our entire innovation economy, and to current and future inventors.
The United States is blessed to have a rich history of innovation the rest of the world aspires to emulate. But our culture of innovation and entrepreneurship are not accidents; they are the direct result of our patent system, which, from the beginning of our nation’s founding, was designed to be a democratic patent system, accessible to anyone with an ingenious new idea. Our patent system necessitated a robust rule of law system, which is exactly what developed in the United States.
Protecting property rights of all sorts provides the foundation for a flourishing free market and successful innovation economy. Our system of property rights protections provides innovators the assurances that they will be able to use, sell, and benefit from the fruits of their productive labors.
This ruling by the International Trade Commission is not only a win for TiVo, but is also a win for inventors, the U.S. Constitution and our entire patent system - all of which means the real winners will be America’s consumers, both today and in the future.
