You Have 60 Days ... Or Else

Author: John Honovich, Published on Mar 22, 2012

Gangster capitalism reigns. Exactly one year after ObjectVideo launched lawsuits against 3 of the biggest global manufacturers, they have now issued an ultimatum to all manufacturers packaged as a magnanimous offer of 'amnesty'.

In this note, we examine this unprecedented threat and what it means for the industry.

Overview

According to OV, here is why companies should license their patents:

"Think of patent licensing as the ability to remain on plan to market and distribute your product as you see fit – free and clear of any potential patent infringement claim by us."

A shockingly direct message that boils down to pay us and we will not sue you. 

The newly announced offer provides a 60 day window to sign a settlement with OV including an undisclosed, "one-time fee and a pay-as-you-go patent licensing agreement." The carrot is that they will "waive past damages"; The stick, a lawsuit.

OV has a new website that prominently displays their patent licensing program. Details, though, are quite light with no explanation of what their patents cover, only that they have 45 awarded and another 40 pending. The implication sems to be that anyone offering analytics falls under their domain.

"Amnesty"

OV employs Owellian messaging, calling the offer "amnesty" as if OV was graciously pardoning companies that have wronged them. Ultimately, though, this appears to be a negotiating tactic to intimidate manufacturers to quickly make a deal.

Get Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

Of course, litigation disputing the legitimacy of OV's patent continues. Currently, Bosch has filed motions asking to invalidate OVs patents and that issue is being litigated by the US ITC. However, OV is betting that they have momentum since Sony folded in February. Nonetheless, so long as Bosch continues to fight, the litigation will likely last into 2013.

Finally, OV's offer of waiving past damages are unlikely to motivate many. There are simply too few video analytics deployments for that to be terribly valuable. Even 'big' analytic companies are unlikely to have deployed more than a few tens of thousands of units. Assume that OV wants $10 per channel and that is, at most, a few hundred thousand. Rather than negotiate, most will likely wait to see the resolution of the ongoing court cases before even evaluating what to do.

Reported Terms

We have received an unconfirmed report of the terms offered by OV. Two main licensing options appear to exist:

  • By Rule: Analytic manufacturers can get total protection against all OV patents, licensed by each rule they offer. For instance, the manufacturer pays a license for an object abandoned analytic, a crossline analytic, etc. The advantage is that this ensures OV will not sue. However, the downside is higher cost. We are told by an unconfirmed source that OV is asking $12 for high end analytics and $4 for basic analytics.
  • By Patent: Analytic manufacturers can pick and choose individual patents they want protection from OV litigation. The advantage is that this minimizes cost by allowing manufacturers to only pay for the patents they fear OV might sue them over. The downside is that the manufacturer might still be sued in the future for patents they do not license.

Both licensing options have long term agreements of 10 - 20 years that reflect the long lifespan of patents.

If OV obtains $12 per camera, that will have a significant impact on end user pricing. This cost would be marked up by manufacturers and the channel, likely adding $50 to $100 to end user pricing. This could significantly restrict adoption of analytics.

The risk of accepting OV's 'amnesty' offer, is that they even if OV's patents are invalidated, the rule licensing option likely forces the manufacturer to still pay OV for the next decade or two. Obviously, manufacturers need to carefully consider and review the specific negotiated terms.

Thug Tactics

This move further demonstrates a pattern of thug tactics; Patent trolling at its most brazen. Ironically, OV references the recent Yahoo lawsuit against Facebook in its top IP news section. Unfortunately, Yahoo's desperate attempt represents to many in the tech industry the worst form of abuses of the patent system. As famed VC and tech industry leader Fred Wilson said in response to the Yahoo patent lawsuit:

"Yahoo! thinks they can bully Internet newcomers with their bogus patents. And that's a line they should not have crossed.... I am wrting this in outrage at Yahoo! I used to care about that company for some reason. No more. They are dead to me. Dead and gone."

Alas, Yahoo is perhaps the best the comparison to OV. Terrible for the surveillance industry but amazing that OV also recognizes the connection.

Comments : PRO Members only. Login. or Join.

Related Reports on Lawsuits

Mysterious Patent Troll 'Secure Cam' Targets Industry, Sues Hanwha, Hikvison, JCI, Panasonic, More on Oct 11, 2018
A company named "Secure Cam," who is actively hiding their ownership, has acquired a slew of video patents and is systematically suing video...
Wave Retorts: SDS 'Desperate' And 'Defeated' on Aug 01, 2018
Distributor SDS has sued Nortek and distributor Wave Electronics alleging bribery, conspiracy, antitrust violations and violations of state laws...
UK VSaaS Startup Ocucon on Jul 03, 2018
Decreasing exposure to fraudulent slip-and-fall insurance claims and lawsuits is one of the oldest selling points of video surveillance for retail....
Chinese Government Attacks Western Reports on Jan 03, 2018
The Chinese government is angry at the BBC and WSJ's reporting on Chinese video surveillance (see BBC Features Dahua and WSJ Investigates China's...
Avigilon / Canon New Lawsuits, No Settlement on Oct 11, 2017
In July, Canon sued Avigilon, a notably rare move amongst major players in the industry, including Canon's subsidiaries Axis and Milestone. At...
Canon Sues Avigilon on Jul 27, 2017
Canon, owner of Axis and Milestone, has sued Avigilon for patent infringement in US court. This is a highly atypical move for Canon, pitting 3 of...
Honeywell Sues Alarm.com For Violating Anti-Trust Laws (Settled) on Feb 24, 2017
Is Alarm.com about to dominate the smart home software market? That is what Honeywell alleges in its new lawsuit, first reported by...
Video Surveillance Manufacturers Risk Lawsuits For Botnet Attacks on Oct 24, 2016
The unprecedented scale of internet outages on October 21st from botnet attacks risk triggering lawsuits against video surveillance manufacturers,...
Bribe Accusations By Multiple US Cities Against Taser on Jun 17, 2016
One company is dominating the body camera business - Taser. The stun gun leader aims to grow a VSaaS powerhouse and take over one of the fastest...
Warning: Case Studies Can Get You Sued on Feb 24, 2015
What do 24 Hour Fitness, Barnes and Nobles and multiple hospitals have in common? They have all been sued in the past few months, with their...

Most Recent Industry Reports

Best Alternatives to Banned Dahua and Hikvision on Oct 17, 2018
With the US government ban and a growing number of users banning Dahua and Hikvision, one key question is what to use for low cost? While Dahua and...
Video Quality / Compression Tutorial on Oct 17, 2018
While CODECs, like H.264, H.265, and MJPEG, get a lot of attention, a camera's 'quality' or compression setting has a big impact on overall...
Knightscope Winning Investors, Struggling With Growth on Oct 16, 2018
While Knightscope's new financials show the company only winning 11 new customers in the past 12 months, the company continues to win new...
Integrator Laptop Guide on Oct 16, 2018
This 18-page guide provides guidance and statistics about integrator laptop use. 150 integrators explained to IPVM in detail about their laptops,...
Huawei Admits AI "Bubble" on Oct 16, 2018
A fascinating article from the Chinese government's Global Times: Huawei’s AI ambition to reshape industries. While the Global Times talks about...
ADI's Financials Revealed + W-Box Growth Priority on Oct 15, 2018
  ADI is one of the most powerful distributors in the security industry but how big are they? How much profit do they make? How much do they sell...
Dahua Face Recognition Camera Tested on Oct 15, 2018
Dahua has been one of the industry's most vocal proponents of the value that AI creates: As part of this, Dahua has released a facial...
Amazon Touts Home Security Market Disruption on Oct 15, 2018
Amazon is coming for ADT and all of home security. Indeed, Amazon is advertising this as, in their own words, calling home security a: Inside...
Higher Power PoE 802.3bt Ratified, Impact on Security Products Examined on Oct 12, 2018
Power over Ethernet has become one of the most popular features of many video, access, and other security products. See our PoE for IP Video...
"New Zealand Govt Uses Chinese Cameras Banned In US", Considers Security Audit on Oct 12, 2018
Newsroom NZ has issued a report: "NZ Govt uses Chinese cameras banned in US": This comes after the US federal government banned purchases of...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact