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Extensive Report: Open TV Sues Apple over Content Streaming as part of an Interactive Television System & More

1AF OPEN TV V. APPLE

Many in the tech sector believe that Apple is going to be introducing a new TV service this fall and that Apple could reveal this new service during their upcoming World Wide Developer Conference next month. Yet before Apple even has the chance of introducing their new service, they've been slapped with a new patent infringement lawsuit from Open TV, Nagravision S.A. (Switzerland) and Nagra France S.A.S.

 

The patent infringement lawsuit in a simple overview concerns Apple's iTunes Store, iTunes software and a long list of Apple hardware including Apple TV, the iPhone, iPad and Macs. However, the depth of the lawsuit involves many other technologies. Open TV is without a doubt a pioneer in movie and streaming TV technologies and have license agreements with Disney, Google and others in the industry.

 

Our extensive report covers the background of Open TV should you not be familiar with this company and their many contributions to the field of movies and TV. We also cover the background of the technology that plays a role in this case, list the five counts against Apple and provide a list of the patents that Open TV is alleging that Apple has infringed. Although this is an extensive report, you could read it all or just skip to the parts that interest you.

 

About Open TV

 

The following is from Open TV's opening segment of their lawsuit which provides the court with the background of Open TV so as to establish the fact that they are pioneers in film and TV technologies. This is only a part of what was presented in their filing.

 

"OpenTV, Inc., Nagravision, and Nagra France are subsidiaries of Kudelski SA. Kudelski SA and its subsidiaries make up the various companies of The Kudelski Group. The history of The Kudelski Group is one highlighted by over 60 years of innovation, award winning products, and loyal, long-term customers who entrust The Kudelski Group with their business. Today, The Kudelski Group is a major employer in the United States, Europe, Asia, and elsewhere, providing jobs in manufacturing, engineering, research and development, marketing, sales, and many other specialties with around 3,000 employees worldwide.

 

In 1951, Stefan Kudelski created the first company in what became The Kudelski Group and launched the now legendary "Nagra" line of portable recording devices for cinema, TV, and radio recording. Stefan Kudelski's recording devices, and the inventions in them, were considered revolutionary throughout the movie industry. The Nagra devices allowed precise synchronization of audio tape with film, providing filmmakers with studio sound quality during on-location filming.

 

Throughout his career, Stefan Kudelski received numerous awards and honors for his technological achievements, including four Academy Awards, two Emmy Awards, and Gold Medals from the Society of Motion Picture & Television Engineers, the Audio Engineering Society, Lyra, and Eurotechnica. Mr. Kudelski also was recognized by the FBI for his technology contribution in audio recording. After Mr. Kudelski's death in 2013, he was honored in the 'in memoriam' presentation during the 86th Annual Academy Awards in March 2014, described by a single word: Inventor.

 

The success of the products that The Kudelski Group manufactured and sold in its early years allowed the company to grow and expand. In 1989, The Kudelski Group expanded the scope of its technological innovation by launching its first conditional access systems for pay TV. Over the next decade, The Kudelski Group continued to expand its technology development in the digital television domain, providing global, universally compatible solutions to manage, organize, enhance, market, and secure digital content, regardless of whether it was transmitted over managed or unmanaged networks, broadcast linearly or on-demand.

 

Today, digital television is The Kudelski Group's core business. The Kudelski Group has become a world leader in digital security and convergent media solutions for the delivery of digital and interactive content. The Kudelski Group's innovations are continuously contributing to the evolution of the digital television ecosystem, enabling operators to extend their multimedia offerings across the entire digital ecosystem to numerous client devices through traditional managed networks as well as Internet delivery.

 

Within The Kudelski Group, the principal operating company responsible for developing and implementing innovative solutions for securing digital television content is Nagravision. Nagravision provides innovative solutions for accessing interactive television content and creates innovative security and access control solutions that provide optimal levels of protection throughout the content distribution chain, from creation to consumption. Nagravision products and services include open conditional access systems, digital rights management, and integrated on-demand solutions for content providers and digital television operators over broadcast, broadband, and mobile platforms. Nagravision's technologies are used by over 120 pay-television operators in the United States and internationally to deliver secure television content to a wide range of devices. In particular, Nagravision has been an industry leader in recent years in the development of technologies to secure delivery of paid content to mobile devices or to multiple devices connected by a local wired or wireless network.

 

The Kudelski Group has also grown as a leader in the digital television domain through acquisitions of pioneering technology companies, including such notable companies as Lysis, Livewire, MediaGuard, SmarDTV, OpenTV, Inc., and most recently, Conax, a global provider of content protection for digital TV services over broadcast, broadband, and connected devices.

 

OpenTV was founded in 1996 as Thomson Sun Interactive, LLC, a joint venture of Thomson Multimedia SA and Sun Microsystems, Inc. In 1997, Thomson Sun Interactive LLC was converted into a newly-formed corporation—OpenTV, Inc. From its inception, OpenTV, Inc. has been dedicated to developing and commercializing cutting-edge, patented technology required for the delivery of television and other media content to consumers through cable, satellite, and terrestrial networks, and other managed and unmanaged networks.

 

OpenTV, Inc., has a long history of innovation in the field of software for set-top boxes for television sets. Within four years of its creation, OpenTV, Inc. became the first interactive television middleware provider to integrate its middleware technology in more than 10 million set-top boxes worldwide—more than all other industry competitors combined. OpenTV, Inc. also partnered with EchoStar's DISH Network, which was the first satellite company to provide interactive television services in the United States. OpenTV, Inc.'s set-top box middleware technologies were key to the successful growth of DISH Network. Today, OpenTV, Inc. has partnerships with companies worldwide, and its middleware has now been incorporated into over 200 million set-top boxes.

 

In addition to its industry-leading set-top box middleware solutions, OpenTV, Inc. has been an innovator in web-based content delivery.

 

As a result of its ongoing commitment to interactive television and web-based content delivery, by 2004-2006, OpenTV, Inc. led the industry in integrating browser software into television sets, built the first interactive shopping application for DISH Network, successfully launched real-time two-way interactive television shopping services on QVC, and provided the technology for CNN Enhanced TV, among other notable achievements. All of these innovations helped to pave the way for the growing revolution in how media content is delivered and enjoyed, including over the Internet.

 

In addition to these achievements, OpenTV, Inc. also developed complementary technology related, for example, to personal video recording ("PVR"), video-on-demand ("VOD"), television home networking, advanced advertising methodologies, and tools for recommending content to viewers. The industry has also long recognized OpenTV, Inc.'s technology contributions. For example, OpenTV, Inc.'s PVR was named as one of the best in its field by Seagate Technology in 2009.

 

Today, OpenTV, Inc. develops software that enables intuitive and personalized viewing experiences for consumers. OpenTV, Inc.'s software solutions provide a variety of advanced and interactive services for television, including advanced user interfaces, VOD, PVR, high-definition ("HD"), interactive and addressable advertising, and a variety of enhanced television applications.

 

A Little about Apple from this Lawsuit

 

Another part of Open TV's patent infringement lawsuit describes Apple's products that the company will be challenging. The following is only a part of what was presented:

 

"Apple TV is a digital media player developed and first sold by Apple in 2007. It is a small form factor network appliance designed to play digital content from the iTunes Store, as well as third-party applications, on an enhanced-definition or high-definition widescreen television. Apple generates significant revenue from the sale of Apple TV devices as well as content purchased through Apple TV. At a recent Apple shareholder's meeting, Apple Chief Executive Officer Tim Cook noted that Apple had generated significant revenue from Apple TV over the last year, admitting that today, "it's a little bit harder to call it a hobby."

 

Apple iTunes is a media player, media library, and mobile device management application and service developed and operated by Apple. Apple iTunes includes an application installed on personal computers or mobile computing devices, as well as an online service operated by Apple. It is used to play, download, and organize digital audio and video on a variety of Apple devices, including Apple personal computers, mobile computing devices based on iOS, and Apple TV. Apple also makes iTunes available for download for users of a wide variety of computing devices, including computing devices made by companies other than Apple. For example, Apple has offered several versions of iTunes that operate in the Microsoft Windows operating system, and generates additional revenue from purchases made within iTunes by iTunes Windows users.

 

Additionally, Apple has periodically added new features to iTunes and offers new versions of the software to existing iTunes users, in some cases through automatic updates. Through the iTunes Store, launched in 2003, users can purchase and download a variety of content such as music, music videos, television shows, audiobooks, podcasts, movies, and movie rentals, and ringtones. The iTunes Store also includes the ability for users to watch movie previews which are streamed from a remote Apple server to the user's device. Users can also rent movies from the iTunes Store. When a user pays to rent a movie, the movie is available for viewing within 24 hours of when they first start watching it.

 

Users can also access "Ratings and Reviews" and 'Related' information about songs and podcasts while they are listening to content on the iTunes Store. Apple has consistently advertised the interaction between iTunes and its other computing and media products, including Apple computers, the iPod, Apple's mobile computing devices, and more recently Apple TV.

 

In the iTunes Store, content such as Video and apps are protected by Apple using an Digital Rights Management ("DRM") encryption scheme known as "FairPlay." Using FairPlay, Apple encrypts content using a key which is in part specific to the purchasing user. This way, content purchased by a particular user can only be played on one of up to five devices authorized to use that user's iTunes account.

 

A substantial part of Apple's business strategy relies on synergies between different Apple products. Apple designs and markets its products to create a branded, closed "ecosystem" that encourages consumers who use one Apple product or service to use it in conjunction with other Apple products and services. For example, Apple computers and mobile devices direct customers to purchase content from the iTunes store and App Store, while Apple encourages Apple TV customers to stream Apple TV content to their Apple mobile devices using a software feature known as 'AirPlay,' which can link Apple mobile devices and/or OS X-based computers to a local wireless network and provide encryption methods to secure content being streamed from one Apple device to another.

 

Notably, Apple's recent success from its vast line of products and services has come years after core technologies underlying these products and services were developed by others, including, in the present case, pioneering technologies developed by OpenTV.

 

In addition, Apple's business strategy relies on its sophisticated use of intellectual property, by which it attempts to protect its product ecosystem through the offensive and defensive use of intellectual property, including patents. Apple is an active patent buyer and seller, and as a corporation, Apple is one of the largest filers of Inter Partes Review petitions with the USPTO.

 

On information and belief, Apple investigates and evaluates the patent portfolios of companies that assert patents against it. In this case, for example, Apple raised other, unasserted OpenTV patents as part of its challenge to the validity of an OpenTV patent in Germany. (See Bundespatentgericht (Fed.Pat. Ct.) BPatG 5Ni51/14 (EP) (filed Dec. 11, 2014). Apple would be aware of a prominent portfolio such as that of The Kudelski Group as this portfolio is well-known in the industry. OpenTV, Inc. has asserted patents from its portfolio where appropriate against infringers. For example, in January 2014, OpenTV, Inc. and Cisco Systems, Inc. successfully ended litigation when The Kudelski Group and Cisco entered a well-publicized license agreement. Furthermore, Apple and OpenTV, Inc. are currently involved in ongoing patent litigation in this district. See OpenTV, Inc. et al v. Apple, Inc., 3:14-CV-1622 (N.D. Cal.). The Kudelski Group has also licensed its patent portfolio in April 2015 to Google, a primary Apple competitor, and to Disney. Thus, Apple is aware of The Kudelski Group's portfolio at least by virtue of its role in the market, its licensing activities, the ongoing litigation, and the impact of The Kudelski Group's portfolio on Apple's products. As a sophisticated consumer of intellectual property, Apple would have known, or should have known, of the patents now at issue in this case.

 

The Five Counts against Apple

 

The first count against Apple involves patent number 6,148,081 titled "Security model for interactive television applications."

 

According to Open TV, "Apple has infringed, and is currently infringing, the '081 Patent in violation of 35 U.S.C. § 271(a) by making, using, selling, offering for sale, and/or importing into the United States, without authority, products, equipment, software and/or services that practice one or more claims of the '081 Patent, including without limitation Apple iOS and Mac OS X devices and iTunes software for the Windows operating system, designed to facilitate iTunes movie rental downloads."

 

2AF 55 OPEN TV V APPLE

The second count against Apple involves patent number 6,233,736 titled "Media online service access system and method."

 

According to Open TV, "Apple has infringed, and is currently infringing, the '736 Patent in violation of 35 U.S.C. § 271(a) by making, using, selling, offering for sale, and/or importing into the United States, without authority, products, equipment, software and/or services that practice one or more claims of the '736 Patent, including without limitation Apple's iTunes Store, designed to provide information services to a user while viewing or listening to a video or audio program on an iOS or Mac OS X product, or a Windows product running iTunes software.

 

The third count against Apple involves patent number 7,055,169 titled "Supporting common interactive television functionality through presentation engine syntax."

 

According to Open TV, Apple has infringed, and is currently infringing, the '169 Patent in violation of 35 U.S.C. § 271(a) by making, using, selling, offering for sale, and/or importing into the United States, without authority, products, equipment, software and/or services that practice one or more claims of the '169 Patent, including without limitation Apple's iTunes Store, designed to facilitate the streaming of content as part of an interactive television system to an iOS or Mac OS X product.

 

The fourth count against Apple involves patent number 7,644,429 titled "Broadcast and reception, and conditional access system therefor."

 

According to Open TV, " Apple has infringed, and is currently infringing, the '429 Patent in violation of 35 U.S.C. § 271(a) by making, using, selling, offering for sale, and/or importing into the United States, without authority, products, equipment, software and/or services that practice one or more claims of the '429 Patent, including without limitation Apple's iOS and Mac OS X devices which include Apple iTunes software designed to facilitate subscriber management and authorization for conditional access to information and content.

 

The fifth count against Apple involves patent number 7,725,740 titled "Generating a root key for decryption of a transmission key allowing secure communications."

 

According to Open TV, Apple has infringed, and is currently infringing, the '740 Patent in violation of 35 U.S.C. § 271(a) by making, using, selling, offering for sale, and/or importing into the United States, without authority, products, equipment, software and/or services that practice one or more claims of the '740 Patent, including without limitation Apple's iPhone, iPad, and iPod Touch line of products.

 

Background of the Technology

 

The lawsuit covers the background of the technology as follows: "The technology at issue in this case generally pertains to the field of securely communicating data between devices and communicating large amounts of information such as streams of digital video information or app data.

 

Changes in technologies, business models, and consumer lifestyles are converging to propel the rise of online video and fundamentally transform TV, advertising, and content delivery methods. A major recent trend in delivery of digital online content is the development of "Over-the-Top" (OTT) delivery of content (such as movies, television, and other media) over the Internet. OTT delivery is done through an ordinary Internet connection that is not tied to the type of content being delivered. In the OTT model, an Internet service provider is responsible only for ensuring that data can be received by the consumer through a provided Internet connection. Over-the-Top services bypass traditional distribution channels like cable and satellite by providing their content "over the top" of broadband networks.

 

OTT content, including OTT content delivered by Apple, can often be viewed on a myriad of connected devices, such as televisions, gaming consoles, personal computers, tablets, smartphones, and many other connected devices. OTT services are the catalyst for much of the growth in consumption of online video and other online digital content.

 

To avoid having OTT services erode potential digital media revenue, content providers and viewing devices must provide ways to secure access to the content, including Digital Rights Management (DRM), authentication, and parental controls. Advances in DRM have enabled content owners and distributors to securely distribute online video and protect playback across devices and platforms. This increased security and level of control has, in turn, helped establish online video as a viable revenue source and led to the proliferation of business models, including digitally delivered rentals, subscriptions, and downloads. Digital security mechanisms have thus permitted the migration of video to OTT delivery.

 

Over the last few years, software ecosystems have been emerging as a significant part of the mobile domain. The marketplaces of these software ecosystems, including Apple's iTunes Store, offer currently hundreds of thousands of applications or "apps" from tens of thousands of developers, and the ecosystems are in a tight competition. These app stores are digital distribution platforms for application software often provided as a component of an operating system on a desktop, smartphone, or tablet. Users can browse through different categories and genres of applications, purchase them (if necessary), and then automatically download and install the application on their connected device. To protect app stores as a revenue source, applications must be provided in a secure manner and verified before they are executed.

 

The proliferation of a wider variety of devices—such as mobile computing devices—for viewing rich OTT content has created another new set of challenges relating to presentation of content in a user-friendly way. For example, users now expect to be able to access a wide range of TV and online content, including some premium content, through multiple platforms such as TVs, personal computers, and mobile computing devices, while content providers and advertisers seek to provide content across multiple platforms without compromising security and control. Additionally, for services such as streaming audio, users may expect a richer presentation of information than simply the audio stream alone.

 

Over the past 20 years, Plaintiffs and other companies within The Kudelski Group have developed many of the underlying technologies that consumer electronics companies, such as Apple, are integrating into their products and services, in order to deliver high quality media content and applications to a growing number of consumer devices. For example, Plaintiffs' portfolios include numerous patents directed to fundamental technologies for video and content management, distribution, information acquisition, sharing, authentication, secure storage, and control.

 

Plaintiffs have been, and remain, industry leaders in developing the technologies required to overcome the significant technical challenges to permit the tremendous growth of digital video content and consumption. Their investments in technology leadership and reputations as technology innovators are harmed by ongoing unauthorized use of their technologies."

 

The patent infringement case presented in today's report was filed in the California Northern District Court, Oakland. The Presiding Judge in this case is noted as being Judge Donna M. Ryu.

 

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