Pearl TV told a U.S. Court of Appeals this week that it has “deep concern” over the future availability of TV sets and devices that support the ATSC 3.0 standard because of LG’s exit from the 3.0 market in the U.S. last year after it lost a court case against Constellation Designs over a patent dispute.
In an amicus brief filed with the U.S. Court of Appeals in the case of “Constellation Designs, LLC v. LG Electronics Inc.,” Pearl, a consortium of broadcasters, manufacturers and associations promoting ATSC 3.0 (aka “NextGen TV”) told the court that it feared that “other major TV manufacturers will follow LG and pull their products off the market, if the decision on damages from the trial court is allowed to stand.”
In 2023, LG Electronics, which, along with Samsung, was one of the companies that worked on developing the ATSC 3.0 standard—a next generation broadcast standard that combines traditional broadcast with IP—announced that it would no longer manufacture or sell TV sets that receive NextGen TV in the U.S. because it lost a patent dispute with Constellation Designs.
LG filed its appeal in May.
The decision at issue in this case disrupted that functioning market in a manner that greatly concerns the broadcast industry and any person interested in seeing the transition to NextGen TV be successful and completed.”
Pearl TV
That decision, LG said at the time, “was not made lightly, because LG has been a vocal ATSC 3.0 advocate, a strong supporter of local broadcasters, and a leading developer of television products with the latest NextGen TV technologies.”
Transition to 3.0 'Could End in Futility'
LG still sells 3.0 sets in South Korea, one of several other countries that has adopted the standard. In the U.S., consumers can still purchase 3.0 sets from Sony, Samsung, Hisense and TCL. However, in Pearl’s amicus, it feared that these companies could follow suit if the appeal stands.
“[A]ll this effort by the broadcast industry to deploy NextGen TV and by the Federal Communications Commission to approve the standard and guide the industry through the transition, will end in futility if consumers cannot purchase ATSC 3.0-equipped TV receivers,” Pearl said.
Pearl told the court that while the industry took steps to guard against such patent disputes in advance of the rollout of consumer TV sets starting in 2020, Constellation Designs’ actions went against the norm.
“[T]his patent pool system is working to facilitate the deployment and transition of NextGen TV,” Pearl said. “Pearl TV . . . views the patent pool system for NextGen TV as well functioning, and has observed no significant issues or complaints by key members of the ecosystem. “Until the Constellation Designs decision on appeal here, the patent pool system led to dozens of TV set models being introduced into the market at multiple price points (many well below $999) and widespread adoption of the NextGen TV technology by the broadcast industry.
“The decision at issue in this case disrupted that functioning market in a manner that greatly concerns the broadcast industry and any person interested in seeing the transition to NextGen TV be successful and completed.”
Judgment Was 'Skewed and Exorbitant'
Pearl also took issue with the financial arrangements, noting that the size of the judgment prompted LG’s immediate exit from a burgeoning market.
“[The trial court] returned a verdict in favor of Constellation Designs, awarding it $1,684,469.00 U.S. Dollars for past infringement,” Pearl said. “More troublingly, the judgment also ordered LG to pay Constellation Designs $6.75 for every future LG TV that used Constellation’s patents. This result immediately halted LG’s NextGen TV enterprise.”
Pearl noted that the judgment was “skewed” and “exorbitant,” distorting the SEP process. “Standard Essential Patents” are those patents identified as crucial to the deployment of a particular technology standard.
“The largest patent pool, Avanci Broadcast, charges $2 to $3.00 for 11,000 patents, including nine hundred SEPs which are critical to NextGen TV,” Pearl said. “Another patent pool charges roughly $.30, twenty-two times less than Constellation’s rate, while offering 90 SEPs, more than twenty-two times the number of SEPs. The jury’s verdict on damages is extreme and risks disrupting the entire patent pool market for ATSC 3.0, which otherwise has functioned smoothly for broadcasters, receiver manufacturers, and consumers.
"The consequences of the judgment may reverberate beyond one manufacturer. The verdict may encourage patent holders to leave patent pools,” Pearl continued. “Instead of negotiating with manufacturers for competitive rates and waiting for their assets to appreciate as NextGen TV takes off, some may prefer to charge higher fees now. Doing so would deter manufacturers from making TVs that are compatible with NextGen TV.”
With the future viability of ATSC 3.0 on the line, Pearl warned that the verdict could discourage further development of new 3.0 products and the standard itself.
“Without NextGen TV-television sets in the market, viewers will not be able access NextGen TV, nor will broadcasters have any incentive to implement the myriad improvements that the new standards boast.”
“Thus, the judgment’s ripple turns into a cascade,” Pearl concluded.
