Patent disputes are epidemic in the display and flat-panel TV industries, and most of them have little impact beyond the companies involved. Most recently, the US International Trade Commission (ITC) has upheld a long-simmering charge by the Japanese company Funai that 11 manufacturers and vendors of digital TV sets infringed upon Funai’s U.S. Patent 6115074 issued on September 5, 2000. The alleged infringers include Amtran Technology, Vizio (which sells Amtran-built TVs in the U.S.), TPV Technology, and Proview. The ITC has issued a limited exclusion order to ban imports of the infringing digital LCD-TVs for sale in the US market.

Ken Werner
Senior Analyst and Editor

So, will Vizio TVs disappear from the shelves at Costco and WalMart? No. The case will now go to a federal circuit court for trial in 60 days. During that period, the TV vendors may continue to import and market products if they make security deposits of $2.50 a unit. Amtran said it is reserving between $1.5M and $2M to cover estimated sales for two months.

At $2.50 a unit, the numbers involved are not insignificant, but they’re not going to destroy companies the size of Funai, Amtran and Vizio. Amtran is on track to ship between 4M and 5M LCD-TVs and 500K LCD monitors in 2009, with 950K units of LCD-TVs and monitors combined already sold in Q1′09.

Vizio responsed to the ITC limited exclusion order by stating that recent rulings by the U.S. Patent and Trademark Office (USPTO) encourage Vizio in the belief that its appeal to the US Court of Appeals for the Federal Circuit will reverse the underlying decision. "We believe that the U.S. Court of Appeals will agree that there are substantial grounds for appeal of the ITC’s ruling," stated Rob L. Brinkman, VP of Vizio.

"Vizio intends to move and is moving aggressively on all possible avenues to protect its rights. Funai’s failure to license its patents on reasonable and non-discriminatory basis is the subject of a lawsuit in federal district court in California, as well as a complaint filed with the FCC," stated Vizio co-founder Laynie Newsome.

So what is the 074 patent? Does it protect a basic feature of LCD or TV operation? Well, no. The patent covers a "system for forming and processing program map information" - that is, the channel guide. Now, in this developing era of program streams from multiple sources, having a good program map is not a trivial matter, but wouldn’t you think Funai, Vizio, Westinghouse, and the others could figure a way to shake hands and make nice? They may eventually, but the companies are still in the name-calling stage, with Vizio and Westinghouse Digital, in particular, claiming that Funai is being discriminatory and unreasonable in the way it charges to license the 074 patent.

The next episode of this Funai tsunami - shall we call it a "Funami"? - will begin playing out in 60 days.