Gemstar Takes IPG Claims to Trade Panel

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Gemstar-TV Guide International Inc. last week recruited the U.S. government into its war to block what it calls patent-infringing interactive program guides from entering the country.

After months of arguing before the U.S. State Department in support of patent-infringement claims against Pioneer Electronics Corp., Scientific-Atlanta Inc., EchoStar Communications Corp. and SCI Systems Corp., Gemstar last Wednesday filed a complaint at the International Trade Commission.

The companies "will have to defend themselves against not only Gemstar-TV Guide, but the federal government as well," Gemstar co-president Peter Boylan said.

The ITC is an independent government agency based in Washington that consists of six commissioners. An administrative law judge will conduct an evidentiary hearing on the Gemstar case. At its conclusion, the judge will issue an initial determination that is reviewed by the commission, ITC spokeswoman Peg O'Laughlin said.

The ITC has the power to issue remedial orders, cease-and-desist orders and exclusion orders. Gemstar wants an order that would exclude the IPG's import into the U.S.

Gemstar hopes the ITC action will allow it to quickly resolve IPG patent-infringement suits that have been tied up in federal courts for several years, Boylan said.

"We believe this [will be] brought to a speedy resolution in no more than 12 to 18 months, perhaps faster, wherein the federal court situation can take a number of years," he added.

Gemstar wants the ITC to order Pioneer, S-A, EchoStar and SCI-which supplies EchoStar with set-tops-to stop importing boxes with infringing IPGs.

The company also asked the commission to force the companies to cease all U.S. sales of the set-tops.

After reaching a $200 million patent-infringement settlement with Motorola Inc. last October, Gemstar has infringement suits pending against Pioneer, S-A, EchoStar, SCI and TiVo Inc. in federal courts.

TiVo wasn't named in the ITC complaint.

"You make sure somebody has the ability to pay you in the event they lose," Boylan said when asked why TiVo wasn't included in the ITC action. "Secondly, you make sure they have a sufficient number of customers-that if you spend the time and money, it's worth the effort. TiVo probably fails on both of those counts."

S-A spokesman Paul Sims said Thursday that the company had not yet received a copy of the complaint. But its executives "do not believe Scientific-Atlanta infringes" on Gemstar and StarSight patents, he said.

"We will vigorously defend this new action, and continue to pursue our patent and antitrust actions against the Gemstar companies here in Atlanta," Sims said.

S-A filed an antitrust suit against Gemstar in December 1998, days before Gemstar sued the set-top vendor for allegedly infringing upon its IPG patents.

Late last year, Pioneer and EchoStar also sued Gemstar for alleged antitrust violations.

EchoStar officials also discounted Gemstar's claims.

"EchoStar firmly believes it does not violate any Gemstar or Starsight patent, and will vigorously contest this lawsuit," said spokeswoman Judianne Atencio.

Officials at SCI, which has produced more than 5 million digital set-tops for EchoStar, did not return calls. The Alabama-based company produces EchoStar set-tops in China and has plants throughout the U.S. and in dozens of international locations, including Malaysia, Singapore, Hungary, Mexico and Brazil.

S-A imports digital set-tops from its plant in Juarez, Mexico. Pioneer produces set-tops in Malaysia.

The ITC action comes as Gemstar faces new IPG competition from the TVGateway consortium, which is backed by WorldGate Communciations Inc., Comcast Corp., Cox Communications Inc., Charter Communications Inc. and Adelphia Communications Corp. Multichannel News
reported last week that several cable systems owned by Comcast and Charter recently dropped TV Guide Interactive and replaced it with the TVGateway IPG.

In reporting its fourth-quarter earnings last Thursday, WorldGate indicated that dozens of additional TVGateway launches might be on the way. The company said it has shipped more than 400 TVGateway headend servers to date, while the IPG is currently deployed in 21 cable systems.

Boylan said he hadn't seen details of the WorldGate announcement, and therefore didn't want to comment on the deployments.

But he emphasized that Gemstar is "100 percent confident in our patent position, and we will vigorously defend our intellectual property."

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