Watermark Firm Verance Countersues Rival Digimarc

Digital watermarking firm Verance Corp. has filed a lawsuit in response to three amended suits filed against it by rival Digimarc Corp. beginning in March 2000. Verance's claim, filed last week in U.S. District Court in Portland, Ore., alleges patent infringement, antitrust violations, and other assertions, including that Digimarc has conspired to put it out of business.

Watermarking helps copyright holders prevent illegal playing and duplication of digital audio and video files, including CDs and DVDs. San Diego-based Verance, whose audio technology has been adopted by the Secure Digital Music Initiative, claims that the audiovisual watermarking Digimarc is proposing as a standard to the DVD Copy Control Assn. (DVDCCA) contains components of its patented technology.

The U.S. Patent and Trademark Office is currently re-examining six patents in question between the companies and, according to Winograd, has ruled in favor of Verance on four of them.

Digimarc VP of intellectual property Bill Conwell calls Verance's conspiracy allegations "absurd," adding, "We're looking forward for the courts to decide this."

Experts say until there is a standardized protection code for DVD, the music and video industries will suffer. "It's having an effect on everything," says Phil Benyola, an analyst with St. Petersburg, Fla.-based Raymond James & Associates. "Consumers can continue to copy DVDs, and the hardware makers eventually [will] have a problem with the content owners because they're not protecting their content."