News

Best Buy Ceases Sales Of ClearPlay DVD Players

Boca Raton, FL – March 31, 2008 – Best Buy has informed Nissim of its decision to cease selling DVD players supplied by ClearPlay. Best Buy has ceased selling ClearPlay players on Best Buy’s website, canceled any open orders for ClearPlay players, has not placed any further orders for ClearPlay players, and is in the process of pulling ClearPlay players from Best Buy stores. Nissim had previously informed Best Buy that the ClearPlay player and the ClearPlay filters used by the player are not in compliance with the requirements of a license agreement between Nissim and ClearPlay.    

This is not the first time ClearPlay has created significant problems for a major retailer. In 2004, after failing to execute an appropriate license from Nissim, ClearPlay proceeded to supply an infringing ClearPlay-enabled DVD player, the RCA DRC232N, to Wal-Mart Stores. Although ClearPlay had knowledge of the fact that the content control technology of the ClearPlay player was excluded from the scope of a license agreement between Thomson and Nissim, ClearPlay failed to disclose this issue to the appropriate personnel at Thomson and Wal-Mart. When Nissim brought suit to stop the infringement, Thomson ceased producing the ClearPlay player, and Wal-Mart ceased selling it.   

Similarly, in November 2007, ClearPlay was distributing CP-007-USB DVD players through Target Corp. that were not covered by a Nissim license. After being informed by Nissim, Target confirmed in writing to Nissim that Target had decided to cease sales of the ClearPlay player on www.target.com; cancel any open orders with ClearPlay for the player, and not place any further orders for the player.

As ClearPlay did with Thomson, Wal-Mart, and Target over the previous ClearPlay players, it appears that ClearPlay did not disclose to Best Buy Nissim’s allegations that the ClearPlay players and filters are not covered by the license from Nissim. ClearPlay continues to fail to disclose information material to its potential business partners. ClearPlay has also denied Nissim’s requests to provide a copy of the parties’ conditional license agreement to interested third parties.

As part of the Settlement and License Agreement resulting from a prior patent infringement litigation, Nissim had granted ClearPlay a conditional license to sell certain DVD players. The license requires compliance with the CustomPlay OC Specifications, developed by Nissim’s subsidiary CustomPlay LLC. The specifications are a detailed set of standards for coding objectionable content in movies. ClearPlay’s CP-427 player and its predecessor CP-007 player are not in compliance with the requirements of the Settlement and License Agreement. The CP-007 player’s non-compliance is currently the subject of pending litigation.

Nissim is the owner of a valuable portfolio of intellectual properties covering the implementation of content control in optical disc, hard disk, and video-on-demand applications. With respect to optical discs, Nissim’s patents have been widely recognized by the consumer electronics industry as being essential to the implementation of the DVD Specifications. Current DVD-Device licensees of Nissim include virtually all major manufacturers of devices capable of playing DVDs, including Dell Products, L.P., Funai Electric Company, Ltd., Gateway Inc., Hewlett-Packard Company, Lenovo (Singapore) Pte. Ltd., LG Electronics Inc., Matsushita Electric Industrial Co., Ltd., Philips Electronics N.V., Pioneer Corporation, Sony Corporation, Thomson Multimedia SA, and Toshiba Corporation, among numerous others. Most recently, Microsoft Corporation became a direct licensee of Nissim for the Xbox 360 device.