ObjectVideo shook the industry a few years ago by launching a series of lawsuits against the industry’s big players, claiming infringement of ObjectVideo’s patents on the basic technologies of video analytics. Some of the targeted companies fought back, but in the end most opted to make the issue go away by signing a licensing agreement with ObjectVideo.
The latest twist in the story is major video supplier Avigilon’s acquisition of those patents – and of the 19 related licensing agreements. The $80.3 million transaction more than doubles the total number of Avigilon’s patents – adding 76 U.S. and international patents to the portfolio (now totalling 124); in addition another 50 pending patents come with the deal. The 19 royalty-paying licenses authorise other companies in the industry – including big players like Sony, Panasonic, Bosch, Hikvision, Pelco and FLIR Systems – to use technologies covered by the patents.
Avigilon says the patent acquisition positions Avigilon to “lead the way” in the area of video analytics. Alexander Fernandes, Avigilon’s founder, president, CEO and chairman of the board, describes the acquisition as a “very strategic” move for Avigilon. “The future is video analytics, and we are well positioned going forward,” he says.
“Intellectual property (IP) in video analytics is very strategic both today and going forward,” says Fernandes. But one wonders: Strategic in what way?
Early in the New Year, Avigilon has continued an apparent strategy to acquire video analytics patents with an announcement they have completed the acquisition of an additional 120 or so US and international patents (in separate transactions) from four other vendors – Behavioral Recognition Systems, Inc., FaceDouble Incorporated, ITS7 Pty Ltd., and VideoMining Corp. – totalling another $13.3 million. These patents cover analytics capabilities such as emotional and attentional response measurement, in-store object tracking and behavioural analysis, object tracking and anomaly detection.
What are the ramifications when a major supplier in the video analytics space owns many of the patents that are fundamental to its competitors’ businesses? It’s one thing to pay licensing fees to a fading player like ObjectVideo (perhaps to avoid costly litigation?), but isn’t paying those fees to a direct competitor another matter? And with video analytics sales on the verge of accelerated growth, those fees (based on revenue or unit volume) are likely to increase. (Historically, the licensing revenue has been “in the millions,” says Fernandes, who also estimates the potential video analytics market at $30 billion.)
We hear that video analytics is the future of the market: Does one player now control that future? Might Avigilon use its ownership of the patents somehow to undercut its competitors or slow down their innovation?
All interesting questions, but there were no signs of industry upheaval when Avigilon made the announcement. Fernandes simply said there is “no ongoing litigation” and that the patents come “with royalty agreements in place.” The agreements typically involve ongoing quarterly royalty payments, based either on revenue or unit volume.
The announcement did not address the long-term ramifications. (More information will be available when Avigilon files the required Business Acquisition Report in the coming weeks.) Fernandes just said “there’s the opportunity to add more licensees; it’s part of the value that comes with the portfolio.” A half dozen ObjectVideo employees engaged in patent generation and licensing will join Avigilon as part of the acquisition.
“With or without the patent portfolio, there’s always the potential for legal ramifications and legal costs, whether it’s an IP licensing-based business or not,” Fernandes says.
Meanwhile, the acquisition boosts Avigilon’s credentials in video analytics, a category the company entered with the acquisition last year of analytics company VideoIQ, which is among the licensees of ObjectVideo’s patents.
“The patents and claims are very strong,” says Fernandes. “This portfolio is very strong, in volume, number of patents and in the strength.” Included is a basket of “fundamental patents” covering most, if not all, video analytics technology being using today and in the coming years. Basically, if a company is generating metadata for use with analytics, whether it's tripwire, people counting, object taken, left behind or license plate recognition, their business is likely covered by the ObjectVideo patents.
Metadata involves extracting information (data) from an image as opposed to a human operator viewing the image. The term is “very broad-reaching and all-encompassing,” says Fernandes. It is also a “very young” portfolio – none of the patents will expire in the next five years.
The patents could open other doors for Avigilon, too. “There are many opportunities to add value and commercialise solutions beyond security, such as for operational efficiency and business intelligence for retailers,” Fernandes says.