The Coalition United to Terminate Financial Abuses of the Television Transition, LLC (CUT FATT), a group comprised of two DTV set manufacturers, Vizio and Westinghouse Digital, has filed a petition with the FCC for rulemaking and request for declaratory ruling seeking modification of the FCC policies regarding DTV patent licensing. The petition asks the FCC to oversee patent licensing terms for patents that are "essential" to complying with the FCC's DTV receiver requirements and to lower associated patent royalty rates.

The proposed rules would require a party that holds patents essential to complying with the DTV receiver requirements to make them available for free or on reasonable and nondiscriminatory (RAND) terms, which would be based on "international comparables."

CUT FATT also asks the FCC to declare that (1) royalty demands for essential DTV patents are presumed not to be RAND if they exceed international comparables by more than 50 percent; (2) a party that holds essential patents has the burden of proving that its licensing terms are RAND; and (3) a party holding an essential DTV patent that refuses to disclose publicly the terms of all licenses for that patent will be presumed to discriminate among licensees.

In addition, CUT FATT asks the FCC to (1) assess a $250 fine on patent holders for each DTV receiving device sold in the U.S. where an essential DTV patent holder collects royalties on terms that are not RAND; and 2) assess a $11,000 fine on patent holders for each set blocked from import or sale if the blocking party has refused to license an essential DTV patent on RAND terms. According to CUT FATT, these penalties are in line with those imposed on companies violating other DTV transition rules.

Comments in this proceeding are due April 27, 2009, and reply comments are due May 27, 2009. The FCC's Public Notice requesting comments is available here.

A copy of the CUT FATT Petition is available here.