By CHRISTOPHER RUGABER
Associated Press

WASHINGTON - A small Pennsylvania company's patent lawsuits could hamstring the government's $1.5 billion effort to make the transition to digital television easier on consumers' wallets.

Rembrandt Inc. owns a patent on technology it says is part of the digital broadcasting standard used by the TV networks. Rembrandt is suing 14 companies, including Walt Disney Co.'s ABC, General Electric Co.'s NBC Universal, CBS Corp. and News Corp.'s Fox Broadcasting, for patent infringement, seeking millions of dollars in royalties.

The nonprofit American Antitrust Institute asked federal regulators last month to bar Rembrandt from enforcing its patent. Otherwise, Rembrandt's suits could add "tens of millions" of dollars to the cost of digital TV, most of which will likely be passed on to consumers, the nonprofit said.

"This is a massive tax that Rembrandt is trying to place on the transition to digital TV," said David Balto, an antitrust attorney who co-wrote a petition the AAI submitted March 26 to the Federal Trade Commission.

The AAI says Rembrandt is violating antitrust and fair-competition laws by abusing the monopoly provided by its patent.

In recent years, the FTC has required companies to license their patents and set maximum royalties in several cases that involve technology standards. Industry groups set technical standards to allow different companies make compatible products.

Broadcasters will switch to digital-only signals Feb. 17, 2009, after which analog TVs without cable, satellite or converter boxes won't work. Through a $1.5 billion coupon program, the government is offering $40 vouchers to help pay for the boxes.

Rembrandt has also sued five cable operators, including Comcast Corp. and Time Warner Cable Inc., and is in litigation with Harris Corp., one of the companies that makes digital transmitters used by the networks to broadcast digital signals. The company has also targeted television-maker Sharp Electronics with a suit.

The royalties Rembrandt is demanding could be passed onto consumers as higher prices for TVs and cable service, Balto said.

Jenni Moyer, a spokeswoman for Comcast, said the patents are "invalid and unenforceable."

Representatives of Fox Broadcasting and ABC declined to comment.

Rembrandt didn't return a phone call or e-mail seeking comment.

The company says on its Web site that it "identifies and acquires patents that hold great market potential" and "pursues and secures revenue from these innovations as established by the U.S. Constitution."

Rembrandt acquired the patent in question in 2004 from Paradyne Corp., a spinoff from AT&T Inc., which developed the technology and obtained the patent in the 1990s.

To its critics, Rembrandt is a "patent troll."

"They make money from litigation, not innovation," Balto said.

Rembrandt filed the suits in 2005 and late 2006. The company said in a 2007 letter that the networks would license its patent for a fee equal to 0.5 percent of all revenues the companies derive from digital broadcasting, the AAI said.

At the core of the AAI's complaint is that Rembrandt reneged on a commitment AT&T made when it owned the patent. AT&T was a member of an industry group that agreed on a digital-television standard in 1995. The FCC then mandated that standard for all digital broadcasters the following year.

AT&T pledged to license its patent to anyone who asked at a "reasonable and nondiscriminatory rate." Rembrandt has said in court filings that it isn't bound by that commitment.

By getting the patent after it became part of a technology standard and then demanding exorbitant fees, Rembrandt is illegally abusing its monopoly, the AAI said.

FTC spokeswoman Nancy Judy said the agency is reviewing the AAI's petition, but declined to elaborate. There is no set period for the FTC to respond.

Rembrandt's lawsuits were consolidated last June in a federal court in Delaware, and could take years to resolve, Wolfram said.