DVD Pioneers Consider Warner Suit

The inventors of the world's first combined compact disc and DVD are considering legal action against Warner Music, one of the largest record groups, amid allegations of breach of contract and patent abuse.

The Dierks Group, the privately-owned German music and technology group that pioneered the double-sided CD and DVD, has warned Warner that it has patents and contract rights over combined music and video discs after the US group signalled plans to manufacture so-called dual discs.

Warner Music, a subsidiary of Time Warner, is planning to launch dual discs in the US next year in a potential tie-up with Sony Music, part of the Japanese consumer electronics and entertainment giant.

The company, which is exploring a potential merger with EMI of the UK, regards combined CDs and DVDs as a new format to help reverse sliding music sales and offset losses to internet piracy.

But Dieter Dierks, a veteran music producer and chairman of the Dierks Group, claims the project could be illegal.

The German entrepreneur, who patented the combined disc technology under the name DVD Plus, has written to Warner Music claiming it has licenses over production of such discs and royalty agreements that promise a share of future profits arising from sales by the US group.

In April 2000, Warner Music sold rights over its own dual disc technology to Mr Dierks in a deal allowing the US company to manufacture the discs if the technology was perfected, as long as it used the DVD Plus logo.

Warner Music officials said that it was determined to press ahead with production of its dual discs in spite of the agreement with Mr Dierks.

"There are no patents in the US," according to one person familiar with the situation. "As far as we can tell, the agreement doesn't obligate us other than putting the DVD Plus logo somewhere on the package, and the only royalty issue is in Germany."

Phil Carson, the record executive behind Twisted Sister and a business partner of Mr Dierks, accused Warner Music of breaching its agreements and contracts relating to DVD Plus.

"We now find ourselves in a position where our work and investment has been hijacked," he said. "It took a lot of blood, sweat and tears to make this format work, and now it may go for nothing."

DVD Plus International, which has already sold more than 2m units of its combined CD-DVDs, last week held meetings with Universal Music, the world's largest record group, to seek support for its stance.