Last year's Christmas present from AT&T was a letter to numerous companies asserting its MPEG patent rights - Apple Computer, CyberLink, DivX, InterVideo, and Sonic Solutions were among the recipients, as were national retailers who distribute products from the foregoing producers. Several companies, including Apple, said "huh?" when asked about receiving the letter.

"AT&T has intellectual property in the MPEG-4 area and are actively discussing licensing terms with a number of organizations," mouthed AT&T spokesperson Jason Hillary, who said Pentax and Nero have signed licensing agreements already.

The MPEG Licensing Association (MPEG LA) oversees a patent pool for MPEG, but AT&T is not affiliated. Larry Horn, responsible for the MPEG LA program, didn't know AT&T was holding cards in the game. Shrugging off accountability, Horn snuffled, "We, as a company, don't make any assurances that all essential patents are included." Capitalism 101 - caveat emptor.

The current MPEG hustle is just one of a stream related to imaging formats. Years ago, Unisys had a patent on GIF, which led to the development of PNG, a comparable format without a patent price tag attached. Most recently, Forgent Networks has turned JPEG, the still-image predecessor of MPEG, into a patent piggy bank.

Having lost its shirt through decades of mismanagement, AT&T is now tapping its patent reserves to maintain cash flow. "What we're doing is pretty common among intellectual property holders," Hillary explained. Indeed.