What is behind Atomos announcement from yesterday regarding the new partnership with RED? At first glance, it looks like the dawn of a new era of innovation from two great companies. However, diving deeper into the details reveals another picture. Has Atomos backed into a corner? Read below.

Atomos and RED announced a new partnership with the title: “Atomos and RED are pleased to announce a royalty-based license agreement”

RED & Atomos: partnership

We all know that these two companies work together for several years. RED owns their legendary codec, and Atomos specializes in their fabulous recorders. Recently Atomos announced a breakthrough of recording the new ProRes RAW codec straight from Nikon Z6 and Z7 via Ninja V Recorder.

While the two companies have for many years worked together, this next phase of the relationship will be one to watch out for

As stated in Atomos’ press release from yesterday: ”In the process of negotiating Atomos’ license to use RED’s intellectual property, the companies recognized that there is a significant opportunity for them to enhance the integration of their product lines to produce what they both expect to be trail-blazing new camera recording systems. While the two companies have for many years worked together, this next phase of the relationship will be one to watch out for.”

The filmmaking community was excited about a new era of innovation and high hopes that Atomos will allow REDCODE RAW recording, thanks to this new partnership.

The other option was getting into court with RED, due to Atomos infringement of four RED’s patents

However, digging deeper into the details, reveal that this partnership was the preferred option. The other option was getting into court with RED, due to infringement of four RED’s patents by Atomos.

RED & Atomos: Legal issues

At the end of 2018, Atomos went public on the Australian Securities Exchange and thus revealed its financial and legal data.

Studio daily reported that documents warn of patent disputes with RED. The company’s IPO prospectus revealed that RED has alleged that some Atomos products infringe four Red patents related to recording and playback of video codecs. Atomos said it has so far declined to license the patents, meaning the dispute could end up in court if the camera company decides to sue.

RED has alleged that some Atomos products infringe four RED patents related to recording and playback of video codecs. Atomos said it has so far declined to license the patents

As stated in the Atomos IPO prospectus: “Potential Dispute with RED: RED.com LLC (“RED”) has alleged that the recording and/or playback of two of five video codec standards currently implemented by certain Company products infringe four RED patents. RED has offered the Company a license to rights under those patents with respect to the implementation. The Company denies RED’s allegations and the parties have engaged in discussions to attempt to resolve the matter including in respect of the proposed license. If the parties are unable to resolve the matter, RED may initiate litigation against the Company in an effort to enforce its patent rights. Patent claims or litigation against the Company, regardless of their merits, could, amongst other things, be time-consuming and expensive to defend, force the Company to remove the prospective format from certain products, delay shipments of Company products and require the Company to pay damages or settlement fees.

RED may initiate litigation against Atomos in an effort to enforce its patent rights….that could be time-consuming and expensive to defend, force Atomos to remove the prospective format from certain products, delay shipments of Company products

This quote speaks for itself. The most logic option (and might be the only option) for Atomos was to agree to this royalty-based license agreement.

Final thoughts

Although the two companies will work together, do not count on getting REDCODE RAW from Atomos recorders. This is just an agreement Atomos had to sign. Otherwise, Atomos’ core products and business model would have been diminished by RED’s legal proceedings.