Thursday, November 20, 2003
MPEG group discloses joint licensing terms for H.264
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To the relief of many in the H.264 community, the licensing group
representing MPEG-4 patent holders earlier this week announced
that H.264 patent holders have agreed on terms for joint
licensing of the advanced video codec technology.
Previous failures by patent-holders to agree on an H.264
licensing structure had recently forced some companies to either
cancel or delay indefinitely their H.264-related projects.
Uncertainty about the licensing structure created an opening for
Microsoft Corp., which is pitching its proprietary video codec as
an industry standard. Microsoft promoted its technology as an
option for a video code of choice for Internet streaming,
broadcasting and next-generation consumer products such as
Peter Besen, president and CEO of Sand Video Inc., a fabless chip
company based in Andover, Mass., said the announcement by the
MPEG LA, an independent licensing agency representing MPEG-4
patent holders, would end many of the uncertainties surrounding
Some warn, however, that potential license complications have
only begun. MPEG LA's announcement may mean vendors would need to
deal with two separate licensing agencies — Via Licensing and
MPEG LA. Each is armed with a different set of licensing terms
and patent holders. Via Licensing is a spin-off of Dolby
Laboratories, founded earlier this year as an independent H.264
licensing agency to compete with MPEG LA.
The biggest difference between the two is that MPEG LA, besides
traditional decoder-encoder royalties, charges so-called
“participation fees” for using H.264 for subscription-based
services, over-the-air free broadcast and duplicating content on
a title-by-title basis.
Beyond decoder-encoder royalties, Via Licensing only requires
“replication fees” for content to be sold on a title-by-title
basis, whether it is distributed on physical media or through
Different groups of companies are participating in the two
licensing groups. The list of patent owners or applicants deemed
by MPEG LA to be essential to the H.264 spec and others include
Columbia University, Electronics and Telecommunications Research
Institute of Korea, France T?l?com, Fujitsu, LG Electronics,
Matsushita, Mitsubishi, Microsoft, Motorola, Nokia, Philips,
Robert Bosch GmbH, Samsung, Sharp, Sony, Toshiba and JVC.
The Via team includes Apple Computer, Dolby Laboratories,
FastVDO, Fraunhofer-Gessellshaft, IBM, LSI Logic, Microsoft,
Motorola, Polycom and Real Networks.
Thus far, Microsoft and Motorola are the only companies
participating in both MPEG LA and Via, with two separate
licensing schemes — a situation that many believe is sure to
confuse potential licensees and members alike.
Larry Horn, vice president of licensing and business development
at MPEG LA, said the group is not finished with its H.264 work.
He said the licensing terms are yet to be incorporated into
definitive licensing agreements. “This is still something that
the marketplace has to sort out.”
Ron Moore, head of licensing business development for Via
Licensing, acknowledged that a “two-stop shop” rather than
single-source licensing is possible “if the market finds both
sets of terms acceptable.”
Still, one-stop licensing remains possible. “If the market
rejects the terms of one of the programs, and makes that position
known early enough, reasonable licensors may well sign up with
the market-acceptable program, regardless of the group they have
been meeting with. Therefore, only one program will have
sufficient licensor support to offer licenses in the market,"
Besen said many in the industry regard MPEG LA as an authority on
H.264 IP rights. Further, several IP holders including IBM,
originally allied with Via are reportedly poised to jump ship.
Said Besen, “MPEG LA's announcement will put an end to Via.”
Via's Moore disagreed, stressing that “Until licensing begins,
nothing has been finally decided. We feel that we have a program
that is much more acceptable to both the vast majority of
licensors and the market.”
MPEG LA's Horn said no royalties will be charged for Internet
broadcasting since “this market is still developing.” That
provision will last until December 2010, when initial licensing
terms expire. “We think we've come up with a reasonable,
affordable and easy-to-swallow licensing program,” said Horn.
Japanese TV stations are poised to begin mobile TV services
tailored to mobile handsets as a part of the terrestrial digital
TV broadcast scheduled to start next month in Japan. Under the
proposed MPEG LA program, terrestrial mobile TV service provider
will be required to pay royalties based on licensing terms
specified as “over-the-air free broadcast participation fees.”
Now that terms from both licensing agencies are public,
negotiations among patent holders and licensees are likely to
start. “We will continue to meet with the companies attending our
program,” Moore said. “Via remains on schedule,” with a plan to
complete its patent license agreement by early 2004.