[M4IF Discuss] Re: hourly usage fee for MPEG4

[Craig Birkmaier]

At 5:01 PM -0500 2/24/02, Alexandros Eleftheriadis wrote:
>(As a long-time MPEG-4 co-conspirator of yesteryear, I've been following
>these discussions with great interest!)
>
>Craig, a small correction -- the purpose of patent law (at least in the
>US) is to 1) make the technology public, and 2) protect the rights of
>the inventor for a set number of years so that he can profit from it.
>The first objective ensures that the technology will not be hidden away
>as a trade secret, and will thus help others learn from it and,
>hopefully, even allow them to create something better in the future. The
>second objective ensures that the marketplace interests of the IPR
>holder *are* protected. Any patent lawyer should be able to confirm
>that.

I agree completely with this assessment. I think that I was not as 
clear as I should have been in my statement about patents.
: Patents are supposed to encourage the proliferation of technology.
: They should not be used to restrict access to a technology, or to
: protect the marketplace interests of the IPR holder(s), although this
: has happened frequently in the past century.

We agree about the proliferation issue. When I said restrict access I 
was referring to companies who refuse to license their technology. 
This is clearly not the intent of patent law; but there are numerous 
examples of companies that have done this; e.g. Polaroid.
The term marketplace interests can be applied in many ways. Clearly 
the IPR holder is protected during the patent term by the government 
granted monopoly, which makes it possible to seek compensation in 
return for use of the patented IP. But the IPR holder is NOT 
protected from the ability of a licensee to use the IP to build a 
better product, taking market share away from the IPR holder.
And in my opinion, the grant of a patent does not give the right to 
the IPR holder to seek license terms that are discriminatory to 
derivative products. Unfortunately, it is a very expensive process to 
prove that IP is being used in a discriminatory fashion. The current 
litigation between Echostar and Gemstar, regarding electronic program 
guides, is an interesting example.
For the case that we are discussing - MPEG-4 visual - it might be 
interesting to do a bit of analysis. As most of the patents and 
patent holders for MPEG-2 and MPEG-4 visual are the same, one could 
look at the license terms for each and ask the question, are the 
terms being asked for MPEG-4 visual discriminatory when compared with 
MPEG-2?
Unfortunately we don't have an apples vrs apples comparison. There 
are differences in the essential patent pools, and there are other 
elements of MPEG-2 that are included in that patent pool, like the IP 
related to MPEG-2 transport. It would clearly be a very expensive and 
time consuming process to challenge the proposed MPEG-4 visual 
license using such an argument.
Nevertheless, it seems clear that the usage fee is viewed as an 
attempt to expand the reach of the patents involved to an entirely 
new realm..."a tax on content."
>The MPEG picture is different from individual inventions though. MPEG
>essentially bestows value to a particular technology by adoption into
>the standard, in return for fair and non-discriminatory licensing.
>However, the value is bestowed *before* the terms of the licensing are
>established. That leaves the license holders free to come up with
>whatever they thing is fair and non-discriminatory. (This, btw, includes
>things that can kill the standard in favor of other IPR.)
>
>MPEG-2 IPR generates a lot of revenue and may have made people believe
>that this is easily repeatable. Not only that: the licensing terms
>appear to be inspired by pre-2000 revenue sharing dreams rather than
>market realities...

Well put!
>
>The JVT effort is commendable and a very interesting experiment. In the
>absense of that, in the future the business terms should maybe be
>established alongside the technology. That may ensure that 'realistic'
>becomes part of 'fair' and 'non-discriminatory' :-)

Let us hope that the experiment proves to be a step in the direction 
of emerging realities.
-- 
Regards
Craig Birkmaier
Pcube Labs