[M4IF Discuss] MPEG-LA, On2 and the DoJ

[Marc Tayer]

As a (former) active participant in the MPEG-2 standardization process, as
well as in the effort to form the MPEG-2 IPR group (which led to MPEG-LA) I
can assure you that in that process, every attempt was made to structure the
licensing in a way that would not run afoul of antitrust laws, inside and
outside the U.S. Close coordination occurrred every step of the way with the
relative governmental entities, such as the antitrust division of the U.S.
Justice Dept. In that case, the feedback was generally positive, in that the
MPEG-2 patent pool was viewed as pro-competitive, fair and reasonable, and
as a good and even necessary way of resolving a very difficult problem,
i.e., an "open" standard containing many essential patents owned by multiple
companies. Imagine if MPEG-LA didn't exist for MPEG-2:  companies practicing
the MPEG-2 standard (companies making encoders, DVDs, DVD players, digital
set-tops, etc.) would have been forced to go to over a dozen companies and
negotiate an individual license with each company. The aggregate royalty
would have almost certainly been much higher than the MPEG-LA royalty,
causing a major impediment to market growth.
Of course every situation is somewhat unique, and the use fee proposal is
certainly a twist, but I assume MPEG-LA is proactively coordinating with
lawyers and with the gov't powers that be, just as we did with MPEG-2. My
guess is the use fee notion will be more of an issue with media companies
than with legal authorities, although the devil is in the details and time
will tell.
Ultimately I'm confident MPEG-4 will prevail. There is too much interest for
(nearly) all interested parties for it not to succeed. And of course there
will be spoilers along the way with transparent and vested interests.
-----Original Message-----
From: Craig Birkmaier [mailto:craig   pcube.com]
Sent: Friday, March 15, 2024 5:27 AM
To: Bernhard Grill; Robert Saint John
Cc: M4IF Discussion List (E-mail)
Subject: Re: [M4IF Discuss] MPEG-LA, On2 and the DoJ
At 6:06 AM +0100 3/15/02, Bernhard Grill wrote:
>Robert Saint John wrote:
>>Well, this is just getting downright silly. As if the issues at hand
weren't
>>complicated enough, On2 has decided to try to disrupt the entire MPEG
effort
>>by calling in our (United States) beloved DoJ....
>
>I'd call it an interesting PR gag. On2 and other companies are using 
>the current MPEG-4 licensing discussion to gain publicity for their 
>propriatory products.
>Rob's answers are quite correct. Let's hope the professionals in 
>this business don't get distracted and recognize it for what this 
>really is.

On the surface, I tend to agree with Rob and others, that ON2 is 
using this as an opportunity to score some PR points. There is, 
however, another way to look at this. This could be an attempt to see 
who comes out of the woodwork to support the position that the 
companies who control the IPR in MPEG-2 and MPEG-4 have colluded to 
control the markets for digital video compression, and acted as an 
illegal trust, under the veil of the MPEG standardization process.
Clearly, these 18 companies could not have collaborated to control 
the migration of video from analog to digital under U.S. Law, without 
the mantle of credibility that ISO and MPEG bring to the table. It is 
less clear whether the kinds of consumer electronics "industrial 
policy" we have seen in Japan and Europe are illegal, or in fact 
government sanctioned competitive advantage.
What is clear is that the MPEG process was used to entrench a great 
deal of NEW IP related to the coding of digital video. The fact that 
MPEG-2 has been a marketplace success probably has more to do with 
the fact that the "CE trust" already controlled virtually every 
aspect of video acquisition, processing and consumer premises 
equipment. The fact that these companies worked together in MPEG to 
control the emerging field of digital video coding is neither 
surprising, nor is it illegal.
But the use of the IPR that dominates MPEG-2 and MPEG-4 visual to 
control the future evolution of the  markets for video distribution 
is quite another matter.  Frankly, I think that ON2 may find some 
traction with their letter to the DOJ, especially if others step 
forward to question the tactics of MPEG-LA.
Washington loves to get in the middle of these kinds of problems...it 
is highly profitable for the politicians, as we are seeing right now 
with the debate about a government mandate for a copy protection 
system in virtually every digital media appliance.
It is not difficult to draw the lines between MPEG-LA's attempt to 
tax the distribution of content, and all of the other power grabs 
that are taking place as we migrate to a new digital distribution 
infrastructure. Everyone wants to gain perfect control over the flow 
of bits, so that they can create perpetual cash flows from their 
copyrights and patents.
But this view of the future is being challenged by the Open Standards 
community that has grown in prominence thanks to the Personal 
Computer and Internet revolutions. This cannot be ignored, as the 
debate has now moved full square into the MPEG process as evidenced 
by the discussions about royalty free implementations of 26L and 
other MPEG development efforts.
Sebastian Moeritz wrote:
>Well -- let's put it this way, I would not interpret too much into all
these
>third-party efforts that are made up to disrupt MPEG-4 etc. They will not
>succeed anyway. Plus, please do not forget -- it seems that it is the "non
>MPEG-4" community that always causes "trouble", not the other way around. I
>wonder why ...

I find this position to be rather out of touch. I do not view the 
world outside of MPEG as a bunch of trouble makers. Instead, I see 
entrepreneurs who are taking up a very different approach to the 
evolution of technology. An approach that is much more horizontal, 
closer to both the consumers and the producers of new ideas. An 
approach that has proven that vast wealth can be created by managing 
the evolution of open standards, rather than controlling the 
evolution of industries via captive standards organizations that act 
to protect entrenched legacies.
Strong words, but I believe they are accurate. I am preparing to go 
to Las Vegas to view the slow death of the video industry. An 
industry that is being strangled to death by the desire of entrenched 
interests to maintain control of a lucrative franchise. An industry 
that is suffering from a self-imposed depression, because the ability 
to innovate is being thwarted.
ON2 may be trying to spin the MPEG-4 situation to gain some free PR, 
but the issues they are raising do resonate with the larger issues we 
face in trying to migrate to a new digital media infrastructure.
Sebastian expresses an optimistic view:
>Let's face it --  the licensing issues will be resolved and a mutually
>acceptable solution will be found, because it is the interest and desire of
>all concerned. Period.

But I do not share the optimism.
Clearly those who have invested heavily in MPEG-4 believe that their 
work deserves the opportunity to flourish in the marketplace. It is 
equally clear to me that the companies that control the key IPR in 
MPEG-2 and MPEG-4 have a different set of interests. They have 
successfully used the MPEG-2 process to protect a valuable television 
franchise. And they seek to profit from and control new forms of 
digital media that may eventually diminish the value of that 
franchise.
I do believe that some of these companies want MPEG-4 to succeed, but 
only so that they can tax the flow of content via ALL digital 
networks. I do not expect them to make the investments in MPEG-4 that 
will be required for it to succeed; they believe they have the power 
(and the IP) to impose their vision of the future.
-- 
Regards
Craig Birkmaier
Pcube Labs
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