[MPEGIF Discuss] MPEG LA Announces Terms of Joint H.264/MPEG-4 AVC Patent License

Tue Nov 18 10:09:27 EST 2003

Discuss list,
The release below was issued yesterday. 
As I have stated before, it is positive that apparently the need for rapid
availability of these terms is being understood, and that the licensors seem
to have recognized a number of concerns that have been raised in the context
of the MPEG-4 part 2 license.
As in the past, we need to understand the exact consequences. MPEGIF
welcomes discussions on this list on the terms as the have been released by
the two licensing agents working on a joint AVC license. A summary of
relevant news links can be found here:  <http://www.m4if.org/patents/>
http://www.m4if.org/patents/ 
We are also seeking to host a phone Q&A session with the licensing agents in
the near future, for MPEGIF members.
Kind Regards,
Rob Koenen
President, MPEGIF
______________________________________
NEWS RELEASE 
For Immediate Release
CONTACT:
Lawrence Horn
MPEG LA, LLC
301.986.6660
301.986.8575 Fax
lhorn mpegla.com
MPEG LA Announces Terms of Joint H.264/MPEG-4 AVC Patent License
(Denver, Colorado, USA - 17 November 2023)  MPEG LA today announced that
essential H.264/MPEG-4 AVC patent and patent application holders have
reached agreement on the terms of a joint patent license for implementation
and use of ITU-T H.264 and MPEG-4 Part 10 AVC (“AVC Standard”). 
“For essential intellectual property holders of such wide diversity to agree
on the terms of a joint license in just a matter of months is a remarkable
achievement, giving testimony to their support for the AVC standard and
their desire to make this promising new technology widely available to the
market in the fastest time possible,” said MPEG LA CEO Baryn S. Futa.  “MPEG
LA congratulates each of them for their extraordinary diligence and
cooperation, despite differences, in coming together for the benefit of the
marketplace.  We also thank potential users across all market sectors for
their forthrightness in sharing with us their concern for licensing terms
that are simple, reasonable and easy to administer.  This helped immensely
in the group’s efforts to make the license terms responsive to marketplace
needs.”
Following is a brief summary of the licensing terms, which are yet to be
incorporated into definitive license agreements and therefore, provided for
information purposes only.  These terms cover the entire AVC Standard
regardless of which Profile(s) are used:
Decoder-Encoder Royalties
*	Royalties to be paid by end product manufacturers for an encoder, a
decoder or both (“unit”) begin at US $0.20 per unit after the first 100,000
units each year.  There are no royalties on the first 100,000 units each
year.  Above 5 million units per year, the royalty is US $0.10 per unit.  
*	The maximum royalty for these rights payable by an Enterprise
(company and greater than 50% owned subsidiaries) is $3.5 million per year
in 2005-2006, $4.25 million per year in 2007-08 and $5 million per year in
2009-10.  
*	In addition, in recognition of existing distribution channels, under
certain circumstances an Enterprise selling decoders or encoders both (i) as
end products under its own brand name to end users for use in personal
computers and (ii) for incorporation under its brand name into personal
computers sold to end users by other licensees, also may pay royalties on
behalf of the other licensees for the decoder and encoder products
incorporated in (ii) limited to $10.5 million per year in 2005-2006, $11
million per year in 2007-2008 and $11.5 million per year in 2009-2010.
*	The initial term of the license is through December 31, 2010.  To
encourage early market adoption and start-up, the License will provide a
grace period in which no royalties will be payable on decoders and encoders
sold before January 1, 2005. 
Participation Fees
*	Title-by-Title – For AVC video (either on physical media or ordered
and paid for on title-by-title basis, e.g., PPV, VOD, or digital download,
where viewer determines titles to be viewed or number of viewable titles are
otherwise limited), there are no royalties up to 12 minutes in length.  For
AVC video greater than 12 minutes in length, royalties are the lower of (a)
2% of the price paid to the licensee from licensee’s first arms length sale
or (b) $0.02 per title.  Categories of licensees include (i) replicators of
physical media, and (ii) service/content providers (e.g., cable, satellite,
video DSL, internet and mobile) of VOD, PPV and electronic downloads to end
users. 
*	Subscription – For AVC video provided on a subscription basis (not
ordered title-by-title), no royalties are payable by a system (satellite,
internet, local mobile or local cable franchise) consisting of 100,000 or
fewer subscribers in a year.  For systems with greater than 100,000 AVC
video subscribers, the annual participation fee is $25,000 per year up to
250,000 subscribers, $50,000 per year for greater than 250,000 AVC video
subscribers up to 500,000 subscribers, $75,000 per year for greater than
500,000 AVC video subscribers up to 1,000,000 subscribers, and $100,000 per
year for greater than 1,000,000 AVC video subscribers.
*	Over-the-air free broadcast – There are no royalties for
over-the-air free broadcast AVC video to markets of 100,000 or fewer
households.  For over-the-air free broadcast AVC video to markets of greater
than 100,000 households, royalties are $10,000 per year per local market
service (by a transmitter or transmitter simultaneously with repeaters,
e.g., multiple transmitters serving one station).
*	Internet broadcast (non-subscription, not title-by-title) – Since
this market is still developing, no royalties will be payable for internet
broadcast services (non-subscription, not title-by-title) during the initial
term of the license (which runs through December 31, 2023) and then shall
not exceed the over-the-air free broadcast TV encoding fee during the
renewal term.
*	The maximum royalty for Participation rights payable by an
Enterprise (company and greater than 50% owned subsidiaries) is $3.5 million
per year in 2006-2007, $4.25 million in 2008-09 and $5 million in 2010.  
*	As noted above, the initial term of the license is through December
31, 2010.  To encourage early marketplace adoption and start-up, the License
will provide for a grace period in which no Participation Fees will be
payable for products or services sold before January 1, 2006. 
Owners of patents or patent applications determined by MPEG LA’s patent
experts to be essential to the AVC Standard and who have cooperated in the
above terms include Columbia University, Electronics and Telecommunications
Research Institute of Korea (ETRI), France Télécom, Fujitsu, LG Electronics,
Matsushita, Mitsubishi, Microsoft, Motorola, Nokia, Philips, Robert Bosch
GmbH, Samsung, Sharp, Sony, Toshiba, and Victor Company of Japan (JVC).
MPEG LA continues to welcome the submission of patents and patent
applications for an evaluation of their essentiality to the AVC Standard in
order to include as much essential intellectual property as possible under
one license for the benefit of the marketplace (only issued patents will be
included in the License).  For each patent or patent application submitted,
an evaluation fee of US $8,500.00 to cover the outside cost of the patent
expert’s evaluation is paid to MPEG LA.  Additional fees may be required to
cover additional outside costs in the event of reevaluation by patent
experts.  Submitting parties must confirm their agreement with the terms and
procedures governing the patent submission process which may be obtained
from Jane Tannenbaum, Director, Contract Administration
(jtannenbaum mpegla.com).
#   #   #
MPEG LA, LLC
MPEG LA successfully pioneered one-stop technology standards licensing with
a portfolio of essential patents for the international digital video
compression standard known as MPEG-2.  One-stop technology standards
licensing enables widespread technological implementation, interoperability
and use of fundamental broad-based technologies covered by many patents
owned by many patent holders. MPEG LA provides users with fair, reasonable,
nondiscriminatory access to these essential patents on a worldwide basis
under a single license.  MPEG LA is an independent licensing administrator;
it is not a patent holder and is not related to any standards agency.  In
addition to MPEG-2, MPEG LA licenses portfolios of essential patents for the
IEEE 1394 Standard, the DVB-T Standard, the MPEG-4 Visual Standard and the
MPEG-4 Systems Standard.  MPEG LA also has initiated a license for digital
rights management (DRM) technologies as described in DRM Reference Model
v1.0.  For more information, please refer to http://www.mpegla.com
<http://www.mpegla.com/> , http://www.1394la.com <http://www.1394la.com/>
and http://www.dvbla.com <http://www.dvbla.com/> .
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