[opendtv] News: Dozen claim MS codec patents

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Tue, 25 Jan 2005 10:00:29 -0500

Dozen claim MS codec patents

http://forms.theregister.co.uk/mail_author/?story_url=3D/2005/01/24/ms_codec=
_patents/

=46aultline
Published Monday 24th January 2005 14:11 GMT

The MPEG LA has had 12 separate companies=20
claiming that they have essential patents in the=20
pool it is developing for the licensing of=20
Microsoft=92s video codec, dubbed VC 1 under the=20
SMPTE standard (Society of Motion Picture and=20
Television Engineers).

The fact that 12 separate companies, possibly=20
more, will decide the fate of the technology has=20
implications for if and how much Microsoft must=20
charge for the codec.

Larry Horn, spokesman for the MPEG LA said to=20
=46aultline: "When MPEG 2 was created we only had 8=20
companies in the pool for essential patents, now=20
we have 24. Some companies hadn't been issued=20
with their patents at the time, some sat on the=20
side lines perhaps thinking they would handle=20
licensing themselves, but usually we end up with=20
more companies providing the technology, rather=20
than less." So, the 12 that are claiming=20
essential patents for VC 1 is likely to rise, not=20
go down.

The MPEG LA cannot discuss the individual=20
companies involved until they have reached=20
agreement on royalty terms for the collective=20
license to operate under, but we can probably=20
make some educated guesses, and we have assumed=20
that there is some overlap between the ideas=20
behind a codec like VC 1 and behind the other=20
standard codecs put together by the MPEG=20
standards organization

If that is so then operations such as the=20
industrial offshoot of Columbia University,=20
=46rance T=E9l=E9com, Fujitsu, Matsushita, Philips,=20
Robert Bosch, Samsung, Sharp, Sony, Toshiba, and=20
Victor Company of Japan, which all have patents=20
in both of these prior MPEG video codecs, might=20
well appear on the list, which makes 11 plus, of=20
course, Microsoft. But that=92s only guesswork.

What is interesting is that whatever the terms of=20
the license, if Microsoft takes such a license=20
for its use of VC1 in Windows Media 9 and 10, it=20
too will have to pay royalties, even if it gets=20
some back in return. "In a way the VC 9 codec=20
that Microsoft uses will just be a particular=20
implementation of the VC 1 standard. Other=20
companies will be able to license the technology=20
and make their own versions," pointed out Horn.

The license never instructs companies on how they=20
must build their product, only on what=20
technologies they may use and how interfaces must=20
perform.

Lion's share

But Horn also explained that the group, once they=20
have all agreed that their intellectual property=20
is vital to the standard, will need to negotiate=20
to see who gets the lion=92s share of the royalty=20
stream, and set rules for licensing.

The MPEG LA only takes non-exclusive licenses,=20
and each of the patent holders are free to=20
license each other under different terms, but=20
each transaction must then be carried out=20
separately. But Microsoft cannot put the genie=20
back in the bottle.

Now these 11 can see that their intellectual=20
property is being used, they can charge for it.

So if Microsoft wants to continue to give away=20
its codec within WM10, it may find itself having=20
to pay for each copy it distributes. The only way=20
around this is either to set an upper limit on=20
the license, as was done in MPEG 4 Level 10 AVC=20
(H.264) or not take a license to the technology=20
through MPEG LA, and negotiate each one=20
separately.

Since Microsoft has never acknowledged any other=20
technology suppliers in its literature on VC 9,=20
it is unlikely that it is currently paying=20
royalties on its current distribution. But it=20
will need to. MPEG 2 for instance has a flat rate=20
royalty of $2.50 on each copy, while MPEG 4/H.264=20
is free up to 100,000 units, then costs 20 cents=20
per unit, falling to 10 cents a unit, capped at=20
$3.5m per year, rising with inflation.

An MPEG 2 style license would not suit Microsoft,=20
while an MPEG 4/H.264 license would be of minimal=20
cost.

But that doesn't mean that the other 11 companies=20
will feel obliged to give Microsoft what it=20
wants, and they are sure to be bristling at the=20
thought that their Intellectual Property has been=20
"given away" by Microsoft for years now without=20
them realizing it.

Once the royalty terms are set, revenue is=20
allocated 50 per cent where a unit is made and 50=20
per cent where a unit is sold, against the=20
patents that each patent holder has in each=20
territory. If other patent holders join the pool=20
later, MPEG LA leaves the license at the same=20
level and just shares the payments over greater=20
number of licensees.

So not only could Microsoft find itself with only=20
a small part of the license fees, but this could=20
be further diluted if other companies join the=20
patent pool later.

Last week MPEG LA announced its licensing for the=20
patents included in the digital rights management=20
pool for the Open Mobile Alliance's DRM 1.0=20
standard. While Horn said he thought that=20
=46aultline's suggestion that some operators had=20
expected it to be royalty free, was not one he=20
had heard, he did confirm that a few voices had=20
been raised suggesting that it was an expensive=20
set of royalties.

=46aultline calculated that the royalty for OMA's=20
DRM would eventually amount to $1bn, which was=20
certainly unanticipated by mobile operators.

"But then again," Horn concluded, "we always hear=20
that our licenses are expensive, so we=92re used to=20
that."

Copyright =A9 2004,=20
<http://www.rethinkresearch.biz/about.asp?crypt=3D%B3%9C%C2%97%8B%80>Faultli=
ne

=46aultline is published by Rethink Research, a=20
London-based publishing and consulting firm. This=20
weekly newsletter is an assessment of the impact=20
of the week's events in the world of digital=20
media. Faultline is where media meets technology.=20
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