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 Subscription details=20 <http://www.rethinkresearch.biz/subscribe.asp>here. ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways: - Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org - By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word unsubscribe in the subject line.