If you responded to Apple’s criticism of MPEG-4 licensing fees for content owners, you may have gotten a response like this one from Larry Horn, VP, Licensing, MPEG-4 Licensing group. Thankfully, MPEG-LA put together a thoughtful response, and this information is interesting: if your content is free, you are not subject to license fees as a content provider. MPEG-LA also stresses that the licensing terms were just announced Jan. 31, and that the parties involved may change those terms — though the process of discussion could take months. Click read more for the full letter from MPEG-LA.
Thank you for your thoughtful note regarding the reported MPEG-4 Visuallicensing terms. We appreciate you taking the time to share your viewswith us and your interest in using the MPEG-4 Visual Standard. As youmight imagine, not all of the messages we received have been sothoughtful :-). I know this email may sound like a canned response, butsince you took the time to write to us and others who wrote us raisedsimilar concerns, we wanted to get back to you (and the others) toexplain the situation. We understand that you have strong feelingsabout the MPEG-4 Visual licensing terms based on what you’ve heard, andwe welcome your feedback. The license agreement is still in the processof being worked out, your views are important to us, and they will betaken into consideration. Similarly, I hope you will allow us thisopportunity to clarify a few things that may have been misunderstood andto explain where this goes from here.
First, we would like to clarify the role of MPEG LA. MPEG LA’s businessis to make it possible for new technologies (like MPEG-4 Video) to enterthe marketplace by making the essential intellectual property rightsowned by many patent owners accessible to everyone on fair, reasonable,nondiscriminatory terms under a single license. If there were no MPEGLA, the essential patent rights that made the MPEG-4 Visual technologypossible would still have to be dealt with, but instead of having theopportunity to deal with one company for a single license that includesthose rights, users’ only option would be to deal with each patentholder individually. With MPEG LA, the marketplace is assured of readyaccess to MPEG-4 Visual essential patents owned by 18 differentcompanies (soon there will be more, but our goal is to include as manyessential patents as possible in one license; therefore, royalty rateswill not increase during the term of the agreement even as new patentowners and more patents are included). What you’ve seen is the firststep in that process.
We understand that the success of a licensing program relies on thesuccess of the underlying technology. Therefore, our goal, like yours,is to promote the widest possible use of the MPEG-4 Visual standard, andwe are sensitive to the need to structure a reasonable license that isconsistent with marketplace conditions. To that end, we continue towork with the patent owners to assure that the license is responsive.Everything is in a state of constant review. If something isn’t right,every effort is made to fix it. Because of MPEG LA’s role, you have theopportunity to discuss your concerns with us, and we in turn cancommunicate them to the patent owners. We note that there are manydifferent views to be considered, however, and that ultimately themarketplace will decide. We note also that there may be many reasons(having nothing to do with licensing terms) why someone may delay aproduct introduction or choose among competing alternatives. And, itwould be a mistake to assume that any alternative is or will be free ofpatent licensing obligations or without additional charges of its own.Finally, we understand that you do not agree with the implementation ofa use fee. Given the nature of MPEG-4 Visual technology and theimportance of encouraging the wide availability of MPEG-4 Visualdecoders and encoders in the market, the patent owners’ intention wasthat reasonable royalties should be shared among industry participantsacross the entire product chain and applies equally to both wired andwireless services (especially as the ability to distinguish between themdisappears). The philosophy underlying the use fee was intended to beconsistent with the expected flow of MPEG-4 video transactions so thatthose who can pay will and those who can’t aren’t expected to: thus, theuse royalties to be paid by service providers are tied to remuneration -if service providers or content providers are paid for offering orproviding MPEG-4 video, then patent holders are paid for the use oftheir patents; if service providers or content providers are not paidfor offering or providing MPEG-4 video, then patent owners are not paidfor the use of their patents. The entire license including the use fee,its application to broadcast/cablecast/multichannel environments, etc.,is under study and will be the subject of further discussion.This is just the beginning. The licensing terms were just announced onJanuary 31, and the details of the MPEG-4 Visual license agreement arestill being worked out. Because of the challenge posed by the effort toproduce a joint licensing program requiring a consensus among at least18 different patent owners and the yet undetermined futureimplementations and applications of the emerging MPEG-4 Visualtechnology, this may take several months to complete. There will bemuch discussion before all of this is sorted out, and changes may beexpected. Again, we appreciate your contribution to this process andwill keep you informed.
Sincerely,
Larry Horn
Vice President, Licensing