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Patently speaking
The DVD format has grown at a pace exceeding any other consumer electronics format. MPEG-2 Patent Portfolio License played a small, but vital role in the DVD format’s success, says MEGUMI KOMIYA, Feature Editor at DVD-Intelligence.
Launched in 1997, DVD device shipments were already in the tens of millions of units by 2001, with an estimated 65.3 million players, PC and videogame devices shipped that year alone.* By 2007, the total number of DVD playback devices – players, games consoles, PCs – reached a staggering 1.3 billion units worldwide.**
There are many reasons for the DVD format’s meteoric rise, including the MPEG-2 Patent Portfolio License created through the MPEG LA Licensing Model. The MPEG-2 Patent Portfolio License has been important to the success of the DVD format because the MPEG-2 standard is used in the majority of DVD hardware and software, including DVD-Video players, DVD-ROM drives, DVD-based videogame consoles and DVD-Video discs.
In the 1990s the MPEG-2 standard faced a patent thicket – a large number of patents owned by many patent owners. MPEG LA offered an alternative as a solution addressing the market’s need for transactional efficiency.
In 1997, MPEG LA began licensing a worldwide portfolio of patents that are essential for the MPEG-2 international digital video compression standard. MPEG LA’s objective was to provide fair, reasonable, nondiscriminatory, worldwide access to as much MPEG-2 essential intellectual property as possible under a single license known as the MPEG-2 Patent Portfolio License.
The MPEG-2 Patent Portfolio License allowed users of the standard to acquire worldwide license rights in hundreds of essential MPEG-2 patents from many companies in a single transaction, as an alternative to negotiating separate patent licenses with each of the companies participating in the pool.
“The MPEG LA Licensing Model helped the MPEG-2 standard address a patent thicket, with multiple MPEG-2 patents owned by many owners making the single MPEG LA license a very attractive alternative to negotiating multiple individual licenses,” explained Larry Horn, CEO of MPEG LA. “We offer, as a convenience to users, the ability to acquire essential patent rights from multiple patent holders in a single transaction.”
The MPEG-2 Patent Portfolio License is managed by MPEG LA, the Denver, Colorado-based company that is the world leader in alternative technology licenses. MPEG LA is independent; it is not related to any standards agency and is not itself a user or owner of patents under license or an affiliate of a patent owner. The company collects and distributes royalties for the benefit of essential patent owners, and receives an administrative fee out of royalties collected.
Fast forwarding to 2009, the MPEG LA Licensing Model is still enabling users to acquire worldwide patent rights necessary for a technology standard or platform from multiple patent holders in a single transaction. The MPEG-2 Patent Portfolio License currently includes more than 850 MPEG-2 essential patents in 57 countries, has more than 1,500 licensees accounting for most MPEG-2 products including set-top boxes, DVD players, videogame consoles, digital television sets, personal computers and DVD-Video discs in the current world market.
MPEG LA’s MPEG-2 Patent Portfolio License includes essential MPEG-2 patents owned by Alcatel Lucent, British Telecommunications, Canon, CIF Licensing, Columbia University, France Télécom (CNET), Fujitsu, General Instrument, GE Technology Development, Hitachi, KDDI Corporation (KDDI), LG Electronics, Matsushita, Mitsubishi, Nippon Telegraph and Telephone Corporation (NTT), Philips, Robert Bosch, Samsung Electronics, Sanyo Electric, Scientific-Atlanta, Sharp, Sony, Thomson Licensing, Toshiba, and Victor Company of Japan (JVC).
Since launching the MPEG-2 Patent Portfolio License, MPEG LA has added licenses for a number of other standards, including ATSC, VC-1, AVC/H.264, MPEG-4 Visual, MPEG-2 Systems, DVB-T and 1394. It continues to look for new opportunities for its licensing model to help standards grow. For example, MPEG LA is currently in the process of working with owners of patents essential to the Blu-ray Disc format, the next-generation DVD, to create a Blu-ray joint licensing pool.
“We welcome the opportunity to help create a patent pool alternative to direct license negotiations with individual patent owners for the Blu-ray Disc format,” said Bill Geary, Vice President, Business Development at MPEG LA, who is working closely with executives representing companies owning essential Blu-ray patents. Like the MPEG-2 standard, there are many essential Blu-ray patents owned by multiple patent owners.
Creating a joint licensing pool takes both time and effort. Many diverse companies, all with their own business interests, own essential Blu-ray patents and must agree on several key issues.
Current Blu-ray patent owners include: One of the key issues to be determined in establishing a Blu-ray Disc patent pool license is the rate of royalties to be charged for products using essential Blu-ray patents, such as Blu-ray players, computer drives and discs. One of the misconceptions of a joint licensing pool is that all patent holders want to charge as high a royalty rate as possible.
The objective is for the license to reflect both relevant conditions in the marketplace and the value of the licensed technology,” added Horn. “It should strike a balance between patent users’ interest in reasonable access to these advanced optical disc technologies, and patent holders’ interest in a reasonable return on their R&D investment that enables a joint license to be offered for the convenience of the marketplace as an alternative to negotiating separate licenses.” Essentially, MPEG LA creates the opportunity for adoption of new technologies and fuels innovation.
The Blu-ray Disc format has big shoes to fill if it is to mirror the success of the DVD format. MPEG LA believes that a Blu-ray patent pool license would be one critical step in achieving a high level of success.
*Digital Tech Consulting, **Globalcom
Posted: 08.01.2010...
On predicting the future
Predicting the future, let alone the future of packaged media, is a perilous exercise, and possibly counter-productive, as the exercise closes doors rather than keep them open, argues JEAN-LUC RENAUD, DVD Intelligence publisher. Consider that: Apple was left nearly for dead 15 years ago. Today, it became the world's most valuable technology company, topping Microsoft.
Le cinéma est une invention sans avenir (the cinema is an invention without any future) famously claimed the Lumière Brothers some 120 years ago. Well. The cinématographe grew into a big business, even bigger in times of economic crisis when people have little money to spend on any other business.
The advent of radio, then television, was to kill the cinema. With a plethora of digital TV channels, a huge DVD market, a wealth of online delivery options, a massive counterfeit underworld and illegal downloading on a large scale, cinema box office last year broke records!
The telephone was said to have no future when it came about. Today, 5 billion handsets are in use worldwide. People prioritize mobile phones over drinking water in many Third World countries.
No-one predicted the arrival of the iPod only one year before it broke loose in an unsuspecting market. Even fewer predicted it was going to revolutionise the economics of music distribution. Likewise, no-one saw the iPhone coming and even fewer forecast the birth of the developers' industry it ignited. And it changed the concept of mobile phone.
Make no mistake, the iPad will have a profound impact on the publishing world. It will bring new players, and smaller, perhaps more creative content creators.
And who predicted the revival of vinyl?
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