MPEG LA License Agreement..............
They'll overnight you a copy -- check their website.
MPEG-2 PATENT
PORTFOLIO LICENSE
PRESENTATION
by
Baryn Futa
July 8, 1997
Mr. Nakamura and Dr. Rubenstein have
given you an excellent history of our effort.
Now, I will present the specifics regarding
the MPEG-2 Patent Portfolio License that
we begin to offer to any interested
companies today.
Important Terms and Conditions
These are: (1) the licensing term, (2) the
product categories, examples and royalty
fees, (3) the nature or scope of the
licensing coverage and (4) other important
provisions of the license.
Licensing Term
The actual term of coverage is from June
1, 1994 to January 1, 2000. This is
because MPEG-2 products began to
enter the marketplace in June 1994. We
must begin the license term in June 1994 in
order provide coverage to all licensees for
all of their MPEG-2 products.
The license is renewable for a second five
years and the royalty rate is protected. By
that I mean that the royalties of all
MPEG-2 products cannot increase by
more than 25% for the second five year
renewal term. We choose a five year term
in order to provide an acceptable length of
time to assure licensees of proper
coverage; but not too long that the license
cannot be adjusted if necessary to reflect
the changing environment of the
marketplace. Since this is a new
technology it is very difficult to anticipate
the future movement of the marketplace.
Product Categories and Examples and
Royalty Fees
There are six basic product categories and
associated royalty amounts. The six
categories are: (1) MPEG-2 decoding
products, software and decoding
software, (2) MPEG-2 encoding
products, software and encoding
software, (3) consumer products, that are
products for the consumer that both
encode and decode MPEG-2 bitstreams,
(4) packaged media, (5) transport or
program stream products and (6)
intermediate products.
(1) MPEG-2 decoding products, software
and decoding software
These products are decoders such as
cable television system or direct broadcast
satellite settop decoder boxes, DVD
players, computers and software that
decodes MPEG-2 that is sold to the
consumer. This products bear a royalty of
four dollars per unit.
(2) MPEG-2 encoding products, software
and encoding software
These products are MPEG-2 encoding
software, MPEG-2 encoders for
distribution (broadcast) use as well as
encoders used to produce MPEG-2
bitstreams for packaged media such as
DVD etc.
As to MPEG-2 encoding software, the
royalty will be four dollars per unit if the
software is intended for sale to consumers.
As to distribution encoding products, this
product is a program encoder sold to
commercial end-users for real time
terrestrial, cable, satellite etc. broadcast
and/or distribution. In such case, the
royalty is four dollars multiplied by the
number of program streams that can be
encoded in parallel.
Packaged media encoders are video
editors, teleciners, program encoders for
production of maters for mastering copies
such as DVDs. There is no royalty on
such encoders. As I will discuss later, the
packaged media, however, is royalty
bearing.
(3) Consumer products
Consumer products are products for the
consumer that both encode and decode
MPEG-2 bitstreams. These are future
MPEG-2 camcorders, read/write DVD
players, computers and/or software, etc.
Since these products both encode and
decode, the royalty is six dollars per unit.
(4) Packaged media
Packaged media is any storage medium
such as pre-recorded DVDs, other disks,
tapes, optic based or other forms of media
storing MPEG-2 bitstreams. For
packaged media sold to end users, the
royalty is four cents per MPEG-2 video
event stored. For package media sold for
commercial purposes such as rental to
consumers, the royalty is forty cents per
MPEG-2 video event.
An MPEG-2 video event is defined as a
unit of video information having a normal
playing time of at least eight minutes.
Therefore, for example, a DVD with two
movies or one movie and a game would
be a royalty product at eight cents per unit
if sold to consumer end-users.
(5) Transport or program stream products
MPEG-2 transport or program stream
products are products such as file servers
or multiplexers. They are products that
multiplex or demultiplex MPEG-2
bitstreams. The royalty for such products
is four dollars multiplied by the greater
number of input or output MPEG-2
streams relevant to a specific device.
(6) Intermediate products
A final but important category of products
we call intermediate products. These are
MPEG-2 encode, decode and/or
transport products that are not integrated
devices intend for sell to end-users.
Rather, these are products such as ICs,
circuit boards, subassemblies and
firmware and software that are sold for the
purpose of further integration into a
product intended for end-users.
Intermediate products utilize MPEG-2
technology and therefore producers of
such products need the coverage of our
license. Therefore, we need to provide
license coverage for these products in
order to give such manufacturers the
protection of our license.
On the other hand, intermediate products
are incorporated into other MPEG-2
products such as DVD players and settop
boxes that are also covered by our
license.
In order to provide intermediate product
makers with the security and assurance of
our license, we created the category of
intermediate products. Intermediate
products are covered by a license to make
and sell MPEG-2 products. This license is
royalty free.
We intend to collect a royalty on
MPEG-2 products from manufacturers of
the integrated devices made with
intermediate products, not on the
intermediate product itself.
Nature of coverage
The third topic of important terms and
conditions relates to the nature of the
coverage provided by our license. As Dr.
Rubenstein had noted, each patent in the
MPEG-2 patent portfolio is essential for
implementing a portion of the MPEG-2
video and system standards. We have
concentrated on what MPEG calls "mp"
or main profile. This relates to a
specifications profile of parts of the
MPEG-2 standard that reflect the
characteristics of the largest use of
MPEG-2: distribution and consumer
electronic products. As such, our license
does not include scaleable extensions or
audio. However, HDTV resolution
products are covered by the license at the
same royalty rates I have already noted
since HDTV is part of the main profile of
MPEG-2.
Also, as Dr. Rubenstein has mentioned,
our portfolio does not include patents
covering specific product type
implementations. We cover only patents
that are essential for the implementation of
MPEG-2.
Our license provides worldwide coverage
from licensors although clearly we have
focused at the beginning on US, Japanese
and European patents.
Further, new licensors and new patents
may be added to the portfolio at any time.
This is at no cost to the licensees and
coverage from such new licensors and
new patents is for the entire term of the
license. Also, a licensor cannot withdraw
coverage of patents to licensees that
already have signed up during a period
when that particular licensor and/or
patents was in the portfolio. This is true
also for the renewal term.
Finally, a licensee can itself extend
coverage of the MPEG-2 patent portfolio
license to its affiliates with merely a
notification to MPEG LA.
Other important provisions
In addition, a licensor can withdraw its
patent coverage to a particular licensee if:
(1) that licensee goes to court claiming that
that licensor is infringing an MPEG patent
held by that licensee and (2) that licensee
refuses to license its MPEG patent to the
licensor it is suing on fair and reasonable
terms. The purpose of the license is to
protect companies from being sued for
using MPEG-2. It should not be used to
protect a licensee so that it can sue others.
Of course, any licensee with an MPEG-2
essential patent is free to add its patents to
the portfolio on the same terms and
conditions as all other licensors. If a
licensee choose not to do so, it merely has
to agree to license such patents on fair and
reasonable terms.
Finally, a most favored nations protection
is included to assure licensees that no one
licensee will get better royalty terms and
conditions than any other licensees.
Licensee information is treated as
confidential and is protected. Also,
product marking requirement may apply
depending upon the category of products.
That concludes my overview of our
MPEG-2 patent portfolio license. |
