MPEG Industry Forum

Disclaimer: this is a personal, non-literal transcript of the Q&A session. Because it was reviewed, I know I am not too far off the mark, but the only definitive sources for answers to licensing questions are the license and MPEG LA. -RK

Introduction

Moderator welcomes members on the call and Larry Horn of MPEG LA. Short roll call is done, but people did call in after the roll call.

Larry Horn gives introduction: "Actual license agreements are the only definitive and reliable statement of license terms, and the details of those are being worked out. In the interest of informing the marketplace, I will provide my current understanding of what the Licensors want to do in those agreements with the understanding that only the actual license agreements may be relied upon."

The focus of the explanation is on what’s different from the 31 January 2002 announcement by MPEG LA:

Coverage expanded including all visual profiles that are in the current published standard to the extent covered by patents in the portfolio
Also conclusion has been reached with Systems group of patent holders – including MPEG-J
Royalties have in many cases (a) limitations, or caps now also related to use-based royalties, (b) thresholds below which no royalties are charged in order to minimize impact on lower volume users (we hope low volume users will become high volume users, and this allows them to get started without the immediate obligation to measure use until they do), (c) additional options for use-based royalties including some without reporting requirements (e.g., per-subscriber fee, paid-up license).

Overview: potential licensees will easily be able to find the portions of the license that apply to them – sections for Unique Use (cable, satellite, future individual addressable over-the-air); Internet, Mobile, Stored Video (both packaged and transmitted with associated transaction fee). Unique Use cannot be mobile or Internet, i.e., decoder licensed for Unique Use is licensed only to decode cable or satellite, not for mobile or Internet.

Q&A

Question: hypothetical example of movie trailers in QT – how does licensing work?.
Answer: There is the royalty for the decoder make and sell license, to be paid by Apple. Use royalty is paid by the video provider with/from whom the user believes itself to be in contact and receiving the video from. That would be Apple in this case. However, a video provider would not include a party that is using the video for self-advertising or self-promotion, as long there is no revenue received for offering or providing the streaming video. The license is not trying to charge people that are using it simply to provide product or corporate information on their own website, but the use-based royalties would apply if they are being paid (including barter) for offering or providing the video (advertising, subscription, etc.),

Question: How about Video conferencing?
Answer: The 25 cts for the decoder gives you no use right, except for communication from one end user to another. If one end user is communicating directly with another end user, the answer is no use fee. Seminar supported by ads or subscription, attendance or materials fee or using materials for which remuneration is paid downloaded from a corporate training service would be a different case, however.

Question: Company doing e-learning, training to employees, entirely internal, use fee?
Answer: No. If you are using source material downloaded from the internet for which there is remuneration, however, then yes

Question:

How about PVRs?

Answer:

Let’s say it is the traditional PVR, where it receives and stores video from Cable or Satellite – If included as part of cable or satellite set-top, then subject to royalties that apply to Unique Use; if standalone, then there would be 25 cts for decode make-sell.

Stored Video is MPEG-4 video paid for on title-by-title basis, either recorded onto a physical medium, or transmitted to an end-user with more than just a one-time play – there needs to be a minimum – at least 20 times and 365 days. If those minimum requirements are not met, it is not a stored video. If there is no per-title payment, it is also not a stored video.

We are anticipating that there are content providers who want to make available video information in E-form, and that can be metered on title-by-title basis, and we anticipate that people want to make available large libraries. Therefore, rates for older videos are lower.

Question: please talk about other Visual Profiles
Answer: The intended field of use is every MPEG-4 Visual Profile in the currently published Standard (including Amendments) to the extent covered by Portfolio patents. The license should grow with the use of the MPEG-4 Visual standard. Initially focused on Simple and Core. We thought this would provide comfort to market if parties understood the full royalty cost to them for use of additional profiles and that they would be more willing to use MPEG-4 if the uncertainty about extending use of the standard into other profiles was removed.
Does the license call out any Profiles? It will name particular profiles as appear in the current 3 books (RK: books mean standard plus Amendments).

Question: there are many, many technologies in Visual – you have only called for Video patents so far.
Answer: The press release is in effect a call for patents that are essential to other profiles, and we will be making subsequent calls

Question: How about thresholds?
Answer: There are no thresholds for Systems. No thresholds or legal entity caps (except for encoder/decoder make-sell) for unique service in the Visual license.

Question: But there is a cap in the Enterprise license for unique service in Visual?
Answer: Yes, when you take the enterprise license, you get license for unique use, mobile and Internet, but not stored video.
Unique use, mobile and Internet are subject to Enterprise cap, but Stored Video is not.
The 1.25 in the Unique Use environment is not capped on legal entity basis, but it is capped by the Enterprise cap

Question: please say more about Systems component
Answer: When the Systems standard technology is being used in a Decoder or Encoder (audio, video or other), then license and applicable royalties will apply.

Question: What is activated decoder?
Answer: This means decoders that are usable/functional for decoding. For example, if they are not usable/functional before key is received, then are not activated until the key is received.

Question: How would you control this in the case of CD ROMs?
Answer: The question is whether it is usable, not whether it is actually used. So, if the decoders on the CD ROMs are usable/functional, they would be considered activated and the royalties would apply.

Question: Clarification Systems; say that a player uses MP4 file with systems stuff, but the player ignores it, do you owe the Systems royalty?
Answer: If the player is capable of using (i.e., not ignoring) it, then yes. If the player has no capability to use it (i.e., it is ignored automatically rather than by choice), then no.

Question: Systems per decoder fee?
Answer: Paid up (one-time royalty), with yearly cap per legal entity

Question: Please say a bit more about broadcast
Answer: The proposed license currently does not grant a license for free over-the-air broadcast. A separate license would be required, and the patent holders are willing to provide a license for that purpose if and when it is necessary, but at this moment it is not covered. (Note: where service is provided to a mobile receiver, such service must be licensed for mobile use and terms of the mobile license will apply. But, the license for mobile use is limited to mobile use; it does not grant a license for free over-the-air broadcast.)

Question: What's the deal with H.263?
Answer: Press Release makes a factual statement about H,263. But, let me make that clear. Field of use is MPEG-4 Visual standard. License will not name H.263. The MPEG-4 Visual Patent Portfolio License is offered as a convenience to the marketplace for those who wish to use the MPEG-4 Visual Standard. Accordingly, the licensed field of use for the MPEG-4 Visual Patent Portfolio License will consist of MPEG-4 Visual profiles in the current published MPEG-4 Visual standard (it will not specifically include H.263, H.263 baseline or the like), but the License will not exclude H.263 products when there are products within such licensed field that are also covered by the H.263 standard (e.g., video frame with short header and H.263 baseline).

Question: If I have H.263 decoder that can only decode H.263 bitstreams, that is not covered, right?
Answer: That is correct

Question: How about an encoder that generates H.263 baseline?
Answer: We will license it for MPEG-4 Simple, which would include the short header (which is equivalent to H.263 baseline)

Reply: It would be great if MPEG LA and licensors could do more to clarify the situation around H.263

Question: How about updates? Bug Fixes?
Answer: We would expect Licensee to treat Bug like product returns. Updates? That’s why we have the cap so issues like updates do not need to be dealt with – all products require license and royalty but cap lightens admin work of determining when it is a new or replacement product. Cannot give definitive answer how update from QT6 to QT7 would be handled.

Question: If I produce MP4 file, am I supposed to pay both the Visual and the Systems royalty?
Answer: If the MP4 file is used with MPEG-4 Visual, then yes, both the Visual and Systems licenses would apply.

Question: Simply using the MP4 file format is enough to incur the Systems royalty?
Answer: yes.

Question: It seems like you are calling for ALL patents in MPEG-4 Visual and Systems?
Answer: that is correct – all current Visual Profiles

Question: We have tools for automated coding, uploading and making available of videos. Video comes from our servers, but looks like it’s coming from the customer’s website. This becomes difficult …

Answer: Under the license the responsibility is your customer’s, but nothing precludes you from either automating it or even paying it. Customer should still become licensee and file the royalty report. But it must be possible to work this out. As long as it is paid for and appropriate responsibility can be placed on the video provider. Need to understand it better, but point is there must be one party with the ultimate responsibility for assuring license is taken and royalties are paid.

Closing Remarks

Thanks to Larry Horn for spending the time today, and thanks to the M4IF members who called in with good questions. We did not succeed in recording this session, but we will make available a transcript to the public.

Thanks to Shawn Ambwani for the initiative and organization of the Session.

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