CableLabs, vendors pose MPEG licensing scheme; a critical mass of patents

Electronic News, April 3, 1995 by Reinhardt Krause, Anthony Cataldo

LOUISVILLE, COLO. - In a major step toward resolving lingering industry concern over intellectual property rights (IPR) for MPEG-2 digital video compression technology, Cable Television Laboratories (CableLabs) and a core group of at least nine companies - including several consumer electronics giants - last week floated a proposal for royalty payments and the creation of a licensing entity pooling their patents.

The core group of potential licensors includes Fujitsu, General Instrument, Matsushita, Mitsubishi, Philips, Scientific-Atlanta, Sony, Thomson, and Columbia University. While industry speculation last week centered on whether a major holdout could still cause concern, those involved in the licensing effort claimed the core group holds a "critical mass" of MPEG-related patents.

The royalties would cover not only cable and satellite TV equipment such as set-top decoder boxes, but also consumer electronics products such as digital videodisk (DVD) players, and "decode-for-general-purpose processors." In addition, royalties were proposed for MPEG-based media such as video CDs.

CableLabs, the cable TV industry's R&D consortium, last year took the lead in addressing IPR issues (EN, May 2, 1994) to facilitate "a worldwide digital television standard" as well as avoid the deployment of proprietary compression technology in emerging interactive TV systems. CableLabs last week said the core working group has not yet addressed royalty issues for high-definition TV, however.

Although GI is a member of the core group of MPEG licensors, its DigiCipher II video compression and access control technology has been positioned as an alternative to MPEG within the cable industry, if the IPR situation was not settled. Another company that has fanned concerns over MPEG IPR has been Intel, which often touts its Indeo video compression technology for niche applications such as videoconferencing and CD-ROMs.

However, with about 50 companies participating in a meeting in Lausanne, Switzerland, March 20-24, the group had progressed far enough to disclose a model for royalties, according to Baryn S. Futa, COO of CableLabs. He said while no company holding MPEG IPR has signed on contractually to join the licensing entity, he expects that it would happen by year-end.

"My hope would be that something would be formed, where people would determine whether they would participate, not in concept but in reality, in the late third quarter or early fourth quarter time frame this year," he said.

The proposed royalties include $3 to $4 on each digital decoder, including MPEG-2 set-top boxes and DVD players; there would also be a $0.03 to $0.04 royalty on video CDs and digital video disks (DVDs) purchased by consumers. Mr. Futa noted that the group "was not attempting to break new ground in royalty fees" and had attempted to tailor the amount paid to "what some markets are accustomed to."

"The intention is that this (royalties) are at the integrated, ready-to-go device level," said Mr. Futa, "like a set-top or DVD player. The intention is for it not to be at the subsystem or IC level. Also, the intention is not to have any type of occurrence of double taxation or double payment. That's part of getting down to the nitty-gritty and getting something that is ready to be rolled out and formed."

The resolution of MPEG IPR issues would clear the way for deployment of products using digital video compression. "It is important for the industry at large to solve the problem that digital video may be encumbered by a tremendous and untractable combination of intellectual property," said Didier Le Gall, C-Cube Microsystems chief technical officer and MPEG video chairman. "This is not a trial balloon. This is it," he added, referring to IPR group's activities.

"It was essential to reassure the Japanese that they will not be the object of attacks by patent holders after they ship products in volume," he added. "I think it is a breakthrough in terms of reassuring the industry that MPEG was the right way to go, not just the way to go technically but from an IPR position as well."

The licensing entity will be designed so that companies planning to deploy products using MPEG technology could acquire patent licenses more easily. Combining the patents into a pool would also reduce the costs of licensing MPEG technology from multiple vendors, advocates said.

Early on, the working group had identified as many as 30 potential patents that could be related to MPEG, which has been approved by the International Standards Organization (ISO) as both a video and audio compression technology. However, while MPEG was established in the early 90s as a technical standard, IPR issues were not addressed by the scientists and companies working on the specification.

According to industry sources, while no one company "invented" MPEG, the CableLabs-led effort has been wrestling with determining how essential some patents are to the technology. Independent patent law experts and engineering experts have determined so far that the nine companies have the most relevant IPR.