The “Open Media Stack – Video Specification V0.9″ is now available for community review at the Open Media Commons website.
OMS, announced in April 2008, is a project of Sun Microsystems’ Open Media Commons initiative to define a complete, royalty-free media specification, including codecs and associated elements.
The OMS Video draft is a key milestone and a big deal, and not just bec
ause I am proud to have contributed to this effort at Sun. This is the first public release of a video codec specification with a vetted royalty-free methodology that is a determined, bottom-up invent-around of the royalty-bearing interlocking and cross-coordinating set of MPEG codec licenses – MPEG-2, MPEG-4, and h.264/AVC (an orchestrated complex of licenses managed through the same license administrator, MPEG-LA, which is owned and controlled, no surprise, by MPEG patent holders themselves).
But do royalties on things like video codecs really matter? Many people don’t even realize that royalties like these exist, or assume they are a just a nuisance cost-of-business borne somewhere in the value chain.
But consider — MPEG and their related royalties are:
- Big. Think on the order of over $2 billion per year, on some one billion or so MPEG integrated circuits a year and growing. That’s royalties, not sales, so better to think of them on the profit side of the business equation — and that’s on the order of ten percent of the entire profit of the world’s 37 largest consumer electronics companies, calculated from a recent Deloitte study of consumer products industries. And given that consumer electronics manufacturers are in a notoriously thin-margin business (according to the Deloitte study, average net profit margin of 3.3%, the second lowest profit in all consumer products industries, ahead of only tires) — the $2.50 per MPEG-2 device royalty alone likely exceeds the manufacturer profit on vast numbers of consumer electronics products.
- Applicable across the entire value chain of devices, content, and encoders. Consider also the $100 million or more a year in royalties of 3 cents on “packaged content” on 90% of all DVD discs produced, collected through disc duplicators. Or the reported 100M Euros in royalties in 2005 on MP3. Or the temporary exemption on “Internet broadcast” royalties — expiring December 31, 2008 on MPEG-4 (perhaps to the chagrin of MPEG-4 licensee DiVX, who noted in a recent SEC filing “Our license agreement with MPEG LA, under its MPEG-4 Part 2 Visual Patent Portfolio will expire on December 31, 2008. MPEG LA has the right to renew the license agreement for successive terms of five years, upon notice to us.”), and expiring December 31, 2010 on AVC/h.264.
- Applicable to you (and virtually everyone else on the network connected planet). Just check your iPhone EULA (“The iPhone Software and iPhone Software Updates contain AVC encoding and/or decoding functionality, commercial use of H.264/AVC requires additional licensing.”) or Flash licensing restrictions:
“The end-user license for Flash Player allows users to play back H.264 content for their own noncommercial use. Commercial applications of Flash Player to decode H.264 video may require a separate license…. Usage categories that may require a license and involve royalty fees include advanced video coding products, title-by-title video, and subscription video among others. Most categories apply to commercial use and implementation, but some are more broad”.
Sure, some will assert that this doesn’t really apply to “you”, just figure out a clever “not-me” work-around — but to quote Russell Long and countless others: “Don’t tax you, don’t tax me. Tax that fellow behind the tree.”
Gosh, one can see how one study of consumer electronics patents/standards commented: “Standardization activities are political negotiations and not a forum for assessing which technologies excel over others”.
So here’s to hoping that OMS Video will add to the growing but still under-the-radar open media movement, including Xiph, Dirac, and more to come. Please take a look at the OMS Video specification and provide comments if you are so inclined.
It looks like the OMS specification is fairly close to MPEG-1 video. Do you think that MPEG-1 video might be patent free?
Joshua:
You are on to a key insight — many digital media technologies, and even whole standards, have been around for many years and are moving out of the patent window, much like “generic” drugs in the pharmaceutical industry. Similarly, many things that pass as “recent innovation” may indeed be obvious spins on old ideas, or actually quite old themselves (consider for example when the mathematics of DCTs, the foundation of most modern codecs in the last two decades, was actually worked through, and you’ll get one idea on this topic).
An effective methodology involves systematic review of patents and prior art — all publicly available information. OMS started from H.261 (the predecessor to MPEG-2, also known as H.262), because H.261 was finalized in 1989, outside the (17-year) patent window. Key tool strategies and prior art were already established in that era.
For a bit more detail on timelines see:
http://blogs.sun.com/openmediacommons/
And on the general strategy of Open Media Commons, see “Sun’s OMS Video codec project is a means to an end”
http://www.linux.com/feature/145347
Rob
I am curious why you are talking about a 17 year patent window. As I understand US patent law, the time frame for patents before about 1995 was the longer of 20 years from filing date or 17 years after grant date.
Joshua:
Yes, the parenthesis in the term “(17-year)” in the statement “H.261 was finalized in 1989, outside the (17-year) patent window. Key tool strategies and prior art were already established in that era” is a shorthand for a longer explanation.
Your http://www.kuro5hin.org/story/2008/7/18/232618/312 contains much useful info, highly recommended to anyone looking into this.
As you correctly point out, US patent law changed in the mid 1990s. The US participated in the Uruguay Round in 1994, and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) precipitated a change in term as of June 8, 1995 for patents filed before that date: from 17 years from issuance to the longer of either 17 years from issuance or 20 years from first US-recognized filing.
http://www.uspto.gov/web/offices/pac/mpep/documents/2700_2701.htm#sect2701
So which term (17 or 20 years) depends on the length of the filing period for a particular patent, which could be more or less than 3 years, as well as what specific filing counts as the first filing.
So some patents have interesting life-extension aspects — it is even conceivable for a patent to be considered still in effect in the US even though it was originally filed, and expired, in another country longer than 20 years ago.
For example consider US 4,970,590, listed in the MPEG Systems patent portfolio list at http://www.mpegla.com/m2s/m2s-att1.pdf. In that document MPEG-LA classifies that patent’s Italian counterpart IT 0624983 as “Expired December 21, 2008″, and this foreign filing date (12/21/1988) is reflected in the US patent “Foreign Application Priority” (see http://www.google.com/patents?id=0aghAAAAEBAJ&printsec=abstract&zoom=4&dq=4,970,590). But MPEG-LA as of January 8, 2009 did not list the US patent as expired. If one were to use the US filing date, this patent still has some 11ish months of validity in the US even though it expired in Italy last December.
US Filing date 12/21/1989 + 20 years = 12/21/2009
US Issue date 11/13/1990 + 17 years = 11/13/2007
Foreign application priority date: 12/21/1988 + 20 years = 12/21/2008
Also MPEG LA calculated Alcatel/Lucent MPEG Visual patent US 4,833,543 “Expired December 23, 2006″
US Filing Date: December 24, 1986
Issue Date: May 23, 1989
Foreign application priority date: Jan 24, 1986 [BE]
But in that case MPEG-LA lists the foreign patents as expiring a bit later (“Expired January 20, 2007″)
http://www.mpegla.com/m2/m2-att1.pdf
Of course, calculating expiration dates of patents is only part of the methodology of note. Essentiality determinations under the procedures of US Department of Justice letters in themselves bring rise to consideration of misdirection and the engendered “myth of essentiality” (how did that rabbit get in that hat in the first place?) — and other aspects of prior art.
[...] For those who haven’t seen it, check the interesting article “Patent Status of MPEG-1, H.261 and MPEG-2″ and associated wiki here. Comments on calculating expiration dates can be found in the responses to article here. [...]
[...] market information in this post on the release of the royalty-free OMS Video draft specification, here are data points about MPEG [...]