The Digital Media Manifesto

 

Source

L. Chiariglione

Title

The role of device IPR in the Digital Media business

No.

030701chiariglione02

1. Introduction

The Media business is about how to manage a particular form of IPR. But to be created, delivered and consumed, media require the use of some physical device. When these devices utilise some technology that requires the use of some IPR, the manufacturer of the device has to pay some royalty.

With the adoption of Digital Technologies to provide Digital Media solutions, the way patent rights used to be licensed in devices supporting the media business is undergoing significant changes and has become a major element affecting the success of Digital Media.

2. The past

A patent holder used to license IPR to make a device according to very simple terms: a fixed amount of money for every device built. This is the case of telecommunication devices, like Group 3 facsimile or Consumer Electronic devices like TV receivers and Video Cassette Recorders, or computer peripherals. For recording devices a royalty is also due for cassettes and compact discs.

The licensing terms of MPEG-2 Systems and Video are very much in the mainstream of tradition. A manufacturer of an MPEG-2 decoder pays a fixed amount of money to the MPEG-2 patent pool. Those printing DVDs pay a fixed amount of money per printed DVD carrying content encoded using MPEG-2 Systems and Video.

This licensing model has a basic flaw: if an end user buys a DVD player for 50 USD and uses it for one hour and then he never turns it on again, he has made a bad use of the 2.5 USD that the manufacturer has paid to the MPEG-2 patent pool (he has also made a bad use of the remaining 47.5 USD, but that is the "physical part"). Still the model works well because it is a good compromise between simplicity and effectiveness.

3. The recent past

For the MPEG-2 AAC standard the first licensing scheme considered two cases. If AAC was used in a hardware playback device, licensing of AAC technology rights could be obtained on a "per hardware unit" basis (à la MPEG-2). If, however, the playback device took the form of software given away for free, another licensing model was offered, viz. the possibility to pay a license fee "per content unit" basis. The latter licensing scheme has now been abandoned.

For MPEG-4 Visual licensing is applied both on the playback device and on the per content unit basis. The latter part of this model does not suffer from the MPEG-2 licensing "flaw", but in some contexts its practical implementation may make the solution too costly. There is an ongoing debate about the viability of the MPEG-4 Visual licensing scheme that some claim threatens acceptance of the standard in the marketplace.

4. The future

There are more and more cases where licensing of technologies to build Digital Media solutions is needed. One example is MPEG-4 AVC, another is MPEG-7, still more cases will be coming from combinations of MPEG-21 technologies, not to mention other non-MPEG technologies whose use is required to make Digital Media solutions.

It is essential that the problem of IPR be considered in a holistic manner, if we want to reap the benefits of the Digital Media Revolution.