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MPEG LA Announces VVC Licensing Terms

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MPEG LA has announced the terms of their VVC licensing program. We cover these below, present the terms of the Access Advance pool, and attempt to show how much coverage of the total number of VVC patents that the pools provide. We wanted to get the news out, but there will be more analysis to follow.

MPEG LA Pool

MPEG LA has traditionally kept its licensing terms simple, and did so with VVC as well. There are two classes of covered products: hardware and paid software, and free software. The de minimus exceptions, rates, and caps are shown in Table 1.

 

De minimus

Royalty

Annual Cap

Hardware/paid software

100,000 units

$0.20

$30 million

VVC free software

1,000,000 units

$0.05

$8 million

Table 1. MPEG LA VVC royalty rates and caps.

Note that the fine print beneath the license terms states that the "Maximum annual royalty (cap) for both VVC Products and VVC Free Software is limited to $30M." Presumably, this means that if Apple paid $30 million in hardware royalties for phones and tablets, software decode in Safari would be free.

Also in the fine print, "Caps do not apply to Back Royalties unless License is signed within the later of six (6) months from the date the License is first offered to the market (January 27, 2022) or within six (6) months of the date the Licensee first offers the product for Sale."  There are only a handful of companies with volumes that will reach the cap, but if they do deploy VVC and don't license within the time frames shown, the cap won't apply.

As you can see in Figure 1, licensees can encode, use, and sell VVC encoded content with no royalty. For the record, MPEG LA announced its pool with eleven licensors.

MPEG LA VVC Licensing Terms

Figure 1. MPEG LA's VVC license summary. (Click image for full-size version.)

Access Advance announced their royalty schedule last July. There are different rates for different statuses, in and out of compliance and with and without trademark discount. In-compliance rates with trademark discounts are shown in Figure 2 and range from a low of $0.25 to $1.50 with caps for different types of products and an overall cap of $60 million. Access Advanced announced a list of 28 licensors that you can access here


Figure 2. Access Advance In-Compliance rates with Trademark discount. (Click image for full-size version.)

Access Advance also launched a Multi-Codec Bridging Agreement (MCBA) designed for technology implementors who license both HEVC and VVC. According to Access Advance's website, the MCBA is not a license, it is an "administrative" Agreement permitting Licensees in both patent pools to pay a substantially reduced royalty rate for products that include both HEVC and VVC codecs, as compared to the royalty rates set forth under the separate HEVC Advance and VVC Advance Licenses.

For the record, note that the two VVC (and HEVC) pools represent different groups of patents, so it's not an either-or situation, it's both. Companies implementing VVC would likely need to take licenses with both pools to avoid infringing some patents essential to the VVC standard.

Speaking of that, note the following chart from an iPlytics webinar entitled Unpacking VVC SEPs Standards Contribution Data. According to iPlytics website, "Our mission is to provide quick, smart and trustworthy IP analytics to leverage insights on markets and technology." Figure 3 is a chart from the webinar that shows significant contributors of patents to VVC technology, both incorporated and not incorporated into the specification.

Figure 3. Significant contributors of VVC IP. (Click image for full-size version.)

If you cross-reference the MPEG LA and Access Advanced lists with the iPlytics list, you'll find that only five of the top 21 contributors are included in either pool, with all five in the Access Advanced pool. This means that IP from 16 of the largest contributors isn't in either pool. What we don't know about the iPlytics list is whether it includes patents relating to previous technology generations, like HEVC, that also apply to VVC. If it doesn't, it could dramatically change the picture of how many VVC-related patents are actually represented in the two pools.

With two pools announced and up and running, it's time to assess VVC's progress towards a royalty structure that promotes its deployment. This involves an analysis of how much of the available IP is covered in the pools, and which companies are sitting out. To a lesser degree, it also involves pricing.

I spoke with Larry Horn, president and CEO of MPEG LA about pool coverage, pricing, and other related issues, but was unable to connect with Access Advance CEO Peter Moller until next week. I also want to chat with iPlytics to make sure that I understand their chart.

At the same time, we wanted to get the news of the MPEG LA pool out there. So, there's the news, analysis to follow next week.

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