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A History of Success – A Future in Innovation


A patent is the grant of a property right covering an invention. The right conferred by the patent gives its owner the right to exclude others from making, using, offering for sale, selling or importing the invention in the absence of a license. Where standards and other technology platforms consist of many patents owned by many patent owners, the number of licenses required of users may be too costly and inefficient for users to negotiate. This is often referred to as a patent thicket. By increasing uncertainty and conflict and restricting freedom of movement surrounding use of a technology, a patent thicket may impede the technology's adoption, interoperability and use.

In the 1990s, the MPEG-2 standard, which is required for digital television applications including DVD, faced a patent thicket. The single biggest challenge to MPEG-2 adoption was access to essential patents. Many MPEG-2 patents owned by many parties made it virtually impossible for most users to negotiate the number of licenses necessary to use the standard. MPEG LA offered an alternative - the first modern-day patent pool - as a solution by addressing the market's need for transactional efficiency. (view link) To resolve uncertainty and conflict in the use of MPEG-2 intellectual property, as a convenience to users, the licensing model pioneered and employed by MPEG LA revolutionized intellectual property rights management by enabling multiple MPEG-2 users to acquire essential patent rights from multiple patent holders in a single transaction as an alternative to negotiating separate licenses. MPEG-2 became the most successful standard in consumer electronics history, and the MPEG LA® Licensing Model has become the template for addressing other patent thickets. Today MPEG LA operates licensing programs consisting of more than 5000 patents in 70 countries with over 130 licensors and 5000 licensees.

Wherever an independently administered one-stop patent license may provide a convenient alternative to assist users with implementation of their technology choices, the MPEG LA® Licensing Model may provide a solution. By balancing patent users’ interest in reasonable access to intellectual property with patent owners’ interest in reasonable return, MPEG LA creates the opportunity for wide technology adoption and fuels innovation.

 

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