MPEG-2 SYSTEMS PATENT PORTFOLIO LICENSE SUMMARY
Click here to download a summary of the MPEG-2 Systems Patent Portfolio License. This briefing provides an outline of the License. It is for information purposes only. The actual license agreement provides the only definitive and reliable statement of license terms.
The MPEG-2 Systems License provides coverage for use of the MPEG-2 Systems Standard in products without licensed MPEG-2 video encoders or decoders. Each patent in the MPEG-2 Systems Patent Portfolio is essential for implementing the MPEG-2 Systems standard specifications: ISO documents IS 13818-1 (including annexes C, D, F, J and K).
The sublicenses granted by the License (Sections 2.1 – 2.4) are worldwide, non-exclusive, and nontransferable, but a Licensee can extend coverage to its Affiliates (Sections 1.1 and 2.3). Licensors are obligated to include all MPEG-2 Systems Essential Patents wherever they issue and cannot withdraw coverage of patents to Licensees that already have signed up during a period when a particular Licensor and/or patent(s) was in the Portfolio. New Licensors and essential patents may be added at no additional cost during the term, and coverage is for the entire term.
Product Categories and Royalties
Click here to download a document summarizing MPEG-2 Systems product categories and royalties.
Under the MPEG-2 Systems Patent Portfolio License, the party that offers MPEG-2 Systems Devices (Section 1.9) for Sale (Section 1.17) to the end user, either directly or through a chain of distribution, is responsible for royalties on the end product. Section 3.1 of the License agreement provides the schedule of royalties that apply to the sublicense granted under Section 2.1. The royalty is ¥20 per Mobile MPEG-2 Systems Signal Receiver (defined in Section 3.1) and $0.25 per product for all other MPEG-2 Systems Devices.
The License is renewable (Section 6.1) for successive five-year periods for the life of any MPEG-2 Systems Patent Portfolio Patent, subject to reasonable amendment of royalty terms and rates (not to increase for a specific sublicense by more than 10%). Current royalty rates (above) apply through December 31, 2020.
Other important provisions
A Licensor may instruct the Licensing Administrator to remove its patents from coverage as to a particular Licensee if that Licensee brings a lawsuit or other proceeding for infringement of an MPEG-2 Systems Related Patent or an MPEG-2 Systems Essential Patent against the Licensor and has refused to grant the Licensor a license on fair and reasonable terms and conditions under such patents on which the lawsuit is based (one example of which is the Licensor’s per patent share of royalties payable under the License). The reason for this provision (Section 6.3) is that the License protects companies from being sued for using MPEG-2 Systems but should not be used to protect a Licensee so that it can sue others; it encourages negotiation and innovation in support of the standard.
Any Licensee is free to add MPEG-2 Systems essential patents to the Portfolio that it or an affiliate may own on the same terms and conditions as all other Licensors (Section 7.4). If a Licensee chooses not to do so, however, it must agree to license such patents to any Licensor or Licensee on fair and reasonable terms (one example of which is the Licensor’s per patent share of royalties payable under the License). The purpose of this provision (Section 7.3) is to assure, for the benefit of all Licensees, that a Licensee does not take advantage of the MPEG-2 Systems Patent Portfolio License, on the other hand; yet refuse to license its own MPEG-2 Systems essential patents on fair and reasonable terms.
A most favorable royalty rates protection is included to assure Licensees that no Licensee will be granted a license with royalty rates more favorable than another (Section 7.7).
Licensee information is treated as confidential (Section 5).