m4vweb

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MPEG-4 Visual Patent Portfolio License Briefing* *This presentation is for information purposes only. Actual license agreements will provide the only definitive and reliable statement of license terms. V 10/02/07

Objectives: 

Offer an alternative license for the convenience of users enabling them to acquire patent rights necessary for the MPEG-4 Visual (Part 2) Standard from multiple patent holders in a single transaction rather than negotiating licenses with each of them individually Align with real-world flow of MPEG-4 commerce Apportion reasonable royalties throughout MPEG-4 value chain Enhance use of MPEG-4 across different business models Caps to provide cost predictability Threshold levels to encourage early-stage adoption and minimize impact on lower volume users Alternative royalty payment options Give new business models time to emerge and mature Objectives

Coverage: 

Coverage MPEG-4 Visual (Part 2) Standard profiles covered by Portfolio patents: Simple, core, main, simple scalable, N-bit, basic animated texture, scalable texture, simple FA, advanced real time simple, core scalable, advanced coding efficiency, advanced core, advanced scalable texture, simple FBA, hybrid, advanced simple, fine granularity scalable, simple studio and/or core studio profiles As defined in ISO/IEC 14496-2:2001 [Part 2 Visual dated 2001-12-01], 14496-2:2001/Amd.1:2002 [Studio profile dated 2002-02-01], or 14496-2:2001/Amd.2:2002 [Streaming video profile dated 2002-02-01].

Coverage: 

Coverage Each patent is essential to the MPEG-4 Visual (Part 2) standard Specific implementations for which there are competitive alternatives not included Patent holders submitted patents for evaluation of their essentiality by independent patent experts Worldwide coverage (including essential counterparts) Licensors include all essential patents

Coverage: 

Coverage More patents in the evaluation pipeline Attachment 1 to the License is updated regularly See http://www.mpegla.com, “MPEG-4 Visual,” “Patent List” New Licensors and essential patents may be added at no additional royalty during term; coverage for entire term

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Current Patent Owners include: British Telecommunications plc Canon, Inc. CIF Licensing, LLC Competitive Technologies DAEWOO Electronics Corporation France Télécom, société anonyme Fujitsu Limited GE Technology Development, Inc. Hitachi, Ltd. KDDI Corporation* Koninklijke Philips Electronics N.V. LG Electronics Inc. Matsushita Electric Industrial Co., Ltd. Microsoft Corporation Mitsubishi Electric Corporation Nippon Telegraph and Telephone Corporation Oki Electric Industry Co., Ltd. Pantech&Curitel Communications, Inc. Robert Bosch GmbH Samsung Electronics Co., Ltd. SANYO Electric Co., Ltd. Sedna Patent Services, LLC Sharp Corporation Siemens AG Sony Corporation Telenor ASA Toshiba Corporation Victor Company of Japan (JVC) Current Patent Owners *Up to and through date of patent expiration (March 14, 2006)

MPEG-4 Visual License: 

MPEG-4 Visual License Decoder/Encoder Manufacturers Subscription Title-by-Title Free Internet Broadcast* Free Television Participation Fees Where End User pays Participation Fees where Remuneration is from Other sources *No royalty during the first term of the License (ending December 31, 2008)

MPEG-4 Visual License Terms: Decoders and Encoders: 

MPEG-4 Visual License Terms: Decoders and Encoders Decoders sold to end users and/or as Fully Functioning for PCs 0 - 50,000 decoders/year = no royalty (available to one legal entity in an affiliated group) US $0.25* per decoder after first 50,000 decoders/year Annual cap per Legal Entity: $1,000,000 Encoders sold to end users and/or as Fully Functioning for PCs 0 - 50,000 encoders/year = no royalty (available to one legal entity in an affiliated group) US $0.25* per encoder after first 50,000 encoders/year Annual cap per Legal Entity: $1,000,000 Enterprise cap - $3 million per year Includes make, sell and limited right of personal consumer use (e.g., in connection with a video teleconference or mobile messaging) Royalties payable on products from January 1, 2004 *A licensee may elect to pay US $0.24 for every product whether or not manufactured or sold in a patent country without reporting country of manufacture and country of sale

MPEG-4 Visual License Terms:Participation Fees: 

MPEG-4 Visual License Terms: Participation Fees Where End User pays for MPEG-4 Video Title-by-Title - 12 minutes or less = no royalty; >12 minutes in length = lower of (a) 2% of first Arm’s-Length Sale or (b) $0.02 per title.  Licensees are (a) replicators of physical media and (b) direct sellers of other media. Subscription (not Title-by-Title): 0-100,000 subs/year = no royalty; >100,000-250,000 subs/year = $25,000; >250,000 – 500,000 subs/year = $50,000; >500,000-1M subs/year = $75,000; >1M – 5M subs/year = $100,000; >5M – 25M subs/year = $200,000; >25M subs = $300,000 Where remuneration is from other sources Free Television (not Title-by-Title, Subscription or Free Internet Broadcast) - one-time fee of $2,500 per transmission encoder Free Internet Broadcast (not Title-by-Title or Subscription) – no royalty during first term (through 2008; not greater than Free Television thereafter) Enterprise cap - $3 million per year Royalties payable on products from January 1, 2004

Term: 

First Term from Jan 1, 2000 – Dec 31, 2008 Right to renew on reasonable terms and conditions for successive 5-year periods for the useful life of any Portfolio patent Rate protection on renewal – royalty rates will not increase by more than 25% for similar license grants (except for Free Internet Broadcast*) *See Sections 3.1.6 and 6.1 of the MPEG-4 Visual Patent Portfolio License Term

Other Important Provisions: 

Most Favorable royalty rates clause Licensee data is protected as confidential Grant-back on essential patents similar in scope to license grants No marking requirements Other Important Provisions