The latest bit of industry drama making the rounds is an article at OS News about the MPEG-LA organization’s vast patent hold on all things MPEG and H.264 related. The article shines a light on the licensing agreements for all the current camcorders that use such codecs, specifically the provision that they cannot be utilized for commercial use.

“ALL modern video cameras and camcorders that shoot in h.264 or mpeg2, come with a license agreement that says that you can only use that camera to shoot video for “personal use and non-commercial” purposes (go on, read your manuals).”

“…I found that even their truly professional video camcorder, the $8000 Canon XL-H1A that uses mpeg2, also comes with a similar restriction. You can only use your professional camera for non-commercial purposes. For any other purpose, you must get a license from MPEG-LA and pay them royalties for each copy sold.”

“And no, this is not just a Canon problem…Sony and Panasonic, and heck, even the Flip HD, have the exact same licensing restriction. Also, all video editors and official media players come with similarly restricted codec licenses!”

Ultimately, what we have here is an overly-restrictive license which is damn near unenforceable in my opinion. Surely MPEG-LA realizes that there is no possible way they could police and pursue the myriad of people using these codecs commercially. Something will have to give…either MPEG-LA grants some kind of clemency, or the camera and software manufacturers pony up and properly license these codecs so pro users can use them as intended. Somewhere along the way someone will probably pay extra for this, and I’d say it’s likely that you, the consumer buying a cheap camera with a “professional” label, will be that person. Or you can continue operating under the radar with “consumer” gear.

Bottom line? It’s a broken system. And it’s one more thing for RED to tout over DSLRs (see note below), which they seem to be intent on discrediting (as video cameras) lately. It would be a great argument…the R3D codec is one of the strongest points in favor of RED acquisition, in my opinion.

UPDATE #1: it seems that REDCode utilizes some spec of the JPEG 2000 format, which may (unconfirmed) have it’s own patent and licensing issues similar to the MPEG-LA debacle (probably depending on how they implemented the spec). I’d love to hear Red’s stance on that. Looking through Red’s license agreement for the Redcode QT plugin, it doesn’t mention any such restrictions, but it does state that customers are responsible for keeping records of how many installed copies they have, and agreeing to provide said records to Red upon request. The Redcode license also states that it is currently free to use, but provides provisions should there ever be a “cost per software seat at some point in the future.”

On a related topic, I did some checking and understand that Cineform’s codec is is not tied up with any such license issues and should be free and clear of those potential concerns. David Newman has reiterated that point in a blog post on the topic where he opines on the root of the MPEG-LA consumer licensing legalese.

Update #2: Engadget has penned a really nice article on this MPEG-LA licensing boondoggle, and it answers a lot of questions raised in the original OS News article. Here’s a few snippets that are relevant to my concerns as a content creator:

“…we’ve directly asked MPEG-LA whether or not using an H.264 camera simply to shoot video for a commercial purpose requires a license, and the answer is no. We’ve also asked whether an end user watching H.264 videos would ever have to pay or be licensed, and the answer to that question is also no.”

“using H.264 to distribute free internet video to end users doesn’t cost a thing, and won’t cost anything until at least 2015. After that, it’s up in the air, and that’s a bridge we’ll have to cross when we come to it — there’s a chance the MPEG-LA could start charging a royalty for free video in five years.”

“Even if a license fee for free internet video is required after 2015, it’s still the apparent provider of the video that’s on the hook for the license, not the content owner or end user — Google would have to pay the royalty for the YouTube videos it hosts, just Apple now has to pay the fee for the movies it sells through iTunes and DirecTV has to pay for the content it broadcasts. That’s a huge distinction, and it’s one that all of these companies seem comfortable with — they signed the contracts, after all. Yes, if you’re a pro and you somehow find yourself selling H.264 videos directly to end users you’ll have to sign a license and potentially pay up, but hey — if you’re doing that you’re running an actual business and you need to go talk to a real lawyer, not a disembodied third person Q&A on the internet.”

Update #3: ZDNet clarifies how much H.264 licensing could rise, should MPEG-LA decide to charge web distributors when the 2015 internet grace period expires:

“What guarantee do licensees have that MPEG LA won’t raise royalty rates by some outrageous amount when the royalty schedules come up for renewal? The current rates are fixed for five years, till the end of 2015, and are renewed again every five years for the life of the patents. That guarantee appears to be in place already in the Summary of AVC License Terms, which sets out the royalties to be paid for different uses of the technology. Here’s the language:
‘[F]or the protection of licensees, royalty rates applicable to specific license grants or specific licensed products will not increase by more than ten percent (10%) at each renewal.’
That goes a long way toward making me feel more comfortable that the cost of H.264 content is not going to impact you and me in any significant way, even after 2016.”


7 Responses to “Does MPEG-LA have the video industry by the proverbial cojones?”  

  1. 1 Jonathan Eric Tyrrell

    I don’t think the issue is around professional content creation, more commercial distribution. The following article appears to lay the matter to rest: http://news.cnet.com/8301-30685_3-20000101-264.html

  2. 2 Matthew Jeppsen

    I wonder how many wedding and dance recital videographers are paying for AVC licenses on all the discs they are shipping to clients?

    It’s interesting to me that the MPEG-LA guy basically insinuates they won’t attempt to enforce the rules with small-time offenders, specifically:

    “Realistically, it’s unlikely that a consumer who unwittingly plays a video clip from an unlicensed source is going to be pursued by MPEG-LA or by patent owners. The legal framework for patent damages is different than it is in the copyright area, so you’re not likely to see lawsuits against ordinary consumers, like some of the highly publicized suits filed by the RIAA [Recording Industry of America] in the United States,” Homiller said.

    So the license is written overly-broad to protect from large abuses and potential loopholes…and they look the other way and whistle while the small production guys (unwittingly) violate the rules? Interesting…

    -MJ

  3. 3 Jonathan Eric Tyrrell

    When you put it like that I’m not sure how different the situation is to software licensing and piracy in general.

  4. 4 hotchkiss

    The most responsible thing to do- is violate this absurd \license\ at every possible juncture. So a codec manufacturer can tell you how you can use your camera? This notion of intellectual property is on the rise, it is the perverse province of tyrants and tyranny.

    This has nothing to do with piracy or software licensing, it is attempted control over content.Is it possible/legal/or moral for a shovel manufacturer to tell the user how to use the shovel, or for what kinds of projects? Or to limit how big of a hole one is allowed to dig?

    Imagine Nikon trying to control how raw files made from one of it’s cameras can be used.

    I suspect that enforcement of these kinds of ridiculous claims on intellectual property will increase given that revenue streams will continue to dry up along with the economy. MPEG-LA can kiss my …..!

  5. 5 Charles McKay

    Thank you, Hotchkiss, for talking sense. Since when has the manufacturer of an artist’s oil paints been entitled to a royalty on every painting the artist sells? How absurd. The painter purchased his creative tools; he may now use them as he sees fit, commercially or not, with nothing more owed to the paint company. It is Big Brother at its worst, and surely un-American and unconstitutional as well, for a company to demand a tax such as this on works it did not create.

    Tools can be patented and copyrighted, of course, to protect the hard work put into creating them by their inventors. It is correct to prevent theft of a tool’s unique design features, or even to charge a license fee to those other companies that incorporate that tool into their own products; i.e., a camcorder. But how can the tool’s inventor lay financial claim to any artistic works created by those who legally purchased that tool?

    I hope that the readers of this will see that MPEG-LA is trying to inflict great harm on our rights as citizens…trying to set a dangerous precedent that, if allowed to stand, will lead to other corporations taking bolder steps to rob us of our personal liberties. Don’t let them get away with it. Contact your congressmen and senators, and tell them that you are outraged by MPEG-LA’s actions against consumers.

  6. 6 hotchkiss

    Charles,

    Back at you ;-).

    We are close to living in the total corporatist-fascist state. Given the current administrations desire to regulate the internet ala the FCC, we are not far off. The internet is the last bastion of free speech, once it’s regulated it will be dead as far as free speech is concerned- think the broadcast networks, the tools of the establishment.

    Man o Man, I wish I was wrong, but despite your suggestion to raise cane with their elected masters, , the sheep are so deep in slumber that no outrage will arise. This country- the “land of the sheep and the home of the slave” is very happy with it’s slavery. Ok, I feel better. ;-)

    On the intellectual property note- I’m horrified by the actions of Apple as of late. Are they an electronics manufacturer or a legal firm? They are slapping down copyright infringements on anything that moves. Apparently, the days of Apple competing on the merits of their products are over, they are going to eliminate their competition through legal costs. Sad, disgusting. It’s the timeless tactic, use the government to do what cannot be accomplished in the marketplace- kill the competition.

    I’ve lost a lot of respect and fondness for Apple over this new direction.

  7. 7 RobShaver

    @CharlyMckay,

    I’m with you on most of what you said. But I don’t agree when you said, “It is correct to prevent theft of a tools unique design features”. First it isn’t theft … its infringement. Second, patents and copyrights, as currently practiced in the USA, are stifling innovation.

    Patent and copyright was invented to promote innovation but I don’t see how anyone could argue that it’s having exactly the opposite effect now. In the employment briefing at the company I’m at now, a company lawyer told us NOT to read patents as it increases our liability. Treble damages.

    The normal state of ideas is the Public Domain. Patent and copyright are government-granted monopolies. So if you want to call it theft, then I think these rights-holders are stealing from the Public Domain. MPG-LA has never invented anything. The just charge the people who do a fee.

    Peace,

    Rob:-]