H.265 Licensing Fees Examined / CEO Interview

By: Brian Karas, Published on Jul 14, 2016

Axis has repeatedly warned about H.265 licensing, most recently:

[The H.265 license model] includes a royalty on revenues generated on the content developed by any HEVC-enabled device. This royalty on content has prompted strong backlash

Is this true?

We spoke with the CEO of HEVC Advance, Peter Moller [link no longer available], the licensing company representing H.265 patent holders, to better understand H.265 licensing for security devices.

In this report, we examine why Axis is wrong, and break down the details of how H.265 licensing will apply to the video surveillance industry.

**** *** ********** ****** about *.*** *********, ************:

[*** *.*** ******* *****] includes * ******* ** revenues ********* ** *** content ********* ** *** HEVC-enabled ******. **** ******* on ******* *** ******** strong ********

** **** ****?

** ***** **** *** CEO ****** *******, ***** ****** [**** ** longer *********], *** ********* ******* representing *.*** ****** *******, ** better ********** *.*** ********* for ******** *******.

** **** ******, ** examine *** **** ** wrong, *** ***** **** the ******* ** *** H.265 ********* **** ***** to *** ***** ************ industry.

[***************]

0.5% ******* *** **********

*** **** ******* ********** *** *.*% ******* royalty ******** ** ******** ****, after ******* ******* ******** ** **** model. ** ******* *** forming ** *** ******** *** **** *****, ***** *** *** to ****** * **** alternative ** *.*** ********** this ********.

**** *.*% *** *** originally ******** ** ** payable ** ********* **** Netflix. It *** ********* ******* how, ** **, **** fee ***** ***** ** VSaaS *********, ***** *** not **** * ***-****** charge, *** *** **** per-camera ******* *************.

*********** ** **** *** should ***** ** ********* and *********** ***** ***** companies ********* **** *** streaming ******** *****.

**** ****** *** **** Commercial *******, *** ********** To ********

***** **** ******** ******* is *** ********** ** any ******* ************, **** though **** ***** *****, confirmed *** ***. ** ************ ***** ***** VSaaS-style ********* *** ***** security-related ************, *** **** informed **** ***** ******* of ******** ****** ***** were ********** "***-********** *****" *** not ********** ** *** licensing **** ****** *** single-time ******* *** *** encoder ******* (********* *****).

Licensing *** ******** *** ********

*** **** ******* ******** ***-**** fees *** ******** *******, or ******** *************, **** ********* an *.*** ******* ***/** decoder ********. ***** **** into **** ** ******* as *** "********* **** and ***** *******" ********. It ** * ***-**** fee, *** ** ***** on *** ******* *** product ***** **, ********** of ***** ** ** manufactured.

[**** ** ****** *********]

******** ******* **** ****** 1 *********, ***** *** shown ** *** ***** below, *** * *** $0.80 ***.  ****** * countries, ***** *** *** not ****** ** ****** 1, **** * *** $0.40/device ***.  

***** ****** * ****** the ******** ** *** market *** ********, ********** Region * ********* ******* China, ******, *****, ****** and ***** ******. *******, products **** ** ***** and **** **** **, e.g., *** ** ** EU ***** ***** *** higher ****** * ****.

*** ********* **** *** ***** Devices ******** *** * maximum ****** ******* *** of ***$**,***,***.

******** ****** ********* *******

******* *** * ****** license ***, ********** ** type. ** ************ ***** ***** multi-sensor ******** ******* *** were ******** ***** **** incur * ****** ***, even ** **** ******* multiple *******, ******** *******, tiled *******, ** *** other *******.

******** ******** ********* *******

********* ** *** ***, *** companies ***** *** * ******* fee per ******** ******, ********** of ****** ** ********* cameras, ** ********* *******.  

*** ******* ***** **** ** H.265 ******* ******** ** their ********, ***** ******* a ******** ******* *** each ****** ************. **** it *** ******* *** that *** ****** ******** is ********* *******-**** **** the ************, *** ************* are *** ****** *******, the *** ********* ***** *** be *********** ******* *** stated "** *** *****, ** would **** ** **** faith ** **** * reasonable *** ******** ********."

First **,*** ******* ******** *** ****

********* ****** *** **** licensing ********** ** * statement "******** ***** ********* of **** **** $**,*** annually ** *** **** to ******* * ******* Agreement, ******* ** ******* exceptions".  ****, ** *******, means **** *** ****** manufactures (***** ********* **** than ~**,*** ******* ********) would *** *** *** H.265 ********* **** *** hardware *******.

Caveats ** *** *******

**** ********* ** **** report ********* ******-**** *******, as ***** *** **** HEVC ******* ********* ** "In **********" ***** *** companies ************ *.*** ****/****** profiles, *** ********** *** HEVC ******* **** ** product *********. ****** **** may ***** *** ********* that ********* ********** ******** in ********, ** *** considered ***-********* *** ***** reasons.

******* ******* ****** *** Be ******** *.*** ********

***** **** *************, **** as *********, ************* ************** *** ******* **** (and ******* ****) ** H.265 ******** ** *.***, there ****** ** ** concerns ***** *** ** when ***** **** *** applicable, ** **** *** final ***** **** **. Additionally, ******** *********, ******* using *****-****** ** **-**** installed *************, ****** *** fear ************* ** ********* licensing **** *** ************ H.265 ******** ** ******** functionality ** ***** ********, as *** **** ******* *** made ** ***** ***** are ** ******* **** for ********* ******** ****** video.

** ***** ********* ************* who *** ******* ** H.265 ********* ************ *** their ******** ** ******* HEVC ******* ** **** questions ** *** ******** and ** *** ****.

*** ** **** *****, other ****** *** *.*** adoption ******, *.*., ******* (though **** ** ** increasing *** *******) *** H.264 ***** ****** ***** a ****** ****** ********** without **** ** ******* / *** *.***.

Comments (6)

Not surprising that HEVC Advance didn't mention their competitor the MPEG LA.

But the MPEG LA is the company that handles h.264 royalties today and is also the company who had the first patent portfolio for h.265. HEVC Advance was actually born of the discontent of some of the MPEG LA manufacturers.

In any event, the quandary is that buying a license from one does not mean one does not need one from another.

We appreciate Brian reaching out to HEVC Advance and taking the time to get the facts for IPVM Members. The issue of MPEG LA wasn't raised during the conversation. Please note that we don’t view MPEG LA as a competitor but rather as a complementary patent pool administrator. Our programs are quite distinct and while I hope patent owners join our program to the extent that such patent owners believe the MPEG LA program better meets their needs I hope they join MPEG LA. HEVC Advance was, in fact, born because many key patent owners did not believe that MPEG LA provided a ‘product’ that meet the needs of both patent owners and patent users and thus would not provide a long term solution to the market place. We believe that HEVC Advance does provide that balance. And while having two patents pools might not be as efficient as having one patent pool, it is almost certainly far more efficient than having to execute multiple bilateral license deals.
Pete Moller
CEO
HEVC Advance

Thanks Peter.

Does joining one patent pool excuse one from joining the other? Will some/most need to join both?

What are, in your opinion, the ramifications of Technicolor exiting both pools? Does this create a third entity to pay?

Each patent pool generally offers a license to a different set of essential patents. So to the extent a company determines it needs a license to both of those separate sets of patents then yes, they would need to join both patent pools. I would note that HEVC Advance has offered the opportunity for all of the MPEG LA licensors to join the HEVC Advance patent pool with no change in our royalty rate structure. If that was to happen then companies would only need to join the HEVC Advance patent pool to obtain a license to both sets of patents.

Concerning Technicolor, please note that Technicolor did not exit both pools, rather Technicolor did not join either pool. That is, they were never a licensor in either pool. I believe the ramifications of Technicolor not being a licensor in either pool is negligible. It is my understanding that Technicolor has a relatively modest portfolio of essential patents, so IF they sought licenses from companies in this market category and IF companies determined they needed a license to those patents, then I would expect the royalty rate would also be modest. In any event, the licensing group at Technicolor is a professional organization and I have no doubt that they will act responsibly and not hinder adoption of HEVC technology. And who knows, maybe they will reconsider and decide to join either HEVC Advance or MPEG LA in the future.

Concerning Technicolor, please note that Technicolor did not exit both pools, rather Technicolor did not join either pool. That is, they were never a licensor in either pool. I believe the ramifications of Technicolor not being a licensor in either pool is negligible.

Thanks Peter.

I was asking because of their own press release, which contains a fair amount of puffing:

TECHNICOLOR WITHDRAWS FROM THE HEVC ADVANCE POOL TO ENABLE DIRECT LICENSING OF ITS HEVC IP PORTFOLIO

Very Informative article.

Much thanks for this update.

Login to read this IPVM report.

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