H.264 licensing body won't charge royalties for HTML5, other Web streams

One of the key objections Mozilla and its supporters have had to the use of H.264 codecs for HTML5 video -- the built-in decoding system being developed for the next edition of HTML -- is that it's proprietary technology. As such, there are no guarantees against the rights holders to that technology staking claims to it, and charging money for it...and there may not be much protection against others who believe they have claims on it, to test their theories in a full-scale patent infringement trial.

Up to now, the MPEG Licensing Authority (MPEG LA) has not been charging royalties to anyone, including streamers and the viewers of streamed content, for the use of H.264 encoding and decoding for the specific purpose of delivering free streams. That way, for example, the participants in YouTube's and Vimeo's current tests of H.264 in HTML5 -- Web browser-based video without any plug-ins -- can proceed without incurring charges.

But discussion about that fact prompted a reader of the Linux news service LWN.net to ask MPEG LA whether that meant H.264 users must still obtain some type of license. As part of its response late yesterday, MPEG LA delivered a statement to multiple sources, including Betanews, announcing that the rights management firm will extend the period for which it will refrain from collecting royalties for use of H.264 in free streaming video, until the last day of 2016 2015. The term of that royalty-free agreement was due to expire at the end of this year.

"Products and services other than Internet Broadcast AVC Video," reads MPEG LA's statement to Betanews, "continue to be royalty-bearing, and royalties to apply during the next term will be announced before the end of 2010." Internet Broadcast AVC Video is the name of the patent portfolio to which H.264 belongs, when used in the context of streaming.

But in a direct, personal response to the LWN.net reader that was shared with other members, MPEG LA global licensing director Allen Harkness explained that the fact it doesn't charge end users (viewers) royalties for downloading H.264 streams, doesn't mean they should not be licensed to do so. Effectively, someone has to be licensed to produce the videos, and that license does incur a fee. But that license is then effectively passed downstream to the end user.

"While our Licenses are not concluded by End Users, anyone in the product chain has liability if an end product is unlicensed," wrote Harkness. "Therefore, a royalty paid for an end product by the end product supplier would render the product licensed in the hands of the End User, but where a royalty has not been paid, such a product remains unlicensed and any downstream users/distributors would have liability. Therefore, we suggest that all End Users deal with products only from licensed suppliers."

The implied danger here is that a producer of video who did not use a licensed codec (whether or not he owed anything for it) could be exposing the viewer of that video to liability. Or as Mozilla contributor Robert O'Callahan described it in a blog post last Friday, "In other words, if you're an end user in a country where software patents (or method patents) are enforceable, and you're using software that encodes or decodes H.264 and the vendor is not on the list of licensees, the MPEG LA reserves the right to sue you, the end user, as well as the software vendor or distributor."

The AVC codecs used to encode video for streaming or other distribution, often carries a fee regardless of how the videos themselves will be used. Some software makers, including UK-based Magix AG, opt to enable H.264 encoders to be purchased separately, to ensure not only that users are properly licensed but also that users who have no plans to actually encode using H.264, don't end up spending extra money for the license.

Under the terms of the current royalty rates due to expire on December 31, makers of software products including the codec are charged 20¢ per unit after the first 100,000 units sold per year, and 10¢ per unit after the 5,000,000th unit sold that year. Royalties for this year are capped at $5 million. Subscription video streaming services also incur royalties, at a rate starting at 2¢ per subscribed title plus about 10¢ per subscriber per year. Those rates, and their associated caps, are likely to change next year, and MPEG LA may be announcing changes soon.

9:12 am EST February 2, 2010 · A spokesperson for MPEG LA contacted Betanews Thursday morning to say the termination date of the royalties terms extension from its previous statements, was incorrect. MPEG LA is extending its royalty-free terms for streaming video until December 31, 2015, not 2016.