Google's attempts to promote "royalty-free" open source technologies just can't succeed in a world in which software is patentable -- a circumstance that Google increasingly realizes and complains about. No one can safely claim anymore at this stage that Android is a "free" mobile operating system without making a fool of himself, given that approximately 50 patent infringement lawsuits surround Android, an initial determination by an ITC judge just found Android to infringe two Apple patents (with many more still being asserted in other lawsuits), and ever more Android device makers recognize a need to take royalty-bearing licenses from Microsoft and other patent holders. Now Google's WebM codec project is apparently bound for a similar free-in-name-only fate as Android.
As a result, WebM seems unfit for adoption as part of a W3C standard, given the W3C's strict policy that its standards must be either patent-free or at least royalty-free.
In February I reported on MPEG LA's call for submissions of patents deemed essential to the VP8 video codec, a key element of Google's WebM initiative. I had already expressed doubts about Google's claims of WebM/VP8 being unencumbered by third-party patents shortly after WebM was announced more than a year ago. The commercial issue here is that Google's claims of WebM being "royalty-free" would be reduced to absurdity the moment that any patent holder rightfully starts to collect royalties on it.
I just became aware of a new streamingmedia.com interview with MPEG LA. MPEG LA serves as a one-stop shop for licenses to AVC/H.264 and other multimedia codecs; streamingmedia.com is the website of Streaming Media magazine. In that interview, MPEG LA stated affirmatively that there have been submissions relating to the February call, and disclosed, at a high level, a preliminary result of the vetting process that commenced subsequently to the submissions period:
Thus far, 12 parties have been found to have patents essential to the VP8 standard.
12 parties -- that's really a high number, and it could even increase in the future.
For now, MPEG LA doesn't want to name those companies. Chances are that there is an overlap between those 12 companies and the ones that contributed to MPEG LA's AVC/H.264 pool. I sent MPEG LA an email to inquire about this, but the only answer I received was that "confidentiality precludes [MPEG LA] from disclosing the identity of the owners".
Whatever the names of those companies may be, it's obvious that they wouldn't have submitted patents to MPEG LA if they weren't interested -- at least in principle and always subject to agreement on the particular terms -- in collecting royalties on WebM. While the Moving Picture Expert Group (MPEG) is a standardization body that also has plans for a (truly) royalty-free codec, MPEG LA is independent from MPEG and in the licensing business. Even MPEG LA offers freebies. For example, it doesn't charge for the use of AVC/H.264 for free Internet video. But that's fundamentally different from declaring a codec royalty-free without any field-of-use restrictions.
The WebM Community Cross-License intiative can't solve WebM's patent problem
I'm sure that none of those 12 companies is a member of the Google-led WebM Community Cross-License initiative. The companies behind the WebM CCL are Google partners who have committed not to assert their patents (should they have any that read on WebM) against that codec. The significance of that initiative was overestimated by some people. It's just a non-aggression pact. Those companies didn't commit to launch retaliatory strikes against patent holders who may bring assertions against WebM. Also, there's a notable absence: Motorola is a top three Android device maker and should be an obvious partner for Google but apparently reserves the right to sue WebM adopters. A Motorola subsidiary named General Instrument Corporation is suing other companies, such as Microsoft and TiVo, over various codec-related patents, including (but not necessarily limited to) U.S. Patent No. 5,949,948, 6,356,708, 7,310,374, 7,310,375, 7,310,376, and 7,529,465. If Google can't even get all of its Android partners on board, that shows how incomplete the WebM cross-licensing group is.
Following a process similar to that of standard-setting organizations (though MPEG LA is a licensing body for patents related to standards previously set by others), MPEG LA evaluates the essentiality of such submissions, meaning that a group of patent experts has to make a determination on whether a patent declared essential really reads on a standard. Without such a vetting process, companies could declare patents essential only for the purpose of participating in a royalty-sharing agreement with those whose patents truly are essential to the relevant standard. In the Streaming Media interview, MPEG LA stresses that "[i]ndependent evaluations of patent essentiality are key to MPEG LA's pool licensing programs and have stood up well throughout its history".
While some have claimed all along that MPEG LA has a vested interest in WebM being deemed non-free (since that result takes a major differentiator away from AVC/H.264's competitor), it's important to consider that MPEG LA's credibility depends upon (among other factors) the quality of its essentiality assessment process. If the experts who perform this analysis overshoot and declare too many patents essential to a standard, MPEG LA's patent contributors will be concerned that their share in any royalty-sharing agreements related to a pool gets diluted. And if MPEG LA failed to recognize the essentiality of patents, licensees would be less likely to believe that MPEG LA is really a one-stop shop. MPEG LA doesn't give guarantees that it's a one-stop shop, but it certainly strives to form pools that minimize the risk of licensees facing infringement assertions related to patents that are not part of the given pool.
In the Streaming Media interview, MPEG LA said that there was a meeting "with VP8 essential patent holders in late June to facilitate a discussion among them whether and on what terms they may want to create a VP8 patent pool license", and that these efforts are continuing.
MPEG LA now has a clearer idea as to which patents would have to form part of the pool. Such a pool "typically remains open for the inclusion of additional essential patents", but there's now a group of a dozen patent holders who may or may not reach an agreement on the formation of a pool. To form a pool, they will have to determine what royalty rates MPEG LA would charge for the pool and how it would redistribute income from the pool to its contributors.
MPEG LA is a licensing -- not litigation -- entity
MPEG LA always stresses (in that interview and on previous occasions) that MPEG LA itself does not file patent infringement lawsuits on behalf of contributors to its pools. I guess that if a company uses a standard and refuses to take a license, MPEG LA will inform its contributors (maybe proactively, maybe just on request). But contributors don't appear to have an obligation to do so if an alleged infringer is unwilling to pay.
Obviously, if none of the actual patent holders ever sued an infringer, licensees might prefer to "roll the dice on litigation". If the 12 patent holders identified by MPEG LA so far (or possibly even more further down the road) join the pool, and if there are deep-pocketed organizations behind them that can afford to bring infringement actions, it's very likely that most of the alleged infringers would give serious consideration to a license deal.
Given that MPEG LA itself doesn't sue, it would be incorrect to claim that MPEG LA created this pool in order to litigate against Google or its partners. MPEG LA can legitimately claim that it offers a way for infringers to more efficiently address a problem that someone else (in this case, Google) may have created. It's not even that MPEG LA was needed to make the holders of those patents aware of the fact that their patents read on WebM. Those patent holders participate in a call for submissions, so it was the patent holders' own assumption that WebM infringes their rights.
It's important to understand that MPEG LA is just an aggregator. Even if MPEG LA didn't exist, those patents would still be around, and an adopter of WebM seeking to obtain a license to all of the declared-essential patents would have to talk to a dozen different companies.
A few months ago, the Wall Street Journal reported that the United States Department of Justice is looking into MPEG LA's activities. In that article, MPEG LA's CEO is quoted as describing his entity as "a convenience store" for licensing patents.
MPEG LA neither made software patentable nor filed the applications that resulted in the patents that were apparently submitted in response to its call for submissions. I believe a world without software patents would be a better place, and in such a world, MPEG LA wouldn't exist either. But in a world in which software is (unfortunately) patentable, MPEG LA can help to address the problem in one particular field.
I wouldn't even hold it against MPEG LA that Google itself didn't ask for the creation of a VP8 pool. The possible creation of an MPEG LA VP8 patent pool wouldn't be on the agenda if there weren't patents that read on VP8 according to their holders as well as MPEG LA's essentiality evaluators. This would also be a non-issue if Google had truly cleared all of the relevant rights instead of creating what could in the worst case become another lawsuit magnet like Android, potentially exposing a variety of companies and also non-profits like the Mozilla Foundation to the risk of litigation. I'm against the root cause of the overall problem, but MPEG LA is a partial solution in one field.
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