Royalty-free MPEG video coding standard ups the ante for Google's WebM/VP8

Amid all the debate about whether Google's WebM video codec VP8 is truly patent-unencumbered and a valid alternative to the market-leading video codec (AVC/H.264), a very interesting project nearly went unnoticed: the development of a royalty-free MPEG video coding standard.

At a recent meeting of the Motion Picture Experts Group (MPEG), the decision was taken to issue a call for proposals (which will formally happen in March 2011) on video compression technology "that is expected to lead to a standard falling under ISO/IEC 'Type-1' licensing, i.e. intended to be 'royalty free'." The announcement also states the following:

"In recognition of the growing importance that the Internet plays in the generation and consumption of video content, MPEG intends to develop a new video compression standard in line with the expected usage models of the Internet. The new standard is intended to achieve substantially better compression performance than that offered by MPEG-2 and possibly comparable to that offered by the AVC Baseline Profile."

It's important to note the difference between MPEG, the standardization body, and MPEG LA, the licensing agency. MPEG defines standards, and those can be royalty-free or royalty-bearing, depending on what the owners of the essential patents agree upon in each case. MPEG LA manages patent pools related to royalty-bearing standards, serving right holders and licensees as a one-stop solution by way of aggregation.

Rob Glidden, a former Sun executive and digital TV expert, made me aware of MPEG's royalty-free codec plans via Twitter (thanks for that!). I found several interesting posts on his blog, such as this recent one arguing for a royalty-free video codec standard. Just like me, Rob appears to be somewhat skeptical of claims that WebM/VP8 is truly patent-free.

Three formidable hurdles for WebM/VP8

Google and its WebM allies (primarily Mozilla, Opera and the Free Software Foundation) wanted to pose a direct challenge to AVC/H.264, the incumbent and ubiquitous video codec. Their strategy was to seek adoption of WebM/VP8 as an Internet standard, claiming that it was the only format of its kind to be available on royalty-free, open-source-like terms. They thought they were already challenging the champion in the final match, but not so fast: MPEG LA may soon start collect royalties from VP8 adopters, and if MPEG's own royalty-free codec initiative succeeds, VP8 will have to beat it -- or be forgotten.

Using that tournament analogy again, VP8 is only in the quarter finals. MPEG LA's formation of a VP8 patent pool and MPEG's call for proposals on a royalty-free video codec are such important developments that the results they produce will have to be awaited before standardization on VP8 will even be seriously considered by the W3C or IETF. There is no rush because everyone can demonstrably watch Internet videos for the time being even though HTML 5's video tag is currently codec-agnostic.

I have drawn up a simple graphic that shows the three hurdles VP8 is facing:

If MPEG LA's patent pool for VP8 disproves claims that Google's codec is truly free of charge, it loses its intended unique characteristic and is out of the game. At that stage, even the Free Software Foundation may feel forced to withdraw its support. It wouldn't be possible for the FSF to advocate a royalty-bearing format.

Should VP8 overcome that hurdle, it would play a semifinal match against MPEG's royalty-free standard. I'll explain further below why this one is also going to be a tough challenge.

Only if VP8 survives that round as well, it will get to challenge AVC/H.264. To dethrone the reasonably-priced market leader, VP8 would have to deliver high quality, not just royalty-free availability.

The odds are long against WebM/VP8

Surmounting three significant hurdles in a row -- since failure at any of them means "game over" -- is really difficult. Even if one assumed a 60% chance in each case, the aggregate likelihood of success would just be slightly above 20%. In my opinion, VP8's chances are less than that. Let me explain my view on each of the three challenges.

1. MPEG LA patent pool for VP8

MPEG LA requests submissions of patents essential to VP8 until March 18, 2011. That's less than six weeks from the announcement. I presume MPEG LA already knows of a variety of relevant patents, and has discussed this with its membership. The first time MPEG LA CEO Larry Horn mentioned the possibility of such a pool was in an interview with AllThingsD in May 2010.

After the submissions deadline, MPEG LA's patent evaluators will make a determination as to which patents are truly essential to VP8. Obviously, whatever they conclude isn't the same as a judicial declaration of infringement. But MPEG LA is trusted by industry, and the moment it specifies the patents it believes read on VP8, Google and its allies will either have to invalidate those patents (which is unlikely to work for a reasonably long list) or prove that there isn't an infringement.

There could also be patents which VP8 infringes but which aren't submitted to MPEG LA in that process. I didn't mention that before, just to keep things simple at the time. When assessing the likelihood of VP8 truly being patent-unencumbered, this additional risk must, however, be taken into account.

2. Royalty-free MPEG video coding standard

It's plausible that MPEG can pull off a royalty-free coding standard. It will be able to draw from three types of patents for that purpose:

• patents that have already expired

• patents approaching expiration (which limits their commercial value)

• patents whose owners are willing to forgo short-term revenue opportunities in favor of longer-term objectives, or who consider it a prudent strategy to support a royalty-free standard for web purposes and monetize related (but other) patents in other fields of use such as digital cameras and digital television

Codec development was already reasonably advanced in the early to mid 1990s, and US patents of that kind have a maximum term of validity of 20 years. Therefore, the first two groups of patents may already be sufficient to produce a codec at a level with, or even significantly superior over, VP8.

In order to compete successfully with a royalty-free MPEG standard, VP8 would have to be clearly better just to be considered. That's because MPEG has the backing of many vendors and offers an open and inclusive process. Under MPEG's stewardship, such a standard can continue to be developed (as new patents expire, approach expiration or are made available by their owners for other reasons) in a balanced, consensus-based way, while WebM is dependent upon Google, a company with specific strategic interests.

The argument that the availability of a WebM reference implementation on open source terms ensures vendor independence isn't sufficent. Theoretically, it's true that anyone could take it in a different direction. Practically, such forking would result in fragmentation, and it's doubtful that anyone would ever put significant resources behind such an effort.

3. Incumbent AVC/H.264 standard

Should VP8 really overcome the challenges previously described, it would still have to garner broadbased industry support. It wouldn't be in the interest of standardization bodies like the W3C and the IETF to formally declare a "standard" that fails to be adopted widely. Such failures can undermine the credibility and diminish the influence of those organizations.

AVC/H.264 isn't royalty-free, but its terms appear to be acceptable to a majority of industry players. In order to take any sizable part this incumbent's market share away, VP8 would have to be at least technically comparable. Degradations wouldn't be acceptable to consumers. However, my own impression and that of most of the opinions I read is that there's still a noticeable gap.

One of the challenges for VP8 is the limited number of hardware products supporting it. For hardware companies it's particularly important to be careful about patent-related risks. A software company may be able to just change its code. Hardware companies would be hit hard by injunctions or ITC import bans. VP8 faces a chicken-and-egg problem with the hardware industry, and the two new initiatives I described before will also have an effect in that area.

Google and its WebM allies won't give up. They are determined to turn this into a new edition of the "videotape format war" of the late 1970s and early 1980s. Looking at the drawing that shows the three hurdles and considering the facts, I have my doubts that they will get very far. However, even if the odds appear to be long against VP8, it may have a positive effect on the willingness of patent holders to support MPEG's royalty-free codec standard.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents.

Share with other professionals via LinkedIn:

Alcatel-Lucent subsidiary Multimedia Patent Trust sues Apple, LG, Canon and TiVo: AT&T video codec patents rear their ugly head again

Certain patent portfolios give rise to litigation again and again over the years. An Alcatel-Lucent subsidiary named Multimedia Patent Trust has previously litigated against Microsoft, Gateway, Dell and a long list of consumer electronics manufacturers and broadcasters over patents originally obtained by AT&T (Lucent was an AT&T subsidiary, while it is now part of Alcatel-Lucent). It was also at the center of litigation instigated by the MPEG LA licensing organization that claimed some patents held by the Multimedia Patent Trust had actually been committed by its corporate parent to MPEG patent pools (more on that further below).

Yesterday, Multimedia Patent Trust filed a new complaint against Apple, LG, Canon and TiVo with the US District Court for the Southern District of California, alleging the infringement of four different patents. All of those patents related to video codecs (encoding/decoding technologies). Canon is alleged to infringe all four of those patents; Apple and TiVo, three of them; and LG, two of them.

The accused products include pretty much the whole range of Apple's offerings, Canon's VIXIA camcorders and video processing software (such as Roxio MyDVD), no less than 64 different LG mobile phones (apparently, however, not including its LG Optimus 7 Windows-based phone), and several TiVo digital video recorders as well as its Desktop Plus software.

For Apple and LG, it's only about money: injunctions against them are highly unlikely

Two of the four asserted patents have already expired, another one will expire within less than a year, and the fourth patent in the spring of 2014. Multimedia Patent Trust seeks an injunction concerning whichever patents will not have expired by the time of the ruling, which will realistically be only the fourth one -- which is, however, asserted only against Canon and TiVo but not against Apple and LG -- or maybe none at all. So at least for Apple and LG, the risk of an injunction is next to nil, and for Canon and TiVo it's connected to only one of the patents. But even after expiration of a patent, its owner can collect damages for past infringement, and that's what Alcatel-Lucent really seems to be going after.

In the following paragraphs I'll take a closer look at the patents-in-suit, the accused products, Multimedia Patent Trust's litigation history, and its choice of forum.

As a side note, the suit was filed by the law firm of Quinn Emanuel Urquhart & Sullivan, which specializes in litigation, is representing Motorola against Apple on multiple fronts, and is known for its closeness to Google and long-standing relationship with IBM. However, it appears that the Quinn Emanuel attorneys working on this matter are all based in Los Angeles and not involved with any of the litigation between Apple and Motorola (I will double-check on this).

Priorsmart newsletter invitation

Before I go into more detail, let me tell you that I became aware of this new suit through Priorsmart's daily newsletter that lists new patent suits. If you're also interested in subscribing to it, here's an invitation. I find it really useful.

The four patents-in-suit

US Patent No. 4,958,226: Conditional motion compensated interpolation of digital motion video; application filed on 27 September 1989, expired last year; asserted against Apple, Canon and TiVo, but not against LG

US Patent No. 5,136,377: Adaptive non-linear quantizer; application filed on 11 December 1990, just expired; asserted against all four defendants and previously against Microsoft and others

US Patent No. 5,227,878: Adaptive coding and decoding of frames and fields of video; application filed on 15 November 1991, will expire in November 2011; asserted against all four defendants

US Patent No. 5,500,678: Optimized scanning of transform coefficients in video coding; application filed on 18 March 1994, will expire in March 2014; as I mentioned, this one is not asserted against Apple and LG; it is asserted against Canon and TiVo, and it was previously asserted against Microsoft and others

Accused products

I previously gave a rough overview of the products that allegedly infringe the asserted patents. Let's take a closer look at the accused Apple and LG products.

Three of the patents (all but the fourth one) are asserted in some way against Apple. The list of accused products for each of those three patents have many products in common: a range of computers (MacBook, MacBook Pro, MacBook Air, iMac, Mac Mini, Mac Pro), a range of video processing software (Final Cut Studio, Final Cut Express, Final Cut Pro, Final Cut Server), Apple's iLife software suite, Apple's QuickTime X and QuickTime Pro codecs, the iPhone 4, and the iPod touch (4th generation).

The '226 and '878 patents allegedly also read on the QuickTime Player, iTunes, the iPad, and AppleTV. The '337 and '878 patents are allegedly also infringed by the iPhone 3GS (the '878 also by the iPhone 3G) and the 5th generation iPod nano, whereas the '878 patent is furthermore asserted against the 6th generation iPod and additional generations of the iPod nano (3rd through 5th) and iPod touch (1st through 4th).

The assertions against LG appear to relate to different operating systems. They include some Android phones such as the Ally or Optimus M but I didn't find any LG products based on Windows Phone 7 at first sight (I specifically looked for the LG Optimus 7). Given that the same patent holder previously settled litigation with Microsoft, there may be arrangements in place that take care of that.

Here's the complete list of accused LG phones: Ally (V5740), Apex (US740), Axis (LGAS740), Banter Touch (UN510), Bliss (UX700), Chocolate (VX8500), Chocolate (VX8550), Chocolate 3 (VX8560), Chocolate Touch (VX8575), Dare (VX9700), Decoy (VX8610), Encore (GT550), EnV (VX9900), enV Touch (VX11000), EnV2 (VX9100), EnV3 (VX9200), eXpo (GW820), Fathom (VS750), Force (LX370), Glimmer (AX830), Incite (CT810), Invision (CB630), Lotus (LX600), Muziq (LX570), Neon (GT365), Neon II (GW370), Octane (VN530), Optimus (P509), Optimus M (MS690), Optimus S (LS670, Quantum (C900), Prime (GS390), Rhythm (AX585), Rhythm (UX585), Rumor (LX260), Scoop (AX260), Shine (CU720), Spyder (LG830), Spyder II (LG840), Swift (AX500), Trax (CU575), Tritan (AX840), Tritan (UX840), Venus (VX8800), Versa (VX9600), Vortex (VS660), Voyager (VX10000), Vu (CU915), Vu (CU920), Wave (AX380), Xenon (GR500), AX565, AX8600, CF360, CU500v, CU515, LG260, LG380, LX400, UX380, VX8350, VX8360, VX8700, VX9400.

In my reporting on smartphone disputes, I will increasingly discuss the accused products. You can find information on accused products in some other -- actually even more important -- cases in my new one-page chart covering major ITC investigations related to smartphones as well as in the reference part (after the diagrams) of my Apple v. Android visualization.

Litigation history

I said before that Multimedia Patent Trust has a history of litigation, and I mentioned a controversy with the MPEG LA patent pool company.

A few years ago, Multimedia Patent Trust obtained a $1.53 billion jury verdict against Microsoft, which was and probably still is the record amount of patent infringement damages ever awarded by a jury in a US court -- in fact, a jury of the same court in which it filed this new suit. However, the Alcatel-Lucent subsidiary never received the full amount. On 6 August 2007, the judge tossed out the jury verdict after a second review. Observers attributed that decision to standards previously established by the US Supreme Court.

I found an SEC filing by Microsoft that summarizes this litigation (Microsoft refers to Alcatel-Lucent, the parent company of Multimedia Patent Trust) and the outcome:

"In 2003 we filed an action in U.S. District Court in California seeking a declaratory judgment that we do not infringe certain Alcatel-Lucent patents (although this action began before the merger of Alcatel and Lucent in 2006, for simplicity we refer to the post-merger entity of Alcatel-Lucent). In April 2008, a jury returned a verdict in Alcatel-Lucent’s favor in a trial on a consolidated group of one video and three user interface patents. The jury concluded that we had infringed two user interface patents and awarded $367 million in damages. In June 2008, the trial judge increased the amount of damages to $512 million to include $145 million of interest. We have appealed. In December 2008, we entered into a settlement agreement resolving all of the litigation pending between Microsoft and Alcatel-Lucent, except one of the two patents the jury concluded we had infringed in the April 2008 verdict. Approximately $500 million remains in dispute in the remaining matter. In April 2009, the U.S. Patent and Trademark Office, after a reexamination of the remaining patent in dispute, determined that the patent was invalid."

So while the exact amount isn't mentioned, it's clear that it was nowhere near the original $1.53 billion, given that the last damage award appealed by Microsoft amounted to about a third of that amount, and if it was settled, it was presumably settled for less.

Wikipedia has an article dedicated to Alcatel-Lucent v. Microsoft.

Two of the four patents asserted against Apple, LG, Canon and TiVo were also used against Microsoft, but it appears that Microsoft never accepted those patents as valid, nor admitted an infringement. I venture to guess that the defendants in this new case will also contest the validity and the alleged infringement of the patents-in-suit.

MPEG LA sued Alcatel-Lucent over some patents considered essential to standards

In November 2007 -- even before the aforementioned litigation was settled -- MPEG LA sued Alcatel-Lucent in Delaware, claiming that Alcatel-Lucent as a member of the MPEG LA patent pool had an obligation to license certain patents on reasonable and non-discriminatory (RAND) terms but set up Multimedia Patent Trust as a formally separate entity only in order to circumvent those obligations. Bloomberg quoted a lawyer for MPEG LA as saying that "preventing the patents from being swept into the MPEG LA portfolio was the one and only reason for the transfer of the patents to the trust". Betanews quoted an MPEG LA statement:

"The only purpose of the transfer was to avoid Alcatel's contractual commitment in order to extract additional royalties from MPEG-2 patent pool licensees."

There's a term for that kind of alleged behavior: patent ambush.

On 29 March 2010 MPEG LA proudly announced a settlement of the case, following two days of trial that didn't appear to have gone too well for Alcatel-Lucent. MPEG LA said:

"As part of the settlement, in addition to other consideration, the Multimedia Patent Trust will submit the patents that were diverted to it in conjunction with the 2006 merger between Lucent and Alcatel for a determination of essentiality in accordance with MPEG LA’s normal procedures. If it is determined that one or more of the patents are MPEG-2 Essential Patents or MPEG-2 Systems Essential Patents, the Multimedia Patent Trust will join the MPEG-2 Patent Portfolio License and/or the MPEG-2 Systems Patent Portfolio License as a Licensor and all such patents will be included."

So the key question that still had to be resolved after the settlement was whether any of those patents were considered essential to the MPEG-2 standard. The latest list of MPEG-2 patents (as of 01 October 2010) indeed contains several Alcatel-Lucent patents. However, none of those are asserted in this new suit against Apple, LG, Canon and TiVo.

By asking for a straightforward injunction (concerning those patents that haven't expired), Multimedia Patent Trust indirectly asserts in its new complaint that the patents-in-suit are not essential to an industry standard.

It remains to be seen whether the defendants are going to claim that those patents belong to either MPEG-2 or some other industry standards concerning which Alcatel-Lucent made commitments in the past. In some other ongoing patent infringement disputes, such RAND commitments play a key role: Myriad Group [Google ally] v. Oracle, Microsoft v. Motorola, and Apple v. Nokia.

I will keep an eye on what happens in this case since it involves major players, but like I said before, at least from a smartphone point of view it's only about money, not about possible injunctions.

Apple can probably handle the cost of this easily: if it can't win the case, it can just write a check. If LG loses, it may have to add yet another company to a long list of patent holders seeking royalties on Android-based devices. However, it's nothing new that Google's mobile operating system isn't truly "free" because of patent licensing (and litigation) costs.

This case can have certain effects on the high tech industry, and it might raise interesting legal questions. But if you're primarily interested in disputes that may result in products potentially becoming unavailable within a year or two, I recommend focusing particularly on certain ITC investigations.

If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents.

Share with other professionals via LinkedIn: