Following on the news that tech patent pool administrators MPEG-LA and Via Licensing have joined forces to form Via LA, Via LA President Heath Hoglund discusses how the “united entity” will operate, as well as presulting synergies for the combined codec licensing body, including streamlined IP distribution and economies of scale in this interview with Streaming Learning Center’s Jan Ozer.
“Can you give us an overview of what you–Via–and MPEG-LA just announced?” Ozer begins.
“We just announced the what we’re calling a united entity,” Hogund replies. “In the technical sense, Via Licensing acquired MPEG-LA as a subsidiary, but it’s more of a merger because for among other reasons. Some of the owners, GE Philips and Mitsubishi in particular, are rolling over their ownership interests from MPEG-LA to also become owners of Via. So going forward, we’ll have four sets of owners. We’ll have a board of directors that consists of a representative from GE, Pat Patnode, who heads their licensing program; Jako Eleveld, who heads Philips IP licensing; Kazuyo Kako from Mitsubishi, who heads their patent pool programs; Andy Sherman, who’s the general counsel at Dolby; and myself.
“And just to close the loop,” says Ozer. Via was a wholly owned subsidiary of Dolby, right?”
“Exactly,” says Hoglund. “And from the inception, because of the business that we’re in, it was structured as an independent subsidiary. We’ve always had a separate independent board and separate management but technically we’re a subsidiary of Dolby. “
Via LA’s Major Codec Pools
“Most of our viewers are gonna know this, but what are the major video codec pools in the MPEG-LA portfolio?” Ozer asks.
“MPEG-LA got its start with the MPEG-2 video program,” Hoglund says. “That’s a technology that’s now out of patent, but it was really the first large-scale, very successful patent pool for the for any codec technology. And so they early on built a reputation in the video codecs space. They next started the AVC patent pool. And that’s another one that’s been enormously successful for the market. It’s just extraordinary. I think it’s the most widely adopted patent pool of all time, with nearly 2,000 licensees and roughly 40 licensors. It’s a hugely successful patent pool program. They have also run VC-1, which was Microsoft’s alternative to AVC, another successful successful pool. More recently, they were the first ones to launch an HEVC program that ultimately wasn’t the one-stop shop solution that their previous video codec pools were. But but they continue to have a successful program for that technology.”
“And also there’s the VVC pool as well,” Ozer says.
“Sure. And they have more recently launched the VVC pool,” according to Hoglund. “That one is early in the market both in terms of market adoption and in terms of the the direction that companies take in terms of aligning with a particular pool or deciding what their path will be, whether it be bilateral licensing, a pool, or whatever they might decide. That one still still seems like it’s early in the game of settling the market for that technology.”
“And what pools does Via have that you were hoping to achieve synergy with by merging the two entities?”
“A couple things there,” Heath replies. “One is that we have a program, an AAC patent pool, which is a super widely adopted MPEG technology. That pool has evolved over time as the original AAC technology was standardized in the late nineties. The early, basic codec and now is off patent, but the standard itself has evolved over time to include a bunch of important follow-on technologies, including stuff that allows for better compression efficiency, live communication, and, more recently, transition between old-school psychoacoustic audio coding and speech coding. Over time, development, we’ve added those future AAC flavors into the pool, so there’s been a different evolution on the audio side than on the video side. In addition to the AAC program, we have an MPEG-H program, which is basically 3D audio. It’s attracted most of the licensors, or most of the patents in the space, and it’s attracted some important licensees. Sony and Samsung have already joined as licensees, and they’re two of the biggest implementers of the technology. We’d like to continue to see market adoption of 3D audio. If you haven’t experienced it, it’s pretty cool. We’re hoping that the market the same promise in that technology.”
Licensing Audio and Video Codecs
“So I guess the thought,” Ozer asserts, “is that the companies that were licensing H.264 and HEVC were also licensing the audio codecs.”
“Absolutely,” Hoglund confirms, “a hundred percent. The licensees are the same. Anything that’s got an AVC decoder in it has an AAC decoder in it too. And the same is likely true for HEVC. So there’s definitely a ton of overlap there. There’s not many devices that just play video without any audio.
“I get that,” Ozer replies. “So how does that simplify licensing going forward? Is it in the same account manager from your side handling both?”
“The short answer is yes,” says Hoglund. “There are a bunch of things that it does for us. Businesses always look for gaining scale. And so it obviously makes it easier for manufacturing in whatever jurisdiction if you’re preparing the audit the royalty report for AVC and you needed to do it a for AAC as well. It’s sure nice if they’re both in the same system and you can do it at the same time. So that’s something that will make the licensee experience easier. We organize licensor meetings from time to time, and I think it makes it easier for everybody if there’s some commonality. It’s the same kind of thing as having scale, and the benefit of efficiency for a little bit larger organization.
Merger’s Impact on H.264, HEVC, and VVC Licensors
“What does this mean for the licensors in MPEG-LA’s H.264, HEVC and VVC pools?” Ozer asks.
“No change,” confirms Hoglund. “It doesn’t change anything because we’ll continue to support those programs. Earlier today we did our first all-hands meeting with the combined teams and there wa some excitement in the room. A lot of people feel good about the combination. I think there’s a good fit of the two cultures, and in terms of the companies, I think we’ll have a little bit more energy going forward for Via and for the MPEG-LA folks.”
“Does this type of event give the patent owners any ability to get out of the pool, or does it change the terms?” Ozer asks.
“No, it doesn’t,” says Hoglund. “In the technical legal sense, as I mentioned at the beginning, MPEG-LA still exists as a legal entity, but it’s now a wholly owned subsidiary of Via Licensing Alliance. The reason is that we don’t want to go change the thousands of license agreements that are in place to a new administrator. Because MPEG-LA continues to exist and as a legal entity, those agreements stay in place.”
Are Other Patent Pool Mergers Coming?
“I’ve read that Access Advance is owned in part by General Electric, Philips, Dolby, and Mitsubishi, who are now the owners of Via LA. You both have HEVC and VVC pools. This raises the question, do we see any kind of merger of the pools going forward?” Ozer asks. “Do we see the HEVC pools merging and the VVC polls merging, or even all four merging, or do we see them operating separately going forward?”
“The ownership groups are still distinct because MediaTek is also an owner of the Access Advance program. So there’s one one unique owner between the two companies. But at a high level, GE, Philips, and Mitsubishi were in fact owners of MPEG-LA and so they were owners of that company when they chose to launch Access Advance. So there’s some there’s some market conditions that drove two different market two different pool offerings. and it, it and there were, there were common owners between MPEG-LA and Access Advance, and there are now our common owners between Access Advance and Via LA. I don’t think the ownership change itself changes the outcome, but obviously we’d like to see one pool solution sometime. To me, that’s the best outcome overall. But at one point in time we saw three pools forming for HEVC. We’re now migrated to two pools, and that’s obviously better than three or better than none at all. I don’t have any plan to see that outcome–the merger of the two existing HEVC programs. It seems like the market has spoken in the direction of having those two programs. They’ve coexisted now for since 2013.”
“Why were two pools formed if there was so much common ownership?” Ozer asks. “What’s the benefit of having two when everybody would agree that one is better?”
“At the time when they formed, I think there was a disconnect,” Hoglund hypothesizes, “and the licensors and the licensees didn’t fully align on what the program terms looked like. We did see a separate pool form for some of the licensors and that drove that outcome, I think. For better or for worse, that’s what happened, and the rates ended up being not so far apart. The Access Advance rates, I think, are higher, but they’re not dramatically different. Having the two programs obviously increases the royalty stack, because you need a license for both programs.”
“I think Access Advance is a bigger pool, but MPEG-LA has substantial IP in their pool. It’s a little bit different with VVC. I know we’re early days in VVC and most patent owners are still not in either pool, but what do you see happening with VVC going forward?”
“We’ll be supportive of wherever the market goes,” says Hoglund. “We certainly support a one-pool outcome. We’d like to see that result. Speaking frankly, I’m not sure if Access Advance has critical mass or sufficient momentum to drive to a one-pool solution. If we thought that was the case, we’d step out of the game. If the market wants us to participate in an alternative solution, we’ll look at it. And if we think there’s a path for us to lead to a one-pool or a two-pool solution that’s healthy for the market, we’ll look at it. If one pool looks like the right path, we’ll throw our support behind another pool. We did that for our wireless programs. We decided to step out and support Sisvel because we felt like that was the best solution for the market. So we’re open to doing that. We want to do the right thing.”
Kudos to MPEG-LA
“I’m not sure how many people are still with us,” Ozer quips, “but I just wanted to express not only to you, but also to the people of MPEG-LA just how big a deal they have been–Larry Horn in particular has been a big deal to streaming video in general. MPEG-2, as you said, was fundamental. The Department of Justice letters ground zero for video pool codec development. What they did in the market with H.264 was probably, as you said, the best pool ever. It’s great for the patent owners, great for the implementers, great for the publishers, and wonderful for consumers who watch YouTube and Netflix and all video on the web. That’s still primarily in H.264. So, a shout out to those guys for the contributions they made. Great license portfolio, you’re picking up great employees, and Via has a bunch of the same. So good luck going forward and congrats on the merger.”
“I can’t echo what you said enough,” Hoglund concurs. “Larry’s been a real icon and he’s been fantastic. He’s stayed on as an advisor. I appreciate his advice and I also enjoy talking with him. I felt like we had a, a really strong team at Via before this. I’m in the process of getting to know the MPEG-LA folks a little bit better and super-impressed by them. I think it’s gonna be good for everybody–good for the industry, good for the combined organization. So we’re excited for it.”
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