[M4IF Discuss] MPEG-LA, On2 and the DoJ

[Jordan Greenhall]

All, unfortunately, this isn't just straight non-sense.  I was on a
panel before the DOJ where the anti-competitive nature of MPEG-4 was
raised.  The chief concern was the interplay between patents and pools.
A patent pool is at extreme risk of anti-trust and anti-competitive
behaviour (can you imagine a Joint Venture between the 18 patent holders
passing regulatory approval?).  The market benefit of patent pools in an
IP landscape that can be described as a "patent thicket" has justified
their existence.  But, their actions are subject to very close scrutiny
- if there is any evidence that the pool is using its market power to
extract even the smallest bit of premium . . .
The recent license terms announcement (particularly the use fees) does
raise some serious concerns.  Not only is the fee novel, but the
potential fees associated with MPEG-4 in certain circumstances could
exceed those associated with MPEG-2 by a great deal.  Compare this to
previous standards such as H.261 and MP3, and the DOJ might see MPEG-4
as an unfair revenue generation effort by 18 multinationals attempting
to avoid anti-trust legislation through the vehicle of a patent pool.
J
-----Original Message-----
From: discuss-admin   lists.m4if.org [mailto:discuss-admin   lists.m4if.org]
On Behalf Of Craig Birkmaier
Sent: Friday, March 15, 2024 5:27 AM
To: Bernhard Grill; Robert Saint John
Cc: M4IF Discussion List (E-mail)
Subject: Re: [M4IF Discuss] MPEG-LA, On2 and the DoJ
At 6:06 AM +0100 3/15/02, Bernhard Grill wrote:
>Robert Saint John wrote:
>>Well, this is just getting downright silly. As if the issues at hand 
>>weren't complicated enough, On2 has decided to try to disrupt the 
>>entire MPEG effort by calling in our (United States) beloved DoJ....
>
>I'd call it an interesting PR gag. On2 and other companies are using
>the current MPEG-4 licensing discussion to gain publicity for their 
>propriatory products.
>Rob's answers are quite correct. Let's hope the professionals in 
>this business don't get distracted and recognize it for what this 
>really is.

On the surface, I tend to agree with Rob and others, that ON2 is 
using this as an opportunity to score some PR points. There is, 
however, another way to look at this. This could be an attempt to see 
who comes out of the woodwork to support the position that the 
companies who control the IPR in MPEG-2 and MPEG-4 have colluded to 
control the markets for digital video compression, and acted as an 
illegal trust, under the veil of the MPEG standardization process.
Clearly, these 18 companies could not have collaborated to control 
the migration of video from analog to digital under U.S. Law, without 
the mantle of credibility that ISO and MPEG bring to the table. It is 
less clear whether the kinds of consumer electronics "industrial 
policy" we have seen in Japan and Europe are illegal, or in fact 
government sanctioned competitive advantage.
What is clear is that the MPEG process was used to entrench a great 
deal of NEW IP related to the coding of digital video. The fact that 
MPEG-2 has been a marketplace success probably has more to do with 
the fact that the "CE trust" already controlled virtually every 
aspect of video acquisition, processing and consumer premises 
equipment. The fact that these companies worked together in MPEG to 
control the emerging field of digital video coding is neither 
surprising, nor is it illegal.
But the use of the IPR that dominates MPEG-2 and MPEG-4 visual to 
control the future evolution of the  markets for video distribution 
is quite another matter.  Frankly, I think that ON2 may find some 
traction with their letter to the DOJ, especially if others step 
forward to question the tactics of MPEG-LA.
Washington loves to get in the middle of these kinds of problems...it 
is highly profitable for the politicians, as we are seeing right now 
with the debate about a government mandate for a copy protection 
system in virtually every digital media appliance.
It is not difficult to draw the lines between MPEG-LA's attempt to 
tax the distribution of content, and all of the other power grabs 
that are taking place as we migrate to a new digital distribution 
infrastructure. Everyone wants to gain perfect control over the flow 
of bits, so that they can create perpetual cash flows from their 
copyrights and patents.
But this view of the future is being challenged by the Open Standards 
community that has grown in prominence thanks to the Personal 
Computer and Internet revolutions. This cannot be ignored, as the 
debate has now moved full square into the MPEG process as evidenced 
by the discussions about royalty free implementations of 26L and 
other MPEG development efforts.
Sebastian Moeritz wrote:
>Well -- let's put it this way, I would not interpret too much into all 
>these third-party efforts that are made up to disrupt MPEG-4 etc. They 
>will not succeed anyway. Plus, please do not forget -- it seems that it

>is the "non MPEG-4" community that always causes "trouble", not the 
>other way around. I wonder why ...

I find this position to be rather out of touch. I do not view the 
world outside of MPEG as a bunch of trouble makers. Instead, I see 
entrepreneurs who are taking up a very different approach to the 
evolution of technology. An approach that is much more horizontal, 
closer to both the consumers and the producers of new ideas. An 
approach that has proven that vast wealth can be created by managing 
the evolution of open standards, rather than controlling the 
evolution of industries via captive standards organizations that act 
to protect entrenched legacies.
Strong words, but I believe they are accurate. I am preparing to go 
to Las Vegas to view the slow death of the video industry. An 
industry that is being strangled to death by the desire of entrenched 
interests to maintain control of a lucrative franchise. An industry 
that is suffering from a self-imposed depression, because the ability 
to innovate is being thwarted.
ON2 may be trying to spin the MPEG-4 situation to gain some free PR, 
but the issues they are raising do resonate with the larger issues we 
face in trying to migrate to a new digital media infrastructure.
Sebastian expresses an optimistic view:
>Let's face it --  the licensing issues will be resolved and a mutually 
>acceptable solution will be found, because it is the interest and 
>desire of all concerned. Period.

But I do not share the optimism.
Clearly those who have invested heavily in MPEG-4 believe that their 
work deserves the opportunity to flourish in the marketplace. It is 
equally clear to me that the companies that control the key IPR in 
MPEG-2 and MPEG-4 have a different set of interests. They have 
successfully used the MPEG-2 process to protect a valuable television 
franchise. And they seek to profit from and control new forms of 
digital media that may eventually diminish the value of that 
franchise.
I do believe that some of these companies want MPEG-4 to succeed, but 
only so that they can tax the flow of content via ALL digital 
networks. I do not expect them to make the investments in MPEG-4 that 
will be required for it to succeed; they believe they have the power 
(and the IP) to impose their vision of the future.
-- 
Regards
Craig Birkmaier
Pcube Labs
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