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On2 claims joint MPEG-4 licensing is anti-competitive

10 April 2002 14:44 by Petteri "dRD" Pyyny

New York-based On2 which develops its own video encoding routines has fired an attack against universal MPEG-4 licensing, organized by MPEG LA.

Company has sent letters to Department Of Justice to see if the joint licensing MPEG LA is proposing for MPEG-4 patents, is anti-competitive. Company basically fears that if the joint licensing is approved by industry giants like Apple, it will practically kill the company. If On2 manages to win its claims, it would eventually render MPEG-4 technology almost useless for most of the companies, because there are too many parties involved who own patents related to MPEG-4 technology.

MPEG LA is an organization which has been licensing MPEG-2 patents for companies who wish to include MPEG-2 encoding or decoding routines to their products. Such products include DVD players, software encoders, hardware encoders, DVD decoder cards, digital TV boxes, TV broadcasting equipment, etc.

Problem in MPEG technology licensing is really the fact that there are at least dozen companies holding key patents for MPEG-2 format and more than 20 who hold key patents for MPEG-4 (and even more who hold non-critical patents) -- MPEG LA has developed a one-stop licensing contract, so the licensees don't need to negotiate with each patent holder separately.

MPEG LA's proposal for joint MPEG-4 licensing was attacked by streaming and technology industries because of its clause which would set the pricing based on encoded material's length instead of fixed fee.

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