Can AV1 and HEVC just get along?
`1 message
`
`Kevin Jakel <kevin@unifiedpatents.com>
`
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`36
`
`Feature | Analysing the leading HEVC patent pools
`
`May/June 2018
`www.IAM-media.com
`
`What will TV cost you? Putting a
`price on HEVC licences
`
`Changes in how you watch movies, stream TV and use video chat are on the way. These
`will fundamentally affect the economics of how content is delivered to you, as well as
`the way that the patents underpinning the enabling technology are licensed
`
`By Erik Oliver and Kent Richardson
`
`The compression algorithm is a piece of critical
`
`technology that enables users to view videos on a
`phone or a computer and now there is a new one
`coming our way: HEVC.
`How important is the commercial adoption of this
`new compression technology? Without compression,
`the movie Thor: Ragnarok – which is 130 minutes long –
`would be 11.6 TB. With current compression technology
`that same movie is about 27 GB; with HEVC it is
`approximately 14 GB (see Figure 1). Thus, HEVC
`can help consumers to save limited mobile data and
`businesses to cut costs on data storage and transmission.
`All while delivering equal – or better – quality video.
`However, there is no point pretending that
`compression technology is easy. The math makes your
`head spin, the trade-offs are tortuous and the metrics
`to decide what looks good – whatever that means – will
`make you question why you ever asked. The implications
`for chip designers are staggering. Hundreds of billions
`of dollars of semiconductors are produced with specially
`designed circuitry and instructions for optimising video
`compression and decompression. Those semiconductors
`are built into billions of devices every year. How much
`circuitry are we talking? We estimate that for 2018, if
`you divide up all the transistors manufactured for video
`compression, there would be 4,000 transistors per ant.
`(There are about 5 quadrillion ants in the world.)
`Broad industry adoption of HEVC was kickstarted
`by Apple’s July 2017 announcement that its iOS 11
`would natively support HEVC. Apple’s membership of
`AOMedia became public as of the time of writing. It
`is too early to tell whether this membership will cause
`Apple, and others, to shift away from HEVC adoption.
`There are multiple reasons for slow adoption but a
`complex and expensive patent licensing landscape with
`three major licensing groups may be one. Compared to a
`peak price of $0.20 per handset for an AVC patent pool
`licence, a consumer electronics manufacturer planning
`to make a handset that supports HEVC would be facing
`an estimated $1.60 per handset charge to license HEVC
`from the three pools. There would also be additional
`royalties for owners of non-pooled patents, which we
`estimate would bring the bill to $2.25.
`One possible reason for the proliferation of licensing
`groups is that historically, licensing patents around
`audio/video compression has generated billions of
`dollars in revenue. Further, the patent battles are
`slated to continue with the latest HEVC standard. If
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`your company plans to support HEVC, this will be
`complicated. Solvable but complicated.
`This article aims to provide an understanding of the
`history of HEVC, video compression standards and
`the associated patent licensing landscape. Given the
`complexity of this subject, it focuses on providing a
`starting point to guide companies through some of the
`relevant patent licence issues. We are not playing favourites
`among the pools nor are we criticising any one pool or
`its policies. Rather we have focused on the perspective
`of HEVC adopters – the customers of the pools. How
`will they view the pool’s stated rates and policies? With
`that, we will look at how the pools, their pricing and the
`licences might affect adopters’ profits and costs.
`
`Brief history of video compression
`While HEVC is the sixth major ITU standard for video
`compression, it is also the third video compression standard
`jointly worked on with the MPEG (operating under the
`ISO and the IEC). Table 1 provides a brief overview of key
`video compression standards from the ITU and MPEG.
`Each of these standards has targeted delivery video at
`lower bandwidth requirements, generally at significantly
`higher quality. MPEG-2 was notable for its adoption as
`the standard format for digital TV broadcasting and in
`DVDs. HEVC has now been adopted for the next
`generation of digital TV broadcasting (ATSC 3.0 in the
`United States). Table 2 highlights several technical
`improvements between most of the successive video
`standards discussed in Table 1.
`Each of the standards builds heavily on those that
`came before. Thus, the 2013 HEVC standard does not
`stand alone; rather, many of its fundamental concepts
`relate to the approaches selected for H.261 back in 1988
`– which provides its own set of patent licence challenges.
`For example, HEVC builds on the macroblock concepts
`that date back to the 1988 H.261, while adding new,
`more refined capabilities for segmenting those
`macroblocks. For those interested in a more in-depth
`technical analysis of the standards, the presentations and
`papers by Gary Sullivan are a good starting point (see
`Google Scholar: https://goo.gl/QrNzhA).
`One further point: standardisation is critical to the
`technology industry and the video encoding space in
`particular. By standardising the video encoding stream,
`more devices can interoperate, which leads to the
`promised value highlighted by Intel’s former CEO,
`Craig Barrett: “[w]hen you have common interfaces,
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`Analysingthe leadingHEVC patentpools | Feature Ea
`
`Glossary of abbreviations and key terms
`
`AOMedia:theAlliance for Open Media.
`ASP: average selling price.
`ATSC: Advanced Television Systems
`Committee, developerofstandard forover-
`the-air digital television in the United States.
`AVC: advanced video coding, alternatively
`H.264 or MPEG-4 (part 10).
`FRAND:fair, reasonable and non-
`discriminatory.
`HEVC: high efficiency video coding,
`alternatively H.265 or MPEG-H (part 2).
`HEVC Advance:private company —- HEVC
`Advance LLC - based in the United
`States that serves as a patentlicence
`administrator for an HEVC pool.
`ISO: the International Organisation for
`Standardisation.
`IEC: the International Electrotechnical
`Commission.
`ITU: the International
`Telecommunication Union.
`LTE: long-term evolution technology.
`
`MPEG:the MovingPicture Expert Group.
`MPEGLA: a private company - MPEG LA,
`LLC - based in the United States that
`serves as a patentlicence administrator
`for many pools, including the MPEG-2
`pool, the AVC pool and an HEVC pool.
`NDA: non-disclosure agreement.
`NTSC:the previous US standard for
`analogue broadcast TV, named after the
`NationalTelevision System Committee.
`SEP: standard-essentialpatent.
`US Patent and Trademark Office.
`VC-1: a standard originally developed by
`Microsoft for Windows Media Video 9 but
`standardised by the Society of Motion
`Picture and Television Engineers (SMPTE)
`as SMPTE 421;it is also supported by
`Blu-Raydiscs.
`Velos: a private company- Velos
`Media LLC - based in the United States
`that serves as a licensor and licence
`administrator for an HEVC pool.
`
`commonprotocols, then everyone can innovate and
`everyone can interoperate. Companies can buildtheir
`businesses, consumers can expandtheir choices, the
`technology moves forward faster, and users get more
`benefit’ (emphasis added). Contrast this with the problem
`ofincompatible technologies where hardware for one
`format (eg, Betamax or HD-DVD)could not work
`with another (eg, VHSor Blu-ray).It is expensive for
`contentproviders andothers in the ecosystem to support
`multiple formats.It is generally preferable to have fewer
`divergent standards, as well as higher-quality standards.
`Wewill provide a brief history ofvideo patent pools
`before turning to the compression capabilities of each
`of these video compression standards, as well as known
`licensing fees ofestablished pools, in the context of the
`ever-changing consumer electronics landscape.
`
`TABLE 1. Overviewof key video compression standards
`
`Early compression technique, not widely adopted.
`Often viewed as basis of modern video compression techniques.
`
`FIGURE 1. Video compression reduces data requirements
`BRU
`
`Thor: Ragnarok, a 130-minute uncompressed movie, 11,600 GB:
`
`
`
`Compressesto 27GB currently And down to 14 GB with HEVC
`
`Video patentpools:history
`While HEVCis the sixth major standard from the
`ITU,it is the third major video coding standard to have
`a patent pool associated with it. The first - MPEG
`LA’s MPEG-2 pool — was notable for being widely
`adopted (it was used in digital TV — including the
`ATSCstandards in the United States — and also used
`in DVDs). MPEGLA provided a one-stop shop for
`clearing the overwhelming majority ofpatentrights for
`use ofMPEG-2.For decoding hardware products (eg, a
`TV, DVD player or computer), the rates were:
`* $4.00 (inception in approximately 1997 to 2002);
`+ $2.50 (2002 to 2010);
`* $2.00 (2010 to 2015); and
`* $0.50 or $0.35 (2015 onward).
`
`Standard TeeRea
`CF al
`1984
`H.120
`The rates andpricing remain controversial. For
`1988
`H.261
`example, in August 2017, Haier — a large consumer
`electronics maker and an ATSC and MPEG-2licensee of
`1993
`MPEG-1
`Inherits many features from H.261 while adding several
`MPEGLA-filed suit over the rates (see HaierAmerica
`technical features.
`Trading LLC v Samsung, Case 1:17-cv-921, NY Northern
`District, August 21 2017 — the suit covers both the
`ATSC and MPEG-2patent pools operated by MPEG
`LA). The Haier suit raises questions aboutthe (lack
`of) effectiveness ofthe screeningprocess for including
`patents,inclusion of non-essential patents, the pricing
`model (flat fee versus scaled by device cost, especially in
`the face of declining device costs) and antitrust concerns.
`Oneof the complaints in Haier concerns the addition
`ofpatents to the pools over time. This will not surprise
`astute observers of the video standards world. NTSC
`
`H.262/MPEG-2
`H.263
`
`1995
`1996
`
`Used in DVDs andbroadcast digital TV,high similarity to (MPEG-)1.
`Many similarities to MPEG-1 and H.261 with enhanced capabilities.
`Used in videoconferencing systems. Interrelated to MPEG-4 (Part
`2) (1999), which has H.263 baseline with additional features.
`First test models in 1999; drafts in 2002; widely adopted on the
`Internet and mobile devices,as well as Blu-ray players.
`Firsttest models in 2010; drafts in 2010-2012; selected foruse in
`next-generation digital TV (eg, ATSC 3.0).
`* Publication year offirstversion ofstandard by ITU (or ISO)
`
`H.264/MPEG-4 2003
`(Part 10)/AVC
`H.265/MPEG-H 2013
`(Part2)/HEVC
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`EI Feature|Analysingthe leadingHEVC patent pools
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`May/June 2018 fam
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`www.IAM-media.com
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`encoding for analogue TV signals in the United States
`boxoutfor a discussion on whether the AVC poolrate
`was set artificially low.)
`was first promulgated in around 1941(for black and
`white TVs) and then modified in around 1953 to add
`Bear in mindthatifyour device supports multiple
`standards,you will need to license each oneseparately.
`colour. Nonetheless, patent licensing for improvements
`on NTSC had a much longer life than 20 years, even
`So for a device that supports MPEG-2, AVC and
`HEVCtogether, you would need to pay thefees for
`given the addition ofcolour.
`each separately to the appropriate administrator(s) or
`Nonetheless, the fact that there are live patents after
`independentpatent owners.
`more than 20 years should raise questions that require
`answers from patent owners. Thus, even MPEG-2 —
`Before exploring the HEVCpatentlicensing
`landscape in more detail, the backdrop ofthe changing
`which is now over 20 years old — was not completely
`unencumbered by patents in 2017. MPEG LA continues
`consumer electronics landscape merits investigation.
`to runalicensing pool for MPEG-2 thatincluded seven
`Consumerelectronics: pricing and performance
`unexpired patents as ofJuly 2017 and charged $0.50
`under Moore’s Law
`per device for a patentlicence (notably, the remaining
`patents have early priority dates in this case but greater
`Discussing video compression standards without
`than their 20-year lives due to country-specific laws
`reference to the changing consumer electronics landscape
`in the United States, Malaysia and the Philippines). A
`can be challenging. Consumer electronics, particularly
`lower-priced $0.35tier is also available for companies
`computers,exist against the backdrop ofMoore’s
`that waive early terminationrights.
`Law which, loosely speaking, predicts that computing
`‘Theissue oflisting patents with priorities post-dating
`capabilities double in performance every two years.
`the standard can be atleast partially answered: standards
`Figure 2 shows trends for computer prices from 2002 to
`are notfixed in time. Even the MPEG-2standard has
`2015.The downward pressure on personal computer prices
`been amended since its 1995 release, with the most
`— even in the face ofinflation — is extreme, with the price
`recent amendmentdating from 2012. Also, the vast
`ofa computer dropping from $1,000 to $277 from AVC’s
`majority ofpatents historically in the MPEG-2 pool had
`launch in 2003 to HEVC’slaunch in 2013.Significantly,
`priority dates falling roughly between 1990 and 1995.
`a $277 computer boughtin 2013is significantly more
`Thus, any late patents may actually represent innovations
`powerful than its more expensive 2003 predecessor.
`related to amendments to the standard.
`Figure 3 shows the processor performance over the period
`Turning away from MPEG-2,we arrive at the second
`from 2002 to 2015 in millions of instructions per second
`(MIPS). Around the time that AVC was launched,
`widely adopted video coding standard: AVC.
`MPEGLA also served as the administrator for the
`processors were clocking it at about 10 MIPS,but by the
`AVCpatentpool. Therate is $0.20 per device but there
`time of HEVC’s launch 130,000 MIPS processors were
`readily available. Thus, over the same 10-year period where
`are some volume-based pricingtiers, as well as a cap
`on total licence fees. Compared to MPEG-2, the AVC
`the computer dropped in price by nearly one-quarter, the
`patent pool was more affordable. (See “Otherissues”
`processing power available wentup by a factor of 10,000.
`
`TABLE 2. Key improvementsof major video standards
`Ter
`MPEG-1
`H.262/MPEG-2 Cae H.264/AVC
`PRIae
`* Macroblock motion
`H.261 features plus:
`MPEG-1features plus:
`H.263 plus MPEG-1/2
`H.263 features plus:
`H.264 features plus:
`compensation
`* Bi-directional motion
`= Interlaced-scan
`features plus:
`* Coding efficiency
`* High-level structure,
`* Discrete cosine
`prediction
`support
`* 3D variable length
`enhancements
`segmentation and
`transform
`* Half-pixel motion
`* Improved DC
`coding of DCT
`* Error resilience
`transformation options
`* Scalar quantisation
`* Slice-structured coding
`quantisation precision
`coefficients
`* Segment codingof
`* Intra-/Inter-picture
`* Zig-zag scan
`* DC-only ‘D’ pictures
`* Scalability (SNR,
`* Median motion vector
`shapes
`prediction and entropy
`* Run length
`* Quantisation weighting
`spatial, breakpoint)
`prediction
`* 0-tree wavelet coding
`andtransform coding
`
`* Variable-length coding—matrices * Lpictureconcealment - Optional, enhanced ofstill textures changes
`
`
`
`motion vectors
`modes
`* More (including
`* More (including
`optionalfeatures)
`optionalfeatures)
`Sources: Adapted from presentations byGary Sullivan, co-chairfor ITU-TVCEG, in “Overview of IntiVideo Coding Standards”, July2005and “DevelopmentsinVideoCoding Standardization”, February2015
`
`ETE Tes]
`
`TABLE 3. AVC and HEVClicencerates and estimates
`
`
`
`Total estimate
`
`aon Cilia)
`NCES
`Licensing group
`
`
`
`3,704
`3,321
`3,200
`Number ofWW Patents
`
`
`$0.65
`$0.75
`‘$1.60
`$0.20
`$0.20
`Handset royalty ($) - highest rate
`
`
`$0.05
`$0.05
`$0.20
`$0.23
`$ per 1,000 patents for handset
`$25 million
`$30 million
`Unknown
`$55 million plus
`$10 million
`Handset cap
`$2.0 million
`$6.5 million
`$7.5million
`$16.0million
`Sampletotal royaltyfor10 million units $1.5 million
`
`Sources: MPEG LAand HEVCAdvancewebsitesasofJanuary 2018combined with estimatesforVelosasdiscussed below. As Samsungand ETRIs patentsarecurrently in both MPEG LAand HEVC Advance poolsuntil
`2019, adopters payingfor both pools will receive a credit and onlypayforthe patentsonce
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`Analysingthe leading HEVC patentpools | Feature Ei
`
`Video compression basics
`
`7,680 x 4,320 pixels. So thatis a factor of 16 times more
`pixels per videoframe;in fact it is slightly higher due to
`increased bit depths.
`Against this backdrop, what does the patent and
`licensing landscape for HEVClooklike?
`
`Audio and video compression use mathematical techniques to achieve significant savings
`in file sizes. This quick summary focuses on the video component. Uncompressed video is
`made upof multiplestill frames — these frames are the starting point for compression.
`HEVClicensing demands
`* Eachstill frame can be broken into smaller blocks. The visual imagery in those blocks
`The known public demands (andestimates) for licence
`can be estimated or compressed using complex mathematical equations.Thisis lossy
`fees for AVC and HEVC are summarised in Table 3. We
`compression - the reconstituted still image will not be identical to the source still image.
`know that someofthe public data is inaccurate or out of
`* The blocks themselves can also be compared for similarities and redundancies
`date (see “Movingtarget analysis” boxout). Nonetheless,
`eliminated, thus providing further compression. For example, a blue sky in the
`for this analysis we will use the public data as is (data
`background will have a lot of redundancy.
`
`* Next is handling motion-ifyoustart looking at the differences between two successive retrieval dates are noted), even though that may skew the
`frames ofa movingpicture, there is often little change from frame to frame.Thus, ifthe
`estimates slightly. Relatedly, while Velos’s data is not
`movementofthe handfulof blocks with changes can be estimated,it is not necessary to
`publicly available, we have estimated its holdings and
`retransmit the whole compressed framebut ratherjust the heavily changed blocks and
`royalties, as discussed further below. Also, given the
`
`the movementof blocks. relative newness of HEVCasastandard,there are still
`pendingpatent applications around the world thatare
`notyet reflected in the pool's lists.
`‘Weanalyse the rates through several different lenses
`in Table 3 to provide context on how the differentrates,
`caps andpatentholdings interact with the pricing. Thus,
`compared to a peak price of $0.20 per handset for the
`sole AVC pool, a consumerelectronics manufacturer
`
`This is a quick, not-too-mathy summary of the fundamentals ofvideo encoding. The
`downsideis that it might leave youscratching your head: why or how do newer compression
`standardsdobetter than older ones? The answer isin the details. Briefly: HEVC offers more
`flexibility or uses different mathematical compression approaches than AVC at each step to
`enhance the amountof redundancy that can be identified and compressed out.
`
`Figures 2 and 3 together translate the dilemma for
`ortega got
`environment of Moore’s Law into economic terms:
`deliver laptops, mobile phones and tablets with twice
`the computing power for lower prices year after year
`after year. While we do not show the graphs forthis, the
`storage capacity ofcomputers and network bandwidth
`10,000x improvementin processors
`across the network has been following a similar curve.
`It is worth contrasting this with expectations for ee
`higher-resolutionvideooverthatsame period (eg,from
`|
`
`1080p in 2003 to, say, 8K presently). The 1080p video
`would be 1,920 x 1,080 pixels, while the 8K video is
`
`FIGURE 2. Computer prices 2002-2015
`
`AVC launch 2003: $1,000 computer
`
`|
`
`HEVC launch 2013: $277
`(a significantly
`better computer)
`
`
`
`FLFEELLLISHLIS—SFIPESSPSSSP9
`Source: US Bureau ofLabourStatistics: “Long-term price trendsforcomputers,
`TVs, andrelated items” (The Economics Daily,October 13 2015)
`
`Source: Millionsofinstructionspersecond (MIPS) data from Intel,AMD andWikipedia
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`40
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`Feature | Analysing the leading HEVC patent pools
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`May/June 2018
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`Table 4 provides a framework for measuring the scale
`of risk from companies outside the three pools. The court
`ruled against the contribution approach in TCL
`Communications v Ericsson (SACV 14-341 JVS and CV
`15-2370 JVS; December 2017 finding of facts by a
`magistrate judge in the District Court for the Central
`District of California). We are using contributions here
`primarily as a way of assessing the potential size of
`portfolios of unaffiliated companies. This table
`synthesises an analysis that the Velos pool is sharing
`(upon request) about the adopted contributions by the
`HEVC technical committee. In brief, Velos manually
`reviewed the meeting minutes of the HEVC technical
`committee (over 20 meetings) to analyse the disposition
`of the thousands of proposed technical contributions for
`inclusion in HEVC. They counted only those
`contributions that were adopted and not later removed.
`A single contribution from multiple parties was counted
`as a contribution for all of the parties (eg, if companies
`X, Y and Z contributed proposal #1234, then each of the
`three companies would be counted as having made one
`contribution). Contributions are a useful way of thinking
`about sources of intellectual property in the standard.
`Contributions are not a guarantee that the contributor is
`the sole inventor of intellectual property in the
`contribution but intuitively it should correlate.
`We received similar data (but for contributions to the
`main profile only) from HEVC Advance. The two pools’
`contribution counts, while different, were directionally
`quite similar. HEVC Advance’s data reflected more
`reassignments from patent transactions showing the
`purchase of patents from unaffiliated entities primarily
`by the Dolby entities and GE. Surprisingly, unaffiliated
`companies represent a large percentage of contributions,
`with 37% of all adopted contributions when both
`main and extensions are considered. Looking briefly
`at the pools, when both main and extensions are
`considered, Velos has the highest percentage of adopted
`contributions by far (39%). In contrast, for main-only, the
`gap was narrower, with the Velos and HEVC Advance
`pools being nearly equal after account was taken of
`reassignments of patents from unaffiliated contributors.
`Returning to the purpose of contribution analysis:
`estimating unaffiliated patents. This can be done by using
`the average number of patents listed (or estimated) per
`pool to compute a ratio of patents per contribution. The
`average contribution ratio (20.6 per contribution) across
`the three pools can be multiplied by the number of
`unaffiliated but adopted contributions (305) to arrive at
`an estimated number of unaffiliated patents of 6,295.
`This would dwarf any single pool taken alone in size.
`For reference, companies with five or more
`contributions that are unaffiliated with the pools are
`
`Three pools
`
`Unaffiliated
`
`530
`
`63%
`
`10,938
`
`20.6
`
`305
`
`37%
`
`6,295
`
`N/A
`
`planning to make a handset that supports HEVC
`would be facing an estimated $1.60 per handset charge.
`As explained below, that becomes an estimated $2.25
`handset charge once unaffiliated companies are included.
`Table 3 uses the maximum rate for handsets. For
`example, HEVC Advance has a rate structure with
`tiered regional rates and lower prices if only the main
`profile for HEVC is implemented (as opposed to also
`implementing all of the optional extensions). Depending
`on your specific handset configurations and shipping
`locations, you might see lower rates than this table
`suggests. If your company made and sold 100% of its
`handsets in China and included none of the extensions,
`the HEVC Advance rate would be $0.20 per handset
`before discounts. As this brief discussion suggests, it
`is key to accurately modelling your company’s handset
`volumes and necessary features.
`The third pool from Velos includes several companies
`with significant patent holdings: Ericsson, Sharp, Sony,
`Panasonic and Qualcomm. Notably, Velos is more than
`just a pool since it directly owns, licenses and can directly
`litigate at least some of the patents (though one of the
`MPEG LA pool holders appears to be an MPEG LA
`subsidiary with former Panasonic patents). The USPTO
`patent assignment database shows assignments of over
`100 patent assets into Velos Media LLC from members.
`We used the midpoint of $0.20 (MPEG LA price) up
`to $1.30 (twice the HEVC Advance price) to model
`Velos’s rate in Table 3 at $0.75. We modelled the total
`Velos controlled/administered patents as follows: starting
`with the assignments listed in the USPTO database,
`we performed an International Patent Documentation
`patent family expansion to identify approximately 800
`patents and publications assigned to Velos. We then
`assumed that the participants retained relevant assets
`as well, which we would estimate as between three and
`five times the amount transferred to Velos. Thus, we
`modelled the pool multiplying by four in Table 3 and
`estimated 3,200 total patent assets. We acknowledge that
`this creates a bit of an apples-to-oranges comparison
`between the Velos pool and the other two pools.
`However, it is a useful starting point for analysis.
`As with AVC, some companies will opt to sit outside
`of the pools for HEVC. Many have been concerned that
`Technicolor, a large historical participant in video codec
`patent pools, has opted to sit outside the three pools
`at this time. This specific example may be somewhat
`mitigated by the fact that Dolby (in HEVC Advance)
`has bought a number of patents from Technicolor. As this
`article went to press, Technicolour announced a deal with
`InterDigital, a known patent licensor, to own and manage
`the Technicolor patents (see this issue’s Insight piece on
`InterDigital’s acquisition of Technicolor’s licensing arm).
`Either way, there will be additional licensing demands
`from companies outside the pools. By way of example
`from AVC, Motorola was a notable patent owner which
`opted to license directly. The litigation stemming from
`Motorola’s licensing programme includes a case brought
`by Microsoft asking Motorola to set a rate for AVC
`(Microsoft Corp v Motorola Inc, 2:10-cv-01823-JLR). In
`that case, the court used principles of proportionality to
`set a licence rate for Microsoft that was less than 1% of
`Motorola’s original ask (2.25% of ASP or $4.5 on a $200
`ASP smartphone; the award was $0.00555 per handset
`or a 0.002% royalty on a $200 ASP smartphone).
`IPR2020-01048 - UP0001401
`HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
`
`TABLE 4. HEVC adopted contributions
`
`Pool
`
`Number of adopted contributions
`
`Percentage of total adopted contributions
`
`Patent count
`
`Patents per contribution
`
`Sources: Velos-provided analysis of HEVC meeting minutes decisions available at http://phenix-int-evry.fr/jct/ combined with
`ROL Group allocation of companies to pools according to January 2018 data. Totals are for the main profile and all extensions
`
`United Patent, LLC. Ex. 1048 Page 6 of 12
`United Patents, LLC v. Elects. & Telecomm. Res. Inst., et al.
`IPR2021-00368
`
`

`

`
`
`www.lAM-media.com Analysingthe leading HEVC patentpools| Feature|an|
`
`iam May/June 2018
`
`listed in Table 5. These 14 companies represent over 80%
`ofthe unaffiliated but adopted contributions. As with our
`discussion ofTable 6 (below), these are companies where
`a cross-licence may be particularly helpful in reducing
`patent exposure withoutsigning upfor a patent pool.
`Thatin turn gives us the insight to estimate the likely
`patent demands from the unaffiliated contributors.
`Given the quantity ofcontributions and estimated
`holdings among a groupofsophisticated patent
`licensors, we estimate that the unaffiliated parties,
`in aggregate, will seek an amount comparable to
`
`the HEVC Advance rate ($0.65 per device). Using
`these assumptions,we estimate thatthe total bill for
`HEVCwould be $2.25 per handset. On a $200 ASP
`smartphone, this would be a 1.1% royalty.
`Before we discuss how to navigate the landscape, an
`exploration of the pool's patentholdings is useful.
`
`TABLE 5. Unaffiliated
`companies with five
`
`TABLE 6. Licensors with at least 50 listed assets by pool contributions
`
`
`HEVCpatent landscape
`Unlike private patent negotiations, historically the video
`patent pools have madethepatents licensed readily
`available to the public. In the case of HEVC,both
`MPEGLA and HEVC Advance have websites that list
`the patents available for license. A third pool, Velos, does
`notcurrently publicly list its patents for license.
`The availability of public lists provides an easily
`accessible avenue for a numberofdifferent analyses.
`Ericsson
`Samsung
`Samsung
`‘Three main areas are particularly valuable:
`* patent priority year distribution, to compute remaining
`Dolby (Int'l & Labs) Sharp
`NTT Docomo
`life;
`General Electric
`Sony
`M&K Holdings
`Microsoft
`* geographic distribution ofpatent coverage, to check
`Mitsubishi
`Panasonic
`JVC Kenwood
`Interdigital
`alignmentbetween patent coverage versus your
`ETRI
`Qualcomm
`SK Telecom
`TI
`practise of the patents; and
`« distribution ofownership, to assess the value of direct
`
`
`USTC HF (MediaTek)—VelosInfobridge Pte
`licensing instead ofpooled licensing.
`LG
`M&K Corp
`Philips
`Motorola
`NEC Corp
`Canon
`TagivanIl (MPEG LA)
`Broadcom
`ETRI
`BlackBerry
`Intellectual Discovery
`Toshiba
`Fujitsu
`MovieLabs
`Sources: MPEG LAand HEVC Advance websites asof January2018 and publicdata
`onVelosparticipation. Listsare bydecliningnumberoflisted assets (exceptforVelos,
`whichisin alphabetical order). Samsungand ETRI are in both the MPEG LAand HEVC
`‘Advance pools until 2019, at whichtimetheywilllikely be in HEVC Advanceonly
`
`Huawei
`Harmonic
`
`Each ofthese will help with risk and cost assessments
`and will be considered in turn.
`Before diving into the analysis, one other pointis
`worth mentioning.Technically, the HEVC standard,
`like prior video compression standards, only specifies the
`format and mechanism for decoding video. This means
`that companies encoding video into HEVC format(or
`transcoding existing video into HEVC format) may
`doso in any of a number ofways provided that the
`result is a compatible decodable HEVCstream. For
`this reason, this discussion oflicensing focuses on the
`decoding or user device side. While streaming services
`still face demands forlicences for their encoding and
`transmission, we will not be covering those demands
`in detail here. Suffice it to say, patent owners and pools
`This analysis is not static. The number of assets in HEVC Advance tripled in the five months
`claim to have patents on the only, or most desirable, ways
`from thestart of our analysis to the publication deadline.This affects all ofthe financial
`to prepare HEVC-compatible encoded video files.
`models. To beclear, this is a challenge for the pools. Keeping the data current poses a
`Figure 4 shows the distribution ofearliest priority dates
`frustrating operationalchallenge to any patent owner. It also is critical to effectively getting
`for US-issued HEVCpatents in public lists ofpatent
`your message out.
`pools (eg, MPEG LA and HEVC Advance; Velos does
`Consider the top-line differences from ouroriginal data pull at the start of September
`notcurrently publicly list the patents thatit licenses).
`2017 compared to the current data (notably Samsung’s and ETRI’s patents are still part of
`The long backwards reach ofpriority dates (back to
`MPEG LAatleast until 2019).
`around 1996)highlights the dependencies between HEVC
`veda eecet (ICRSID
`and prior standards, as discussed in connection with Tables
`1 and 2. Notably, over 10% ofthe USpatents have priority
`the analysis on a patent
`Original data
`pull
`(August 2017)
`1,872
`1,19
`
`
`family basis and the