Once the MPEG-G standard has been completed, it is expected that the holders of standards-essential patents will convene to discuss any possible royalty rate. This is done outside of the scope of MPEG and ISO but with the requirement in place that the MPEG-G participants who are holders of essential patents provide their IP on RAND terms.
Since MPEG-G is still under development, there is currently no royalty rate in place and it is not known who will be subject to royalty rates, if any. The participants in MPEG-G are bound by the ISO IP policy which requires RAND terms.
Reasonable and non-discriminatory (RAND) terms, also known as fair, reasonable, and non-discriminatory (FRAND) terms, is a voluntary agreement between a standard-setting organization and the holder of standard-essential patents.
Reasonable in this context refers to the fee, or rate, that can be charged by a patent holder. A reasonable rate will foster adoption of the standard, not allow a patent holder to extract large royalties simply because a patent is standards-essential, take into account royalty “stacking” (the end product using patent may be subject to multiple patent licenses) and adequately compensate the holder of the patent.
Non-discriminatory primarily refers to making a patent available to license to all prospective licensees on similar terms, even if the potential licensee is a direct competitor. This creates a level competitive playing field, ensures that new entrants to the market can join on the same basis as existing competitors, and fosters the adoption of the standard.
MPEG conforms with the ISO/IEC/ITU common patent policy which is set out in the ISO/IEC Directives (latest edition is version 5 dated 2004) and in Clause 2.14 of Part 1 and Annex F of Part 2. The Directives can be accessed at the ISO site.
In order to include a piece of technology in an ISO Standard the directive requires that:
- “the patent holder is willing to negotiate licenses free of charge with other parties on a nondiscriminatory basis on reasonable terms and conditions. Such negotiations are left to the parties concerned and are performed outside ITU-T/ITU-R/ISO/IEC”
- “the patent holder is willing to negotiate licenses with other parties on a non-discriminatory basis on reasonable terms and conditions. Such negotiations are left to the parties concerned and are performed outside ITU-T/ITU-R/ISO/IEC.”
If a patent holder is not willing to comply with one of the two options above, the Standard shall not include provisions depending on the patent.
Call for proposals
When MPEG issues a Call for Proposals they advise submitters that they will need to comply with the ISO/IEC Intellectual Property Rights Policy.
Patent statement and licensing declarations
As standards are developed, organizations with patented technology which is included in the specification are invited to provide Patent Statement and Licensing Declarations to the ISO and IEC Central Office. The form for making such a declaration is available from the ISO web site.
ISO maintains a database in which they provide entries for all Patent statement and Licensing Declarations received by ISO and IEC Central Offices. This database can be accessed at the ISO web site.
Licensing technology included in MPEG standards
Various MPEG standards have benefited from the existence of patent pools where organizations wishing to license technology included in such standards can negotiate a single license covering all the essential patents identified by those organizations which administer the patent pools.