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(Nikkei BP Group)

(No.1 High-Tech News Site in Japanese)

  • Philips, Pioneer, Sony Start Licensing DVD Patents
  • February 25, 1999 (TOKYO) — Royal Philips Electronics NV of the Netherlands, Pioneer Electronic Corp. and Sony Corp. said they have started joint patent licensing for DVD-related products.
    Philips accepts patent applications made by manufacturers of DVD players, DVD-ROM devices and DVD discs on behalf of a group of the three companies.

    As to a patent licensing for DVD formats, Hitachi Ltd., Matsushita Electric Industrial Co., Ltd., Mitsubishi Electric Corp., Victor Co. of Japan, Ltd., Time Warner Inc. of the United States and Toshiba Corp. agreed on Oct. 20, 1997 on provision of a unified program for licensing of patents held by the six companies.

    With the launch of the joint patent licensing program by Philips, Pioneer and Sony, most DVD products will be covered by one of the patent licensing programs.

    Manufacturers which obtained a license will be entitled to use a patent of DVD-Video or DVD-ROM held by the three companies. Such patents also include ones related to MPEG2 audio held by Philips and other companies. However, they do not include any patents related to the MPEG2 encoder and decoder.

    As for the licensing fee structure, for the DVD player it will be US$10,000. Of the amount, however, US$5,000 will be a royalty for the DVD player. The royalty for the DVD player is 3.5 percent of the retail price.

    The licensing fee for a DVD-Video or DVD-ROM disk initially is US$10,000, and US$5,000 of the amount is also a royalty. The royalty for a disk is 5 cents.

    The camp of the six companies collects 4 percent of a retail price for a DVD-Video player, DVD-ROM drive and DVD decoder and the amount should be no less than US$4 per unit. The group of the companies collects 7.5 cents for a DVD disc.

    Therefore, in case of a DVD player, for example, the minimum royalty will be 7.5 percent of an actual retail price, a total of 3.5 percent paid to the three-firm camp and 4 percent paid to the six-company camp.

    According to industry observers, other companies than the total of the nine companies also hope to license a patent for their DVD-related products. Some observers even argue that the royalty alone could surpass 10 percent of a retail price if such companies also start patent licensing.

    (Nikkei Electronics)

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