VVC Advance Patent Pool: Where and When is a Royalty Due?

VVC Advance Patent Pool:
Royalty Rate Structure

A royalty is due upon the Sale of a Consumer VVC Product or VVC Content on Digital Media Storage for which a VVC Standard Essential Patent (listed on the VVC Advance Patent List) is in force in either the country/territory of manufacture or the country/territory of Sale.

If there are no patents in force in both the country/territory of manufacture and the country/territory of Sale, then no royalties are due for Consumer VVC Products or VVC Content on Digital Media Storage Sold in that country/territory.

Royalties due under the VVC Advance Patent Portfolio License (“PPL”) for Sales of VVC Products prior to 1/1/2022 will be waived.

Royalty Rate Structure

Three sets of Royalty Rates apply:

  1. The best rate is for Licensees In-Compliance(1) that display the VVC Advance Trademark Logo
  2. The next best rate (10% higher than the most preferential rate) is for Licensees that are In-Compliance but that do not display the VVC Advance Trademark Logo
  3. Standard rates (25% higher than the best rate) apply for Licensees not In-Compliance (irrespective of whether they display the VVC Advance Trademark Logo) and all past sales

Main 10 and Advanced Profiles + Optional Features (e.g., VSEI messages) are included in a single per-device royalty.

Royalty Rate Term Increase Cap: Royalty rates and caps may not be increased by more than 20% for any Renewal Term.

Geographic Rate Differentials: Stated rates apply to the country/territory in which the Consumer VVC Product and VVC Content on Digital Media Storage is first Sold.

Royalty Reduction (50% discount) if the First Sale is in a country/territory in Region 2 (an emerging market), except for Connected Home and Other Devices Sold below $80 (discount varies).

Region Definitions:

  • Region 1 = U.S., EU, UK, Japan, S. Korea, Australia, New Zealand, etc. See a complete list of countries/territories here.
  • Region 2 = All countries/territories outside of Region 1.

Initial Term discount of 10% for Licensees that become licensed within a reasonable period after first Sale of a product with VVC functionality (not available for Licensees that sign the Multi-Codec Bridging Agreement).

Annual In-Compliance Royalty Caps

Multiple Product Category Caps (i.e., Mobile Devices, Connected Home and Other Devices, 4K UHD+ Television/Displays, and VVC Content on Digital Media Storage).

Single Enterprise Cap for aggregate of all Product Categories.

Affiliates included under a Licensee’s PPL receive the benefits of the caps.

Caps apply only during those quarterly reporting and payment periods in which a Licensee and its Affiliates are In-Compliance.

All caps reset annually on January 1 of each year.

Standard Rates are not capped (i.e., royalties owed at Standard Rates do not accrue against any caps).

VVC Software is excluded from caps with limited exceptions.

Annual Enterprise Credit

  • Annual Enterprise Credit of $25,000 applies to all Enterprises that owe royalties and are In-Compliance.
  • The credit is provided in four equal quarterly installments of $6,250 each.
  • Unused credit amounts do not carry over to future quarters.

Footnotes:

(1) In-Compliance means Licensees are complying with the terms and conditions of the applicable agreements.