Publisher: Access Advance LLC
Document Type: Industry Whitepaper

The market told Advance what it needs

In late-2023 Access Advance (“Advance”) was approached by companies who believed that as the video streaming market has grown so large, it needed a fair, balanced and transparent solution for video codec licensing. They recognized that litigation and assertion activities were increasing in this space. However, they were concerned that the video distribution licensing programs then being discussed and offered did not balance the interest of both implementers and patent owners, and instead of providing a solution, these programs could lead to many years of litigation and uncertainty for both implementers and patent owners. They emphasized that an effective solution must adequately address the complex needs of the modern video distribution industry, particularly for the many different business models of the companies offering video online and via streaming.

They believed that to provide the best experience to the consumers, the market needed a pool that offered implementers the flexibility to distribute video in multiple codecs, and the ability to add, drop, and switch among codecs, without any license constraints.

They believed that implementers needed a pool with licensing costs that did not change as the mix of the various codecs they used changed, which was a daily reality for the industry.

And they believed that the market needed all of that in a single pool license that implementers would not have to renegotiate when the mix of codecs they used and the volumes of video they delivered in each of those codecs changed.

They said Access Advance was well positioned as a creative and reliable pool administrator to develop a pool license that met their needs and that could quickly gain market support among both video distributors and patent owners.

Advance created a patent pool to meet those needs

In response to conversations with the companies that initially reached out to Advance, and through ongoing discussions with many other stakeholders, Advance structured a pool license with these key features:

• The pool license will include SEPs on each of the four codecs currently used or contemplated for use by video distribution providers: HEVC, VVC, AV1, and VP9.
• Each licensee will pay royalties that will not vary either with which codecs they use or with the proportions in which they use those codecs.
• The amount of the royalty for all four codecs will depend on the size of the licensee as determined by one of three criteria: the average number of monthly active users, the average number of monthly video subscribers, and the semi-annual video streaming revenue. The use of three different measures of “size” ensures both that the license accommodates any licensee business model and that comparable licensees are treated the same.

The Advance video distribution pool license is procompetitive

Each feature of the Advance video distribution pool licensing program marks it as strongly procompetitive.

The Advance video patent pool meets the market’s needs and demands. While in its formation stage prior to launch, the program received strong support from licensees and licensors that are involved in other Advance patent pools as well as from companies not associated with any current Advance patent pool.

The pool license is structured so that the practice of a codec covered by pool patents triggers a license to those patents for the practice of that codec. As a result, a licensee will be licensed to all the SEPs of each codec it uses but will not be licensed or be required to take a license it does not need to the SEPs for any codec it does not use.

And this approach offers an innovative solution to a significant problem for licensees in the dynamic video distribution segment: the need to negotiate for new licenses and pay additional royalties as it adds streams in additional codecs.

As an example, a pool licensee who initially uses VP9 and HEVC will be licensed to the pool’s SEPs for use of each of those codecs, but not to the pool’s SEPs for use of VVC or AV1. If that pool licensee later offers streams in VVC, it will “automatically” become licensed to all the pool’s SEPs for use of VVC, without any need for additional negotiation and, just as importantly, without paying any additional royalties. Similarly, for example, if that same licensee later stops providing video encoded in VP9, the licensee will no longer be licensed to the SEPs for use of VP9 but will continue to be licensed to the SEPs for HEVC and VVC.

And the inclusion of VVC in the license “future proofs” the program. Video distribution providers will be able to test VVC under the pool license umbrella and decide for themselves the pace at which they add VVC-encoded content without the fear of “unknowns” about future licensing availability or terms. This will both encourage, and Advance believes, accelerate the adoption of VVC.

By offering a license to all four codecs at a single price, the program allows video distribution providers to determine which codecs to use and in what combination based purely on their own assessments of technical and business issues, without any concern about the licensing or financial impact of those decisions, and without the burden of negotiating multiple individual licenses, either bilaterally or with separate licensing programs, for each individual codec and paying additive royalties.

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