Audio and Video CODEC Licensing

1. Introduction
This guide gives Atmel customers information about, as well as an overview of, the licensing of patents that cover technologies such as MP3 and WMA that run on Atmels AVR or ARM Thumb based microcontrollers. A video or audio technology involves not only one patent but rather many different ones. Because of this a licenser needs to license a pool of patents that cover the desired technology. These patent pools are offered from dedicated companies to ease the licensing process. All license royalties (and schemes) in this document are taken from the official websites of the licensers but these may change over the time. Because of this the reader should always take a look at the referenced sources in this document for detailed, up to date license schemes and royalties.
Note: This document only applies as a source of information and no responsibility is assumed by Atmel for the correctness of the information found herein.

AT91 ARM Thumb-based Microcontrollers Application Note

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2. MP3
MP3, short for MPEG-1/MPEG-2 Layer 3, is a format for storing digital audio. It uses an advanced type of audio compression, which reduces the file size with little reduction in audio quality. MP3 is used in software applications, digital audio players, home stereo devices and music distribution over the Internet, but is also used for other purposes such as real-time digital audio transmissions over ISDN. The companies, Thomson, Sisvel (and its U.S. subsidiary Audio MPEG; http://www.audiompeg.com) offer a patent pool of relevant MP3 patents related to decoder and encoder. Thomson licenses Fraunhofer MP3 and MP3 Surround software as well as Fraunhofer MP3 patents. The contact website for the licensing of MP3 through Thomson is http://www.mp3licensing.com. The following chapters describe different license models from Thomson.

2.1

MP3 hardware decoder/encoder licensing

Atmel has a license of MP3 for its ICs/DSPs from Thomson. This means that a customer does not have to license its product when he uses an Atmel IC with an incorporated MP3 decoder/encoder [3].

2.2

MP3 software decoder/encoder

For hardware that uses software MP3 decoder/encoder a license is needed. Important is that this license does not include the right to distribute, broadcast and/or stream MP3/MP3Pro encoded data. These rights are covered by the license described in chapter 2.3. The royalties for MP3 decoder/encoder software are staged according to the used technology (MP3 or MP3Pro) and the use of decoding/encoding or just decoding. In any case an annual minimum royalty is payable upon signature and each following year. This minimum royalty is creditable against annual royalties and is about 15,000 US$. Table 2-1 shows the royalties for a license of the MP3 patents only.

Table 2-1.
Component Decoder Codec

MP3 patent-only license (third party MP3 software)

Costs per unit in US$ 0.75 1.25

2.3

Electronic music distribution/broadcasting/streaming

The current licensing scheme of MP3 makes it necessary to have a license to be allowed to stream or distribute content in MP3 if the use is commercial (e.g. revenue-generating). This makes the MPEG-2 and MPEG-4 audio formats (AAC), in addition to their superior compression technology, more attractive for broadcasting systems and because of that also for receiving systems. AAC is also license-free for streaming and distribution. See Section 3. According to Thomson no license is needed for private, non-commercial activities (e.g. homeentertainment, receiving broadcasts and creating a personal music library), not generating revenue or other consideration of any kind or for entities with associated annual gross revenue less than US$ 100,000.

Application Note
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Application Note
The royalties for MP3 music distribution/broadcasting/streaming is related to the revenue. These are 3.0% for MP3Pro and 2.0% for MP3. Also a minimum annual royalty of US$ 3,000 for MP3Pro and US$ 2,000 for MP3 that is creditable against annual royalties exists.

3. AAC
Advanced Audio Coding (AAC) is a standardized, lossy compression and encoding scheme for digital audio. It is specified both as Part 7 of the MPEG-2 standard, and Part 3 of the MPEG-4 standard. As such, it can be referred to as MPEG-2 Part 7 and MPEG-4 Part 3 depending on its implementation. However it is most often referred to as MPEG-4 AAC, or AAC for short [1]. AAC patents are licensed by Via Licensing Corporation. Please visit http://www.vialicensing.com for more information. Various patents from different companies or institutions are covered by these licenses but still others do claim to have relevant patents that are needed (e.g. Thomson states that it has relevant patents that are not included [3]). Via offers any company to submit their patent that covers a relevant part of a technology for an evaluation. If the patent meets the requirements it can be added to the patent pool at no further costs for the licensees. No licenses or payments are required to be able to stream or distribute content in AAC format. This reason alone makes AAC a much more attractive format to distribute content than MP3, particularly for streaming content. However, a patent license is needed by manufacturers or developers of end user encoder and/or decoder products. Under this category fall, according to Via licensing, all end-user products, when sold directly or through distribution to end users. Licensee's products that are not end user products are not covered by the license and would require that the party incorporating such a component or implementation into its end user product obtain its own license.

3.1

AAC License
The royalties for a license of the AAC pool are related to the number of units per year and decoder/encoder channels. A channel refers to an audio output channel. For example stereo is a two-channel implementation (left and right), while a surround sound system might have five or more audio channels. Special licensing prices for cellular phones andPC software are also available upon request. Table 3-1 shows an excerpt of standard royalties for AAC.

Table 3-1. 1 to 500,000

AAC license royalties excerpt for consumer products

Per Unit Fee

Volume (per unit(1)/annual reset)

$0.98 $0.76 $0.62 $0.52 $0.42 $0.24 $0.20 $0.15

Note: 1. *Consumer Products with more than two Channels count as 1.5 units.

500,001 to 1,000,000 1,000,001 to 2,000,000 2,000,001 to 5,000,000 5,000,001 to 10,000,000 10,000,001 to 20,000,000 20,000,001 to 50,000,000 50,000,001 or more

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4. MPEG-2/MPEG-4 AVC/H.264 VC-1

Patents covering MPEG-2/MPEG-4 video are claimed by many companies. The MPEG Licensing Authority (http://www.mpegla.com) licenses patents required for MPEG-4 Part 2 Visual and MPEG-2 from a wide range of companies. The MPEG Licensing Authority has two licensing models for MPEG-2/MPEG-4, a system license and codec license. The system license applies for devices which handle MPEG2/MPEG-4 but do not have a licensed video encoder/decoder. This is the case when the device only handles MPEG data streams. For products that handle and encode/decode MPEG, both system and codec licenses are required. New licenses for MPEG-4 system patents are under development and no new licenses are being offered. Holders of its old MPEG-4 systems license are still covered under the terms of that license for the patents listed. The MPEG Licensing Authority also provides codec licenses, including encoder and decoder, for AVC/H.264 and VC-1.

4.1

MPEG-2
The fee for a MPEG-2 System license is US$ 0.50 for each product. Following royalty categories are available for a MPEG-2 codec license: Decoders: $2.50 per unit Encoders: $2.50 per unit Distribution Encoders: $2.50 x L per unit, where L is the number of programs encoded in parallel Consumer Products (Encode & Decode): $2.50 per unit Intermediate Products: License to make and sell (no royalty), end user product bears royalty

4.2

MPEG-4 Visual
Currently no information about a MPEG-4 system license is available. For further details please contact the MPEG Licensing Authority. The following royalty categories are available for a MPEG-4 codec license: Decoders sold to end users and/or as fully functioning for PCs 0 - 50,000 decoders/year = no royalty (available to one legal entity in an affiliated group) US $0.25* per decoder after first 50,000 decoders/year Annual cap per Legal Entity: $1,000,000 Encoders sold to end users and/or as fully functioning for PCs 0 - 50,000 encoders/year = no royalty (available to one legal entity in an affiliated group) US $0.25* per encoder after first 50,000 encoders/year Annual cap per Legal Entity: $1,000,000 Enterprise cap - $3 million per year

4.3

AVC/H.264
Following royalty categories are available for an AVC/H.264 license:

Application Note
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Application Note
Products sold to end users (decoder, encoder or product consisting of one decoder and one encoder = unit) 0 - 100,000 units/year = no royalty (available to one legal entity in an affiliated group) US $0.20 per unit after first 100,000 units/year. Above 5 million units/year, royalty = US $0.10 per unit Enterprise cap: $3.5 M/year 2005-2006, $4.25 M/year 2007-08, $5 million per year 2009-10

4.4

VC-1
Following royalty categories are available for a VC-1 license: Products sold to end users (decoder, encoder or product consisting of one decoder and one encoder = unit) 0 - 100,000 units/year: No royalty (available to one legal entity in an affiliated group) US $0.20 per unit after first 100,000 units/year Above 5 million units/year: US $0.10 per unit Enterprise cap: $5 million/year 2006~2012

5. Windows Media
To get more information about the different licensing models of Windows Media visit http://www.microsoft.com/windows/windowsmedia/licensing/default.mspx. As a chipset manufacturer, system integrator, or independent software vendor (ISV), you can license Windows Media technologies such as audio or video codecs, or Windows Media digital rights management (DRM) for your Interim Products. These Interim Products include digital signal processors (DSPs), application-specific integrated circuits (ASICs), reference designs, or other Windows or non-Windows software applications [5]. For such devices no royalties are needed because they are no end-user products but a source code fee may apply if a customer needs to port the code. Table 5-1, Table 5-2 and Table 5-3 in the next section are an overview of the royalties that correspond to embedded end-user systems and are intended to serve as an orientation point for the reader. More detailed information about Windows Media licensing fees and royalties are available from http://www.microsoft.com/windows/windowsmedia/licensing/licensing.aspx.

5.1

Windows Media Audio (WMA)

Windows Media Audio (WMA) is an audio data compression technology developed by Microsoft. The name can be used to refer to its audio file format or its audio codecs. It is a proprietary technology which forms part of the Windows Media framework. WMA consists of four distinct codecs: The original WMA codec, known simply as WMA. WMA Pro, a newer and more advanced codec, supports multi-channel and high resolution audio. A lossless codec, WMA Lossless, compresses audio data without loss of audio fidelity. WMA Voice, targeted at voice content, applies compression using a range of low bit rates [1].

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The licensing of WMA is not directly related to the different codecs. Instead the licensing model is related to how many channels are used and if the digital rights management technology is used. Table 5-1.
Component Decoder Encoder Decoder/Encoder

Royalties for WMA with two or fewer channels

Royalty per final product unit $0.10 $0.20 $0.25 Annual maximum for embedded system $400,000 $800,000 $1,000,000

Table 5-2.
Component

Royalties for WMA with three or more channels

Royalty per final product unit Annual maximum for embedded system

Decoder Encoder Decoder/Encoder

$0.20 $0.20 $0.35

$800,000 $800,000 $1,400,000

5.2

Windows Media Video (WMV)

Windows Media Video (WMV) is a compressed video file format for several proprietary codecs developed by Microsoft. Table 5 3 shows the royalties per final product unit.

Table 5-3.
Component Decoder Encoder

Royalties for Windows Media Video (WMV)

Royalty per final product unit $0.10 $0.20 $0.25 Annual maximum for embedded system $400,000 $800,000 $1,000,000

Decoder/Encoder

6. References
[1] Information about various video/audio formats: http://www.wikipedia.org [2] MP3 licensing from Thomson: http://www.mp3licensing.com [3] Atmel as MP3 licensee: http://www.mp3licensing.com/licensees/index.asp [4] MPEG-2 MPEG-4 Audio (AAC) licensing: http://www.vialicensing.com [5] Windows Media licensing: http://www.microsoft.com/windows/windowsmedia/licensing/default.mspx [6] Windows Media licensing fees and royalties: http://www.microsoft.com/windows/windowsmedia/licensing/licensing.aspx [7] Sisvel (Audio MPEG) MP3 licensing: http://www.audiompeg.com

Application Note
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Application Note
7. Revision History
Change Request Ref.

Doc. Rev 6476A 6476B

Date 14-May-09 24-Jul-09

Comments First issue Section 4. MPEG-2/MPEG-4 AVC/H.264 VC-1 on page 4: Title : remove H.263, First/second line : remove (MPEG-4 includes H.263)

E-mail 23-Jul09

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Headquarters
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