DRM Royalty Costs Fall - Slightly

MPEG LA, the company that is causing a stir by trying to charge users of the industry standard copyright protection service has announced that the initial group of OMA DRM 1.0 essential patent holders have revised the terms of a joint patent portfolio license to be offered by MPEG LA for use of the Open Mobile Alliance (OMA) DRM 1.0 specification. The group consists of ContentGuard Holdings, Inc., Intertrust Technologies Corp., Matsushita Electric Industrial Co., Ltd., Koninklijke Philips Electronics N.V., and Sony Corporation.

The revisions are responsive to feedback from the market following MPEG LA's announcement of proposed license terms on January 6, 2005. MPEG LA and the OMA DRM 1.0 Patent Portfolio License are not affiliated with the OMA; nor was the OMA DRM 1.0 Patent Portfolio License initiated by the OMA. Rather, the OMA DRM 1.0 Patent Portfolio License has been established by MPEG LA for the convenience of OMA DRM 1.0 adopters as an alternative to negotiating separate licenses with individual patent owners.

"This achievement is made possible with the wireless industry's cooperation and strong show of interest in OMA DRM technology," said MPEG LA Chief Executive Officer Baryn S. Futa. "Their input has enabled us to appreciate relevant market conditions and adjust the license to meet them. The terms announced today strike a balance between users' interest in reasonable access to this opportunity-enabling technology and patent holders' interest in a reasonable return on their research and development investments. That balance allows DRM technology leaders to offer a single license for the convenience of the market as an alternative to negotiating separate licenses. The real beneficiaries are consumers who will have available to them the myriad new products and services that OMA DRM enables."

Under the revised license terms, royalties for the right to make and sell OMA DRM 1.0 devices will be US $0.65 per device (payable by the party that offers the device in hardware or software to an end user). The patent holders also intend that a device combining both OMA DRM 1.0 and OMA DRM 2.0 functionality should bear no greater royalty than a device incorporating OMA DRM 1.0 alone.

Royalties for transactions in which an end user pays for delivery of a digital asset or rights object employing OMA DRM 1.0 will be a flat US $0.25 per subscriber per year upon the subscriber's first purchase. In view of the current OMA DRM 1.0 standard, license coverage for use of devices will be limited to transactions that are enabled by that standard in which remuneration is received. The licensors recognize that this market is in the early stages of development. As new applications for OMA DRM emerge, their coverage will be considered in connection with future licenses.

The License will provide coverage for products from January 1, 2004, but royalties will be payable only on products from January 1, 2005 forward."

Posted to the site on 15th April 2005