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New DVD Licensing Group Formed

Marking an apparent end to ongoing talks with the Philips/Pioneer/Sony group, Time-Warner and a group of Japanese manufacturers have set up their own DVD pool to license their patents to hardware manufacturers and disc replicators.

Other members of the new pool are Hitachi, JVC, Matsushita, Mitsubishi and Toshiba. All those, plus Pioneer, are former supporters of the SD (Super Density) 5″ video disc format that in 1995 was merged with the competing Philips/Sony MMCD (MultiMedia CD) system to create the current DVD standard.

But while the two camps agreed on standardization, patent licensing has been another story. All parties agreed a one-stop worldwide license covering all patents would be best for the promotion of the new home video system, but they could never come together on specific terms.

One SD member, Thomson, elected to license its patents separately. In 1996, Pioneer joined the Sony/Philips pool and Matsushita and Toshiba signaled their intention to follow suit. But they never finalized an agreement.

The new pool’s patents cover DVD players, ROM drives and decoders on the hardware side, and the replication of video and ROM discs. Royalties, covering the full portfolio, are 4% for hardware, with a minimum of $4 for players and drives and $1 for decoders, and 7.5 cents per disc.

Philips and Sony originally planned to levy patent royalties of 2.5% on players and 4.5 cents per disc, but that presumably was increased after Pioneer signed on.

Toshiba is the official administrator for the new pool, with direct responsibility for licenses issued in Africa, Europe and Japan. Matsushita is handling licensing in the Americas, and Hitachi is responsible for the rest of Asia, the Pacific Rim and the Middle East.

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