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Time-Warner & CE Makers Form Alternative DVD Licensing Pool

Marking an apparent end to on-going 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″ videodisc format that, in 1995, was merged with the competing Philips/Sony MMCD (Multi Media 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 decoder, and 7.5¢ per disc.

Philips and Sony originally planned to levy patent royalties of 2.5% on players and 4.5¢ 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 North and Latin America and Hitachi is responsible for the rest of Asia, the Pacific Rim and the Middle East.