Setting the record straight about MPEG LA

In his op-ed “The state of technology – Obama must admit America is a nation of innovators,” it is peculiar to see Steve Forbes making a baseless attack on MPEG LA once again.

MPEG LA is an example of what is right, not what is wrong. Our record of service in response to the market's need for efficient access to patents owned by multiple patent owners is exemplary, transparent and highly regarded.

MPEG LA operates the premier and most successful of pool licenses doing just what Mr. Forbes says pool licenses should -- “offer[ing] efficiency to the patent system and promot[ing] innovation and competition.”

Mr. Forbes should know better because we offered to speak with him after he wrote a similar piece nearly a year ago, but instead he has persisted in conveying information he knows to be untrue about an area in which he apparently knows very little.

For example, Mr. Forbes stated in his most recent op-ed that MPEG LA is “owner of the MPEG-2 standard” after stating in his March 2013 blog that “MPEG LA has absolute power over the MPEG 2 technology, and innovators are forced to accept MPEG LA’s license fees and terms regardless of actual patent value.”

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Had he done his research or taken the time to speak with us, he would know that MPEG LA does not own or control the MPEG-2 standard (created by a working group of ISO/IEC) or any other standard for that matter.

Our purpose is to provide the marketplace with convenient access to patents owned by multiple parties in order to assist users of any size with the technology choices they determine for themselves.

The terms of those licenses, which are decided by patent holders, are made available on the same terms to all licensees (nearly 2,000 in the case of our MPEG-2 License) including those who are patent holders.

Contrary to Mr. Forbes’ statement about users being “forced to accept MPEG LA’s license fees and terms,” the licenses offered by MPEG LA are voluntary and nonexclusive.  Users are free to negotiate bilateral licenses under one or more patents with any patent owner under terms on which they may independently agree.

Forbes also repeats the false claim that MPEG LA “does not adjust their licensing fees and locks in licensors [we assume he meant licensees] to contract terms far longer than the life of the patents despite holding predominately expired patents.”

The goal of our MPEG-2 Patent Portfolio License is to incorporate as much essential intellectual property as possible under one license for the benefit of the marketplace including licensees and patent holders.  Doing that relies on achieving a balance between what patent holders are willing to offer their patents for and what licensees are willing to pay.

Although the license grew from eight patent holders and 100 patents to 27 patent holders with more than 1000 patents, it has delivered a reliable market-based solution in which instead of increasing royalties commensurate with this dramatic growth in value, royalties have been reduced by one-half to two-thirds.

Further, each patent being essential to the standard, licensees pay royalties only for products manufactured or sold in a country with one or more active (not expired) patents at that time.  All patents in the license are published on our website and applicable expirations are known throughout.

In criticizing MPEG-2 patent owners for enforcing patents against those who ignore their responsibilities, Mr. Forbes fails to acknowledge that by doing so, patent owners also defend the vast majority of companies who meet their licensing responsibilities and compete fairly.

Would he be so forgiving if someone stole property from him?

Even if Mr. Forbes has been misled by one of the few companies who refuses to be licensed or comply with contractual license terms, that is no excuse. His disregard for the truth is not just harmful to MPEG LA; it is harmful to the marketplace and any rational discussion about incentivizing and protecting innovation.

While we do not begrudge Mr. Forbes the right to have an opinion different from our own, he wouldn’t have this one if he used accurate information readily available to him.