Over the years Apple and Microsoft made themselves allies of the content industries, enforcing Digital Rights Management (DRM) and accepting the Hollywood Veto over their technology in order to take over distribution channels. The alliance has sometimes been uneasy. Google’s WebM, launched at Google I/O yesterday, is the first direct challenge to the Veto launched by a tech company in a decade. The open source, royalty free codec formerly known as VP8 has been met by a full-on FUD attack, but rather than back down Google has pushed forward.

For Internet advocates this is a matter of principle. W3C standards have always been royalty free, patent rights waived, in order to assure maximum penetration of the global market.

The H.264 codec does not meet this test, but Apple, Microsoft, Adobe and the rest of the industry was prepared to make it part of the HTML5 standard, a proprietary technology controlled by MPEG LA, in the name of maintaining peace with the content industries.

Google’s “Royalty-Free” WebM Video May Not Be Royalty-Free for Long", by John Paczkowski, AllThingsDigital:

Indeed, Larry Horn, CEO of MPEG LA, the consortium that controls the AVC/H.264 video standard, tells me that the group is already looking at creating a patent pool license for VP8....For what it’s worth, Google seems to believe that it has done its due diligence here and has the necessary patent clearance for VP8. Said Google product manager Mike Jazayeri: “We have done a pretty thorough analysis of VP8 and On2 Technologies (VP8’s developer) prior to the acquisition and since then, and we are very confident with the technology and that’s why we’re open sourcing.”

Microsoft 2nd Witness, Garrett Glanz

General manager of Licensing in Microsoft IP group—for all patents. Has been there 12 years, 2 years in this position. Manages inbound and outbound licensing Was Microsoft's rep to the MPEG LA pool. Discusses timeline of pool development, including Motorola's decision to not join the pool.

May 2003 H.264 adopted. [The development of the patent pool s]tarts with call for patents. Initial meeting, and MPEG LA coordinates the meeting. MPEG LA collects/distributes royalties. At this time, H.264 was not used much. Competing technology then included Real Video, MPEG4, Windows Media Video. MPEG LA issued press release saying licensing terms were reached. 20 cents/unit after 100,000 units, lower afterwards. Free if under 100,000 units. There is a royalty grace period. Companies involved were listed in the press release, and included Motorola. VIA licensing was also doing a patent pool for a video standard. Microsoft and Motorola participated in that one too. Paul Bawell was the Motorola rep.

Pool process description: MPEG LA created a “straw man,” then attendees proposed adjustments. MPEG LA had an external expert determine what patents were essential. Many patent holders were licensees as well. Motorola had mobile phones, set-top boxes for cable TV, that would use the H264 codec. Microsoft had Windows and other products that would use it. Garrett made notes at the “pool meetings” and shared with others at Microsoft, including Will Spencer. His notes were reviewed; gave background on how they were captured, etc. Slides of the pool meeting were presented, then discussed in comparison to his notes. Concern at the pool meetings was that if royalty rates were set too low, patent holders would not contribute their patents. But if rates were set too high, competing codecs might be used instead by licensees.

Motorola suggested the initial units not need to pay royalties, and this was adopted. Motorola said the proposed rates were too expensive for mobile use—would likely then use other codecs.

Recapped Larry Horn's summary (he was the MPEG LA chair), that terms should not differ between types of licensees, and there should be annual caps on royalty payments for any one company.

At the next pool meeting there were two new “straw men” proposals, #2 and #3. #2 had a pre-payment option (vs. a cap, which could lower the rate for high-volume units). #3 had annual up-front caps. Motorola preferred #1 (original straw man), but would like to see a cap of $2 million per business unit.

MPEG LA licenses patents for Web video encoding technology, including today's widely used H.264, on behalf of a sizable group of companies with hundreds of patents it deems to bear on the technology. As an alternative to H.264, Google last May began offering VP8, the technology at the heart of its $123 million acquisition of On2 Technologies in 2010...

Google announced WebM last year, saying people could use VP8 technology royalty-free. But video encoding is a patent-infringement minefield, and VP8 officially entered patent limbo in February when MPEG LA said it was asking for organizations to tell them if they had patents essentially used in VP8...

"MPEG-4 is trying to monopolize the substantially software-based interactive video compression industry, plain and simple," On2 wrote in a 2002 position paper to the Justice Department. "It is a move by a few very large companies to dominate a market and fix prices. Recent pricing policies by MPEG LA for MPEG-4, and the customer reaction to them are ample evidence of this."...

Absolute power has corrupted MPEG LA absolutely," said Nero, which makes CD- and DVD-burning software, in its complaint. "Once MPEG LA obtained monopoly power in the relevant technology markets, it used that power to willfully maintain or extend its monopolies for years beyond their natural expiration...and administer its licenses in an unfair, unreasonable, and discriminatory manner that stifles competition and innovation, and harms consumers."...

In a 2010 letter to the Free Software Foundation Europe, Jobs cast doubts on freely available codecs, though he specifically named only a commercially unsuccessful progenitor to VP8 called Theora. The letter arrived shortly before Google announced its WebM plans for VP8.

"A patent pool is being assembled to go after Theora and other 'open source' codecs now," Jobs wrote in the e-mail. "Unfortunately, just because something is open source, it doesn't mean or guarantee that it doesn't infringe on others' patents."...