December 03, 1997 in Social Responsibility News

SAMSUNG Electronics Included in Multimedia Patent Package Bringing Royalties of $5 Billion

SEOUL, Korea, December 3, 1997: Samsung Electronics Co., Ltd. has become part of the MPEG Licensing Administrator (LA), LLC's MPEG-2 patent portfolio. The portfolio contains "essential patents" to the MPEG-2 technology, which MPEG LA will license in a package. This package is to bring an estimated US$5 billion in royalty payments to the Korean-based electronics company and the eight other companies holding these "essential patents."

Over the next seven years, some 1 billion products are expected to be related in various ways with MPEG-2. Specifically, an average of US$4-US$6 royalty will be placed on each digital video disc player, digital TV and other multimedia product using this digital information compression standard.

Currently there are nine enterprises and institutions in the MPEG LA patent pool. These include Sony, Philips, Mitsubishi, Matsushita, Fujitsu, Scientific Atlanta, General Instrument, Columbia University, and most recently, Samsung Electronics. Cross-licensing agreements will be made possible among the various patent holders.

"Essential MPEG patents" refer to those that are indispensable for the manufacturing of products that utilize MPEG technology. Technology from a US ctable wrap company was first to be selected as an "essential MPEG patent." Currently, more than 100 organizations have submitted in excess of 8,000 patents for such designation by MPEG, but so far only nine have been recognized as possessing "essential" technology.

In the 1990s, Samsung Electronics committed many of its top researchers and huge capital investment to obtain basic technology related to MPEG-2. Samsung applied for a US patent covering its digital transmission data decoding system. This system has been recognized as an "essential MPEG patent," qualifying Samsung to become part of the MPEG LA patent portfolio.

MPEG-2 will be essential in the full range of future digital products, which include digital video disc (DVD) players, digital TVs, set-top boxes, digital video cameras, and digital satellite broadcast receivers. It is also to be used in digital satellite broadcasting in the US, Japan and Europe.

Royalties being levied in accordance with principles established to date are as follows:

.US$4 for each DVD player, HDTV, digital TV and computer as well as encoders that are used to compress moving pictures into the MPEG-2 format.
.US$4 x N (N = number of programs simultaneously aired) for each piece of broadcasting equipment commercially sold for conventional,satellite and cable broadcasting.
.US$6 for products with encoder/decoder units such as DVD-RAM, camcorders, VCRs and computers.
.US$0.04 x N (N = number of recorded programs) for each packaged medial product such as DVD titles, CD-ROMs and video tapes.

Samsung Electronics Co., Ltd., a US$19 billion flagship company of the Korean-based Samsung Group, is a world leading producer of consumer electronics, IT, multimedia and semiconductor products. The company is active world-wide with operations in more than 60 countries.

Reference Material
- What is the MPEG-2 Standard MPEG is short for Moving Picture Experts Group, which was formed in 1988 during a meeting of the International Standards Organization (ISO) and the International Telecommunications Union (IEC). It is a research group for standardizing the compression, transmission and restoration of digitized moving picture data.

The MPEG process of formulating an industry standard continued over several years, with a growing number of institutions taking part. By 1993, MPEG-1 technology, used mainly for video CDs, was standardized. The MPEG-2 technology standard was finalized in 1995. This technology is used in DVD players, HDTV, set-top boxes, digital satellite broadcast receivers,and video on demand and other products transmitting moving pictures at 2-3Mbps or faster.

MPEG-1 format can only compress small resolution (360 x 240 pixels) moving pictures, but MPEG-2 is capable of handling regular TV (720 x 480 pixels) as well as HDTV (1920 x 1080 pixels). Therefore, MPEG-2 has a much broader application range than MPEG-1.

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