Op-Ed: Blu-ray Disc Licensing for Videographers, Small Publishers, and Duplicators
Posted Jun 1, 2008

Disclaimer: The following is provided for general information purposes only. Those engaging in any of the mentioned or similar pursuits should seek the advice of competent legal counsel. Information contained in this document has been obtained from sources believed to be reliable. The author does not warrant the accuracy or completeness of such information. Responsibility for the use of the contents shall remain with the user and not with the author.

Whether we acknowledge, like, or even understand them, we all have obligations. Traditionally, legal responsibilities for videographers, photographers, filmmakers, and service bureaus fall along the lines of managing copyright interests as well as privacy and publicity rights. Distributing digital audio, video, text, and still images, either electronically or on physical media, often involves equally important patent, trademark, and other intellectual property considerations.

Since most digital delivery methods incorporate a host of technologies from any number of unrelated sources, identifying and making sense of these requirements can be daunting for the small-shop practitioner. Certainly this is the case with Blu-ray Disc (BD), which is made possible through the efforts of dozens of companies and is promoted, protected, and administered by multiple bureaucracies.

When working with Blu-ray, the need to enter into and comply with various license agreements differs depending upon the circumstance. For example, while the Advanced Access Content System (AACS) must be used to encrypt all replicated/pressed BD-ROM AV (BDMV) authored titles there is no such requirement, and all it entails, for duplicated/recorded discs. Since most videographers and duplicators deal in single or (at most) a few hundred discs at a time, I have confined this discussion to situations where BD content is distributed on writable rather than pressed discs (a topic for a future column).

Pro Logo
The simplest way to let the world know about your BD video services is to mention Blu-ray by name or—better still—by displaying its official logo on your website and promotional material. But, before you do, appreciate that both are trademarks and, as such, cannot be exploited indiscriminately.

Specifically, while the Blu-ray Disc name may be employed freely, those who wish to use its logo must first receive written permission from the Blu-ray Disc Association (BDA) License Office, an entity responsible for managing and policing fundamental Blu-ray technical and legal agreements. This consent is available, at no charge for an indefinite term, to advertise and promote BD products and technology by executing a Logo License Agreement (LLA).

Further, the Blu-ray Disc name and its logo must be used in compliance with a set of rules also published by the BDA License Office. For example, in its text form, "Blu-ray Disc" should be printed as such (not "Blu-Ray Disc," "blu-ray disc," "BLU-RAY disc," etc.), and its logo should appear within its specified shape, legibility, color, size, clear zone, and prominence guidelines. Additionally, proper trademark notification must be given by affixing the characters "TM" to the logo or by written means such as the statement "‘Blu-ray Disc’ and its logo are trademarks." (A PDF of the "Blu-ray Disc Logo Guide" can be viewed here.)

Also keep in mind that other trademarks, service marks, and logos, such as those from Dolby Laboratories and DTS, carry their own imperatives.

Paying the Video Patent Piper
Beyond trademarks, a multitude of companies, groups, and institutions claim and exercise patent rights in all corners of the Blu-ray universe. While Blu-ray is sometimes regarded as a "Sony format," the Blu-ray patent picture is far larger than any one company, and is even more complicated than the situation for DVD.

In particular, it is the position of MPEG LA, an independent licensing administrator representing the collected interests of dozens of patent holders, that those distributing digital video encoded in MPEG-2, MPEG-4 AVC/H.264, or VC-1 formats, on any type of physical media (BD, DVD, flash memory, magnetic tape, etc.), obtain from MPEG LA a corresponding patent portfolio license. This includes all legal entities (no exceptions) selling or giving away (arms-length) any quantity (no minimum) of discs. These agreements are non-exclusive so it is possible, although impractical, to individually negotiate with each licensor for the right to use its patents. Typically, the party writing/duplicating the discs acquires the license(s).

Under each MPEG LA agreement, licensees must accrue and remit specified royalties (see Table 1, below) on a semiannual basis, keep records, consent to audits, and the like. (To view details of each format, visit the MPEG LA website.)
figure 1

Further, executing a given license triggers the obligation to pay back royalties plus 10% interest per year within 30 days of signing for past uses of the codec. For example, obtaining an MPEG-2 license requires payment for not only all infringing BDs previously sold or given away but payment also for every DVD-Video disc, D-VHS tape, and other relevant physical media and other use (dating back to June 1, 1994). Individuals and enterprises that choose not to obtain a license "risk the possibility of a patent lawsuit," according to Bill Geary, vice president of business development for MPEG LA.

Be aware, however, that while MPEG LA’s portfolio licenses may be comprehensive, they are not exhaustive and include only essential patents. Thus, it is possible that other parties may be due royalties. For example, many of the participants of a rival, and now abandoned, MPEG-4 AVC/H.264 joint patent licensing program administered by Via Licensing Corp. are not included in MPEG LA’s offering.

Blu-ray Disc Royalties
Complicating matters further is the reality that many patent holders have yet to declare their Blu-ray-specific licensing intentions. Seeking to avoid DVD’s complex multi-agent system (DVD6C, 4C, 3C, 1C, etc.), at least 18 stakeholders are currently working to establish MPEG LA as a one-stop BD licensing authority. However, it is unclear how successful this effort will be regarding the scope, terms, and rates of any possibly ensuing programs. For example, will royalties be sought when distributing BD-ROM AV (BDMV) or BD-R/RE AV (BDAV) content on recordable or rewritable discs (BD-R/RE and DVD±R/RW/RAM)? From whom? Any exemptions? Thresholds? Amounts?

"It is not yet decided how this will be handled," says Geary, who is responsible for MPEG LA’s Blu-ray and other new patent pools. "But it’s likely to be addressed either in connection with the blank disc or as a charge to the duplicator." Until more information is forthcoming, it is difficult to know how to proceed. However, rather than gambling on what might eventually unfold, it may be prudent to estimate and begin accruing funds immediately to cover any back royalties, interest, penalties, and taxes that might be assessed in the future.

Look Before You Leap
A brave new world of creative and business opportunities may await content producers and service bureaus willing to embrace Blu-ray Disc. But in addition to making equipment and marketing decisions, individuals and enterprises should also seek competent legal advice to survey the landscape and determine where they should proceed with caution.

Hugh Bennett (hugh_bennett at compuserve.com) is president of Forget Me Not Information Systems, Inc. and the author of EMedialive's Authoritative Blu-ray Disc (BD) FAQ.