AVC Standard Agreement Met

(November 20, 2003) Los Angeles--MPEG LA announced that essential H.264/MPEG-4 AVC patent and patent application holders have reached agreement on the terms of a joint patent license for implementation and use of ITU-T H.264 and MPEG-4 Part 10 AVC ("AVC Standard").

Following is a brief summary of the licensing terms, which are yet to be incorporated into definitive license agreements and therefore, provided for information purposes only. These terms cover the entire AVC Standard regardless of which Profile(s) are used:

Decoder-Encoder Royalties
Royalties to be paid by end product manufacturers for an encoder, a decoder or both ("unit") begin at $0.20 per unit after the first 100,000 units each year. There are no royalties on the first 100,000 units each year. Above 5 million units per year, the royalty is US $0.10 per unit.

The maximum royalty for these rights payable by an Enterprise (company and greater than 50% owned subsidiaries) is $3.5 million per year in 2005-2006, $4.25 million per year in 2007-08 and $5 million per year in 2009-10.

In addition, in recognition of existing distribution channels, under certain circumstances an Enterprise selling decoders or encoders both (i) as end products under its own brand name to end users for use in personal computers and (ii) for incorporation under its brand name into personal computers sold to end users by other licensees, also may pay royalties on behalf of the other licensees for the decoder and encoder products incorporated in (ii) limited to $10.5 million per year in 2005-2006, $11 million per year in 2007-2008 and $11.5 million per year in 2009-2010.

The initial term of the license is through December 31, 2010. To encourage early market adoption and start-up, the License will provide a grace period in which no royalties will be payable on decoders and encoders sold before
January 1, 2005.