2 AVR32722

2 MP3
MP3, short for MPEG-1/MPEG-2 Layer 3, is a format for storing digital audio. It uses an advanced type of audio compression, which reduces the file size with little reduction in audio quality. MP3 is used in software applications, digital audio players, home stereo devices and music distribution over the Internet, but is also used for other purposes such as real-time digital audio transmissions over ISDN.
The companies, Thomson, Sisvel (and its U.S. subsidiary Audio MPEG; http://www.audiompeg.com) offer a patent pool of relevant MP3 patents related to decoder and encoder.
Thomson licenses Fraunhofer MP3 and MP3 Surround software as well as Fraunhofer MP3 patents. The contact website for the licensing of MP3 through Thomson is http://www.mp3licensing.com. The following chapters describe different license models from Thomson.

2.1 MP3 hardware decoder/encoder licensing
Atmel has a license of MP3 for its ICs/DSPs from Thomson. This means that a customer does not have to license its product when he uses an Atmel IC with an incorporated MP3 decoder/encoder [3].

2.2 MP3 software decoder/encoder
For hardware that uses software MP3 decoder/encoder a license is needed. Important is that this license does not include the right to distribute, broadcast and/or stream MP3/MP3Pro encoded data. These rights are covered by the license described in chapter 2.3.
The royalties for MP3 decoder/encoder software are staged according to the used technology (MP3 or MP3Pro) and the use of decoding/encoding or just decoding. In any case an annual minimum royalty is payable upon signature and each following year. This minimum royalty is creditable against annual royalties and is about 15,000 US$. Table 2-1 shows the royalties for a license of the MP3 patents only. This model is most likely for a customer that uses e.g. an AVR®32 to decode/encode MP3 data because the ported codec library is available from Atmel (contact Atmel for further details: avr32@atmel.com).
Table 2-1 MP3 patent-only license (third party MP3 software)

2.3 Electronic music distribution/broadcasting/streaming
The current licensing scheme of MP3 makes it necessary to have a license to be allowed to stream or distribute content in MP3 if the use is commercial (e.g. revenue-generating). This makes the MPEG-2 and MPEG-4 audio formats (AAC), in addition to their superior compression technology, more attractive for broadcasting systems and because of that also for receiving systems.

According to Thomson no license is needed for private, non-commercial activities (e.g. home-entertainment, receiving broadcasts and creating a personal music library), not generating revenue or other consideration of any kind or for entities with associated annual gross revenue less than US$ 100,000.
The royalties for MP3 music distribution/broadcasting/streaming is related to the revenue. These are 3.0% for MP3Pro and 2.0% for MP3. Also a minimum annual royalty of US$ 3000 for MP3Pro and US$ 2000 for MP3 that is creditable against annual royalties exists.

6 References
[1] Information about various video/audio formats: http://www.wikipedia.org
[2] MP3 licensing from Thomson: http://www.mp3licensing.com
[3] Atmel as MP3 licensee: http://www.mp3licensing.com/licensees/index.asp
[4] MPEG-2 MPEG-4 Audio (AAC) licensing: http://www.vialicensing.com
[5] Windows Media licensing:
[6] Windows Media licensing fees and royalties: http://www.microsoft.com/windows/windowsmedia/licensing/licensing.aspx
[7] Atmel contact email: avr32@atmel.com
[8] Sisvel (Audio MPEG) MP3 licensing: http://www.audiompeg.com