Eddy Lab

2 AVR32722
32097A-AVR32-01/08

3 MPEG-2 / MPEG-4 Audio
Advanced Audio Coding (AAC) is a standardized, lossy compression and encoding scheme for digital audio. It is specified both as Part 7 of the MPEG-2 standard, and Part 3 of the MPEG-4 standard. As such, it can be referred to as MPEG-2 Part 7 and MPEG-4 Part 3 depending on its implementation. However it is most often referred to as MPEG-4 AAC, or AAC for short [1].
MPEG-2 and MPEG-4 Audio (AAC) patents are licensed by Via Licensing Corporation. Please visit http://www.vialicensing.com for more information. Various patents from different companies or institutions are covered by these licenses but still others do claim to have relevant patents that are needed (e.g. Thomson states that it has relevant patents that are not included [3]). Via offers any company to submit their patent that covers a relevant part of a technology for an evaluation. If the patent meets the requirements it can be added to the patent pool at no further costs for the licensees. It is
No licenses or payments are required to be able to stream or distribute content in AAC format. This reason alone makes AAC a much more attractive format to distribute content than MP3, particularly for streaming content (such as Internet radio).
However, a patent license is needed by manufacturers or developers of end user encoder and/or decoder products. Under this category fall, according to Via licensing, all end-user products, when sold directly or through distribution to end users. Licensee's products that are not end user products are not covered by the license and would require that the party incorporating such a component or implementation into its end user product obtain its own license.

3.1 MPEG-2 AAC License
The royalties for a license of the MPEG-2 AAC pool are related to the number of units per year and decoder/encoder channels. A channel refers to an audio output channel. For example stereo is a two-channel implementation (left and right), while a surround sound system might have five or more audio channels. Special licensing prices for cellular phones, PC software are also available upon request. Table 3-1 shows an excerpt of standard royalties for MPEG-2 AAC.

Table 3-1. MPEG-2 AAC license royalties excerpt

3.2 MPEG-4 AAC License
The royalties for a license of the MPEG-4 AAC pool are, just like the MPEG-2 version, related to the number of units per year and decoder/encoder channels. Table 3-2 shows an excerpt of standard royalties for MPEG-4 AAC. For special licensing prices that apply for cellular phones or PC software please contact Via licensing.
Table 3-2. MPEG-4 AAC license royalties excerpt

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:
http://www.microsoft.com/windows/windowsmedia/licensing/default.mspx
[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

2 AVR32722
32097A-AVR32-01/08

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:
http://www.microsoft.com/windows/windowsmedia/licensing/default.mspx
[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