Mike Clendenin

EE Times

(04/27/2006 7:45 AM EDT)

SHANGHAI, China — Intellectual property clearing house MPEG LA is making moves to deepen its reach into China, inking agreements in Beijing on Thursday (April 27). The deals struck with Chinese industry groups covered its MPEG-2 patent portfolio and may lead to better compliance by local exporters of consumer electronics equipment such as DVD players.

The agreements come as China tries to put its best foot forward on the heels of high-level meetings with U.S. officials during the past few weeks, including meetings between the Chinese and U.S. presidents. Intellectual property figured highly in those discussions.

China’s DVD player manufacturers have a tense relationship with DVD patent holders and MPEG LA. Larry Horn, president of the licensing agency, said signing the agreement in Beijing with industry groups representing DVD player makers signaled that China is willing to make progress on IP rights. He acknowledged, however, that MPEG LA still needs to strike individual agreements with China’s numerous DVD makers. That may prove to be tough. Tougher still, could be collecting the money.

Horn said no deals were made to lower the fees charged to DVD makers here, and they will still be liable for past obligations. However, the agreement does allow for any overdue payments to be made in future incremental installments or a lump sum. “That’s a good way of taking care of their back royalty obligations but not bullying them and running them out of business. It’s not in our interests or the patent holders’ interests to see them fail,” he said.

Despite its rocky relationship with local OEMs and manufacturers, Horn said MPEG LA is also in China this week to drum up interest in its business model. Although the country is overwhelmingly a net importer of technology, he believes that will change over the long term and develop into a situation where Chinese companies will be looking for licensing models to monetize their intellectual property. “China has been one of the biggest consumers up to now, but all logic and every sign tells us they will be a prolific owner of intellectual property in the future,” Horn said.

No deals have been made yet. In the coming months and years, MPEG LA will reach out to Chinese companies and industry groups working on standards to convey how they might benefit from the MPEG LA model. Horn agreed it will be an ironic turnabout for these groups, who are more used to MPEG LA asking them for money rather than telling them how they can make money.