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Fraunhofer Lowers Patent Boom On MP3 Software Developers
by Michael Robertson, 1998-09-11

September 11th, 1998

Following up on a claim they have had posted to their web site and reiterated at the 1998 MP3 Summit, Fraunhofer sent letters of infringement to a number of MP3 software developers. In the letter, they claim that due to patents they hold related to MP3, they are entitled to royalties for any commercial players, all encoders (whether sold or given away), and also works of art sold in MP3 format.

The letter of infringement had an immediate effect on the free encoder programs with many being removed from their official web site. Affected encoders include Plugger, CDEX, soloH, 8Hz, Blade, Canna, and others. Most of these efforts were built upon the freely available ISO source code on Fraunhofer's own site.

Fraunhofer is demanding a royalty payment beginning at $25 per encoder. Additionally, a 1% or .01 per file royalty is also put forth as being required. Belows is the exact text of the letter. MP3.com is investigating this situation further and has requested an official response from Fraunhofer.

A quick patent search reveals the following patents 5742735 and 5579430 registered to Fraunhofer and likely dealing with MP3. After reading the original letter sent out below, add your take to the messageboard.

Here is a copy of the letter they are distributing:


Dear Ladies and Gentlemen,

As you may know, both the Fraunhofer Institute and THOMSON have done important work to develop MPEG Layer-3 audio compression (before and after it became part of the MPEG standards). This work has resulted in many inventions and several patents, covering the MPEG Layer-3 standard.

From your publications and your web-site we learn that you distribute and/or sell decoders and/or encoders that use the MPEG Layer-3 standard.

Our files do not show that you have a valid license agreement with us. This means that the products infringe the patent rights of Fraunhofer and THOMSON.

To make, sell and/or distribute products using the standard and thus our patents, you need to obtain a license under these patents from us.

In the past, we have licensed several companies under different models for different products, e.g.:
- Software encoder licenses against a per unit royalty starting at $ 25,00 and decreasing for high volumes; and
- Pay-audio licenses against a royalty of $ 0,01 per song or 1 % of the selling price.

At least the Software encoder license seems to apply to your products and we would appreciate if you could send us some more details about your activities, in order to discuss what would be the right royalty structure for your company.

In view of the above, we urge you to contact Henri Linde (mailto:lindeh@thmulti.com) and Martin Sieler (mailto:sir@iis.fhg.de) in order to start the discussion of the license or licenses needed.

We look forward to hearing from you soon.

Best regards,
- Martin

---
Martin Sieler
Fraunhofer IIS-A, Audio & Multimedia
email: sir@iis.fhg.de
phone: +49 9131 776-610
fax: +49 9131 776-699
www: http://www.iis.fhg.de/amm/


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