Are We Violating the MP3 Patent?

I recently became aware of the fact that the MP3 format is patented and that the patent holder has recently begun to pursue violators.

http://www.mp3licensing.com/

This raises a lot of questions and concerns for me.

1) Has Macromedia licensed the use of MP3 for playback in their OCX? (I would assume so.)

2) As a web developer, am I covered under that license or would I need to also get a license to distribute Flash content that takes advantage of the MP3 format?

3) As a user of standalone products like SWF Studio, do I need to get a license separately to distribute MP3 capability? Does Northcode and the other standalone vendors have (or need to have) a license to use the MP3 format?

4) Finally, as a software developer, if I create a Windows app using Visual Basic and I include the Flash OCX and use the MP3 functions, do I need a license?

I'm hoping someone can tell me I'm all wet and none of these scenarios require me to purchase a license!

SWF Studio uses capabilities built into Windows to play MP3 files and Microsoft has licensed their MP3 technology from Thomson so I *believe* we're in the clear here. I will run this past our lawyers though just to be sure. Macromedia has also licensed MP3 technology from Thomson so again I *believe* you're covered there. Macromedia should have something on their site about this.

Thanks for the reply NC.

So, it may be as simple as, whenever we are using the Flash OCX for MP3 playing, we are already licensed?

If I load an external MP3 into my Flash application (using the buil-in Flash MP3 features) and that app is packaged and distributed using SWF Studio, would SWF Studio be intercepting the MP3 playback commands or would that be handled through the Flash OCX?

I'm guessing it would be the OCX so I'd still be coming back to whether Macromedia has a license for the MP3 playback that allows me to provide this functionality in my standalones. Then my concern is that even if Macromedia's MP3 license does extend to standalones created from Flash it might not extend to standalones created with 3rd-party tools.

Ever since the Eolas/Microsoft lawsuit, my company wants to be very careful in these areas! :)

Ahh, this brings back (NOT SO) fond memories of the UniSys GIF patent.

I guess it depends on whether Macromedia's license is for the OCX or the Flash authoring tool. Isn't that scary! I have to believe that using MP3's in Flash is okay because if it's not then there are probably MILLIONS of web sites out there that are all in violation of the patent!

SWF Studio uses capabilities exposed by the operating system through the media control interface (MCI) and I believe this is okay, but I *am* having real lawyer people look into this for me. The last thing I want is to have MP3 patent lawyers start sniffing around. I'm thinking that can't be very fun.

Do you license mp3/mp3PRO software to end users?
No. We license mp3/mp3PRO software and patents to developers and manufacturers of software applications and hardware devices


I would imagine that you are covered Northcode, since you just use the windows decoder instead of writing your own. Also on the list,http://www.mp3licensing.com/licensees/index.asp macromedia and microsoft are on there, so i would imagine that all of their products are covered. XcVbSdRw I don't think using flash would be a problem since the output is not considered software. Just my two cents.

Actually, this is quite intresting.

I have my own/third party mp3 software. Do I need a license?
Yes. Use of our patents is not related to a specific implementation of encoders and decoders, which means that a license under our patents is needed.

Am I getting that even if you use licensed windows decoders, just because your software uses ones already present, you need a license too?


Do I need a license to stream mp3/mp3PRO encoded content over the Internet?
Yes. A license is needed for commercial (i.e., revenue-generating) use of mp3 / mp3PRO in real time broadcasting (terrestrial, satellite, cable and/or any other media), broadcasting / streaming via Internet, intranets and/or other networks or in other electronic content distribution systems, such as pay-audio or audio-on-demand applications.

However, 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 an annual gross revenue less than US$ 100 000.00.

I wonder if that includes flash? Or may be since the mp3 is bundled in a swf wrapper it does not count. Oh well looks like i spoke to soon earlier.

lesley,

Thanks for your inputs. My biggest concern is whether I'm in a gray area (or worse clearly in the wrong) when I distribute my "application" built with Flash and SWF Studio.

I mean, one of the coolest things about SWF Studio is you can almost completely disguise the fact that you are still using Flash (at least to the casual observer). In that sense, my standalones do tend to look like a software application! And, if they are loading and playing MP3s from the user's hard drive I'd guess that could appear to be a patent violation.

I'd bet that Macromedia licensed the use of MP3 for all planned uses of the Flash OCX or player but I'm not sure if they would have foreseen the need to include the 3rd-party generated standalones in that license.

I have submitted a carefully worded question about this to the folks who own the patents. If they respond I'll post it here.

The issue is not as cut and dried as you might think Les... back when the Unisys patent was still an issue, The Microsoft page regarding use of LZW and GIF file formats stated something like

"...while Microsoft has licensed this technology from Unisys for their applications, this license does not extend to developers using Microsoft tools which may open and allow modification/copying/saving of the modified GIF image."

And the Unisys site echoed this sentiment. So while you might be ok to import an MP3 into Flash, they might still be able to come after you for playback, escpecially streaming.

It all depends on the nature of the agreement between each licensee and the licensor. It's entirely possible that every agreement they strike is different w.r.t. inherited/extended rights.

I emailed them about it and this is the response I got.

Hi Lesley,

For private, personal use, you do not need a license to create mp3 content
with the Macromedia Flash program.

If, however, you are creating commercial content for distribution, you may
need a license. What is your planned use of the mp3 content you are
creating? I can assist you in determining whether or not you need a
license.

Cheers, gj
-------------
Gary E. Johnson
mp3/mp3PRO Licensing
Thomson
+1.818.378.5409 cellular
+1.858.521.7603 office
[email protected]


Does not look to promising. But I do remember when unisys was trying to create an uproar, that is when the open source people developed png's to replace gif's. That pretty much went out with out a bang though didn't it? I mean they stopped pressing the issue didn't they?

Hey Lesley,

Today I got a response from the same guy. He says we can decode MP3 content without a license but we need a license if we distribute or encode MP3 content. I'm gonna ask for further clarification. For example, if I send out 2 files, one SWF and one MP3, and the swf loads the MP3 to play it, does that constitute "distribution" and if so do I therefore need a license? What about if I embed the MP3 into my SWF? Is that considered "distribution"?


Anyway, here is the question exactly as I asked it followed by his answer below,

----------
MY QUESTION
----------
My company creates web sites for clients. A few of those clients want Flash content embedded into them. And, one client has indicated he may wish to load and play MP3 formatted audio from his web site. Before we do this for him I have a couple of questions for you.

My first question is, do we need to license your MP3 technology for this type of application? I am assuming we do not since Macromedia has already licensed it for their Flash OCX and the Flash OCX is installed by the end-users of web sites we create so we actually do not provide any MP3 capabilities beyond what is embedded in the Flash OCX already installed on the end-user's computer.

My second question involves a scenario we have not yet faced but may face someday. That is, if we developed a software application that distributes the Flash OCX, and if that application uses the MP3 capabilities built into the Flash OCX, would we need a license from you? Again, in this scenario we would not be providing any MP3 functionality other than we would be utilizing the MP3 functionality built into the Flash OCX.

Thank you for your consideration and response to these questions.
----------

----------
THE ANSWER I RECEIVED
----------
You are correct that the Flash player is licensed for mp3 decoding.

It does NOT provide a license for distributing or encoding mp3 content though. For any mp3 content distribution, the provider must have a license if they meet the minimum requirements of $100,000.00 USD annual revenue. Please see www.mp3licensing.com <http://www.mp3licensing.com> for more details. The Flash documentation should also have more information on encoding and distributing content.

You are welcome to redistribute the Flash player if allowed by Macromedia, and the decoder will be licensed.

Let us know if you have further questions or concerns.

Cheers, gj

Gary E. Johnson
mp3/mp3PRO Licensing
Thomson
+1.818.378.5409 cellular
+1.858.521.7603 office
[email protected]

http://mp3licensing.com <http://mp3licensing.com/>
----------

I sent a follow-up question to the MP3 licensing folks and got another response. Below is the question and response.


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MY 2nd QUESTION
----------
Gary,

Thank you for your response. I am still not completely clear however. Let me give you three examples and then perhaps you can comment on each one as to whether a license is needed.

Example # 1
a. I use Macromedia Flash to create a presentation that can load and play external MP3 files
b. I output my presentation to the Flash SWF format
c. I then make the SWF available to customers and prospects via the web or on a CD or in some other way (clearly for commercial purposes)
d. my customers and prospects use my SWF to play their own MP3 files
Do I need a license in this example?

Example # 2
a. I use Macromedia Flash to create a presentation.
b. I use an audio program to create an MP3 (for purposes of this example let's assume the audio program is properly licensed to produce an MP3)
c. I use the Import function in Flash to import and embed the MP3 into my presentation
d. I output my presentation to the Flash SWF format
e. I then make the SWF available to customers and prospects via the web or on a CD or in some other way (clearly for commercial purposes)
Do I need a license in this example?

Example # 3
a. I use Macromedia Flash to create a presentation.
b. I use an audio program to create an MP3 (again let's assume the audio program is properly licensed to produce an MP3)
c. This time I code my Flash SWF to load the MP3 from the disk rather than embedding it in my presentation
d. I output my presentation to the Flash SWF format
e. I then make the SWF and the MP3 available to customers and prospects via the web or on a CD or in some other way (clearly for commercial purposes)
Do I need a license in this example?

Thanks in advance for your help in this matter.

----------
THE ANSWER I RECEIVED
----------
Any commercial use of mp3 content requires a license if your companies annual revenues are $100k or more. All three examples you gave are commercial uses of mp3 compressed content.

The Flash program is licensed for commercial mp3 decode, not encoding.

Cheers, gj

OK. So I was not completely satisfied with that response since my first example was meant to be the "control variable" that obviously should NOT require a license!!!

I called and spoke directly to Gary. When I explained that example #1 did not involve encoding or distributing MP3 he agreed it did not require a license. However, he stressed that both of my other examples DO require a license.

From all this it is clear to me that if you are using MP3 content at all in your commercial Flash creations you need a license and risk being subject to prosecution if you neglect this.

If I read this correctly, you need a license for #2 and #3 IF your company revenue is $100k or more. This could be true of a medium size design firm, but not likely for a self employed developer.

Does the revenue issue pertain only to revenue gained from mp3 content?

I would hate to think that a company makes $100,001 in a year and only $1.00 of that is due to mp3 content sales and they have to pay a license fee for the mp3 encoding.

My understanding (and I am NOT a lawyer) is that your scenario ($100,000 from HTML work and $1 from MP3) would require you to have a license.

I am still chasing this because it just does not ring true!!! Why would Macromedia license the use of MP3 in the Flash player and then each developer would still be required to also purchase a license?

I went to the Macromedia EULA and found the following in the 3rd-party section of the EULA,

------
Fraunhofer IIS and Thomson Multimedia
MPEG Layer-3 audio compression technology licensed by Fraunhofer IIS and Thomson Multimedia (www.iis.fhg.de/amm/). You cannot use the MP3 compressed audio within the Software for real time or live broadcasts. If you require an MP3 decoder for real time or live broadcasts, you are responsible for obtaining this MP3 technology license.
------

Sounds to me like Macromedia thinks the only time you would need a license for MP3 is when you are doing real time or live broadcasts. I have asked the folks at http://www.mp3licensing.com/ for further clarification on this.

What about this one. Create a wav, then add it to a SWF file. Inside the Swf file Flash uses mp3 compression on the wav. So have you encoded a mp3 with Flash. Does distributing the mp3 encoded inside the swf file count?

It's getting more confusing by the moment!

They say you don't need a license for decoding, but that's ALL the Flash player can do unless the audio stream from a web cam or mic is encoded as MP3.

If decoding is permitted under the license MM has, and they aren't doing any encoding in the player, then I don't see how using the Flash player could require a license.

If you are doing real time or live playback of an MP3 file in the Flash player (not encoding on the fly, just playing it), again I don't see how a license is required.

There are some fuzzy lines here that need to defined a lot more.

I would not take the word of anyone at Fraunhofer IIS and Thomson Multimedia as golden because (of course) they are going to say you need a license, they'll always interpret things in their favor. However, what they want and what they are actually entitled to under their patent(s) may be quite different.

We can ask questions and argue this one until we're all blue in the face, but a patent/IP lawyer is the only one I'm going to trust in the end on this issue :)

Northcode,

You make an excellent point. Are you planning to have this reviewed by a patent lawyer? If so, can you share the results here?

The way I see it there are several possible interpretations,

1) the guy at Thomson's (maybe with a knee-jerk reaction certainly to their favor)
2) the legal experts at Thomson's (certainly more knowledgeable but still likely to be biased)
3) Macromedia's interpretation
4) an independent (hopefully unbiased) patent lawyer
5) the legal system (to interpret once and for all)

Since I have not yet been able to reach Thomson's legal expert I've been trying to present this logically to the guy I'm talking to in the hope that he will simply acknowledge the rights we have. That could resolve this (at least for me) immediately.

Obviously, the only sure way to resolve this would be through legal channels (simply continue as we are and wait for the cease-and-desist letter from Thomson).


Do you think we would have any luck in submitting this question to Macromedia to request a definitive explanation of the license we are using when we use MP3 with their Flash player?

the developer community could come together to support a legal challenge to the clarity of the Thompson license.

Everyone banding together to fight their claim is probably the best thing that could ever happen... for them! I can't think of a better way to get all the people I want money from to line up at my door :)

We are talking to our lawyers about this. The first stop is the corporate lawyers, if they can't suss out a solid answer for us, then we move on to the patent and copyright specialists down the street.

Nothing happens fast with lawyers :yarr: they're paid by the millisecond...