The Working Group results, which were presented at the Lausanne meeting, are as follows below.Consensus was obtained within the Group as to what issues were "first order" as well as a consensus determination to be set as a "target" for the licensing entity on these issues.Work remains to refine the initial conclusions on these issues including further work on the royalty for encoders, enforcement of patent rights, refinement based upon further input, as well as other issues.

(1) Technology to be Licensed: "Licensed Technology". This shall include issued patents, the application(s) for which were filed on or before November 13, 1994, that are essential to the "licensed technology." "Essential" is defined, in the context of main profile @ main level, as well as for a given legal jurisdiction of patent authority, as:

• required to decode MPEG, or
• needed to generate an MPEG bitstream, or
• "main stream" implementation techniques and
• directly documented on DIS13818-2 (MPEG video standard) as clarified but not extended by DIS13818-4 (MPEG conformance document) or
• directly documented on DIS13818-1 (MPEG systems standard) and the following annexes:

C. Program Specific Information
D. ITU-T Rec. H.222.0 Systems Timing Model and Application Implications
F. Graphics of Syntax for DIS13818-1
K. Interfacing Jitter Inducing Networks to MPEG-2 Decoders
L. Splicing Transport Streams

(2) Availability of Licensed Technology. Any party can seek access to the licensing entity's licensed technology. (Rights granted to and by the licensing entity will be on a nonexclusive basis.)The same royalty structure will be applied to all parties, including licensers to the licensing entity.The entire portfolio of patent access that the licensing entity maintains as licensed technology will be available to all licensees on a unified offering basis.The licensing entity will not differentiate among licensees based upon access to only certain patents or based upon certain jurisdictions.

(3) Royalty Model. The Group has discussed and has reached consensus on targeting a $3 to $4 (U.S.) royalty on each digital decoder, including MPEG-2 settop boxes, digital videodisk (DVD) players, and decode-for-general-purpose processors. Using that target and based upon the model discussed below, that would result in a $0.03 to $0.04 (U.S.) royalty on each video CD or DVD that would be purchased. Also, there would be a $0.30 to $0.40 (U.S.) royalty on each video CD or DVD that was for distribution use (i.e., rental market).

The royalty logic is as follows: x = Decode per unit (settops, DVD players, decode for general-purpose processor, etc.) Also, "x" will include encode per unit that is not for the purpose of producing "y" products for distribution, or is not "z" encoders.

* if hardware or software (as defined by "x") encodes and decodes then = 1.5 x.

y = Prerecorded optic and magnetic medium per unit (DVD, VideoCD, prerecorded magnetic medium, etc.)

x + y = where an optic or magnetic medium includes decode capability as well as MPEG bitstream

z = Encode per unit.(Encoders for distribution industries but not for production of "y" and not covered by "x".)

* Discussion to continue at April 11 and 12, 1995, Working Group meeting.

The relationship between the x and y is as follows:

y = 0.1x (where y is such medium for distribution use, i.e. not for direct sale to end user)

y = 0.01x in all other instances

Finally, the Working Group also has discussed and reached consensus on a method for royalty allocation.

(4) The Entity. The licensing entity will maintain "National Committee(s)" for each jurisdiction for which it holds licensing rights to patents to licensed technology.An "Administration Committee" will be appropriately constituted to include participation from each National Committee.Finally, a "Secretariat" will be established that will see to the day-to-day functioning of the entity.

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