Is H.264 a legal minefield for video pros?

If you're a digital-video professional--the sort of person who records weddings, sells stock footage, or edits B-roll--chances are good you deal with the H.264 video encoding technology. But after reading software license agreements, you might well wonder if you have rights to do so.

A recent blog post by Harvard Ph.D. student Ben Schwartz, including the provocative phrase "Final Cut Pro Hobbyist," put the spotlight on license terms in Apple's video-editing software by questioning when professionals may use H.264 video. A similar "personal and non-commercial activity" license requirement appears in Adobe Systems' competing Premiere package, too.

Schwartz's contention caught my attention: my SLR shoots 1080p video encoded with H.264, and I'm in a position both to publish some videos online for my main job and sell others on the side. And with bubbling controversies regarding how HTML is reshaping online video, any troubles with H.264 constraints take on new interest.

It seemed like a good time to call Apple, Adobe, and the MPEG-LA, the industry group that licenses the H.264 patent portfolio to the likes of software companies, optical-disc duplicators, Blu-ray player makers, and others who have need to use H.264.

I was a little alarmed when Apple and Adobe declined to comment--it's their software people are buying, after all. I got a similar response from Microsoft, which includes similarly restrictive H.264 language in its Windows 7 license.

When I heard back from Allen Harkness, MPEG LA's director of global licensing, though, I was relieved to learn that Final Cut Pro isn't just for making YouTube cat videos.

But H.264 use isn't all free all the time--the wedding videographer might need to pay 2 cents per disc they sell, for example--and even experts can be thrown off by the complications.

"I agree that the language in these licenses is a bit off-putting, on first read. I had a similar reaction the first time I read the license," said Dan Homiller, a patent attorney with intellectual property firm Coats and Bennett. "The biggest problem with the particular language that MPEG LA requires their licensees to use is that it sounds threatening to ordinary users of the end device."

Although I'm somewhat reassured in this particular matter, the broader issue raises my hackles.

End-user license agreements, privacy policies, and terms and conditions are impenetrable enough as it is. I fear that in the technology era, ugly legal realities will intrude in new ways into ordinary peoples' lives, whether it's worrying about licensing the music your toddler is dancing to on YouTube, having your electronic books withdrawn, or being charged with illegal surveillance when recording video with a mobile phone.

But back to the specific H.264 case. Let's start with the background.

H.264 license terms
H.264 is what's called a codec, technology to encode and decode media such as video or audio. In the video domain, its rivals include VC-1 from Microsoft, Ogg Theora from the Xiph.org Foundation, and VP8 from On2 Technologies, a company Google acquired in February for $124.6 million.

For historical reasons involving marketing, standards groups, and industry jargon, H.264 goes by many names. It's also called AVC (short for Advanced Video Coding), MPEG-4 Part 10 (the acronym refers to the Moving Picture Experts Group), and JVT (Joint Video Team). When it comes to licensing, it gets even more complicated.

MPEG LA licenses a portfolio of more than 1,000 H.264-related patents on behalf of 26 companies that hold the patents.

Among the companies whose patents are covered by the portfolio (the full H.264 patent list is available in PDF form) are: Frauenhofer, Microsoft, LG Electronics, Panasonic, Philips Electronics, Samsung, Sharp, Sony, and Toshiba. MPEG LA licenses the patents on behalf of this group.

So how exactly does this translate into the world of video editing? Here's the language from the Apple Final Cut Pro license agreement (PDF):

To the extent that the Apple Software contains AVC encoding and/or decoding functionality, commercial use of H.264/AVC requires additional licensing and the following provision applies: THE AVC FUNCTIONALITY IN THIS PRODUCT IS LICENSED HEREIN ONLY FOR THE PERSONAL AND NON-COMMERCIAL USE OF A CONSUMER TO (i) ENCODE VIDEO IN COMPLIANCE WITH THE AVC STANDARD ("AVC VIDEO") AND/OR (ii) DECODE AVC VIDEO THAT WAS ENCODED BY A CONSUMER ENGAGED IN A PERSONAL AND NON-COMMERCIAL ACTIVITY AND/OR AVC VIDEO THAT WAS OBTAINED FROM A VIDEO PROVIDER LICENSED TO PROVIDE AVC VIDEO.

Here's how Adobe puts it for Premiere:

16.17. AVC DISTRIBUTION. The following notice applies to software containing AVC import and export functionality: THIS PRODUCT IS LICENSED UNDER THE AVC PATENT PORTFOLIO LICENSE FOR THE PERSONAL AND NON-COMMERCIAL USE OF A CONSUMER TO (a) ENCODE VIDEO IN COMPLIANCE WITH THE AVC STANDARD ("AVC VIDEO") AND/OR (b) DECODE AVC VIDEO THAT WAS ENCODED BY A CONSUMER ENGAGED IN A PERSONAL AND NON-COMMERCIAL ACTIVITY AND/OR AVC VIDEO THAT WAS OBTAINED FROM A VIDEO PROVIDER LICENSED TO PROVIDE AVC VIDEO. NO LICENSE IS GRANTED OR SHALL BE IMPLIED FOR ANY OTHER USE. ADDITIONAL INFORMATION MAY BE OBTAINED FROM MPEG LA L.L.C. SEE http://www.mpegla.com.

So what about professionals?
"Personal and non-commercial activity" sounds ominous for professionals.

But it turns out it's not, exactly.

The H.264 licensing language is broad to head off various efforts to dodge licensing requirements, Harkness said. "As soon as you try to be specific about a commercial purpose, everybody tries to find a way around it."

The "Final Cut Hobbyist" moniker isn't right, Harkness said.

"There are some areas where you can use a product, and that type of use isn't going to be covered under the license. It's not that they're trying to withhold coverage. There isn't a license associated with that use," Harkness said. "In some cases people can use a product in a commercial way and not be able to receive coverage under our license."

For somebody supplying footage to a movie studio, for example, H.264 licensing requirements don't enter into the calculation until the last step in the production chain--broadcast of the movie or replication of its disc, Harkness said. An H.264 license would be needed, though, for a band making and selling its own concert video disc, he said.

"Whoever is the seller of AVC video to the end user is the party who needs to take a license," he said.

But the wedding videographer might need to take an AVC/H.264 license--though payments will hardly be a big burden even if they're sending out 100 DVDs of somebody's nuptuals.

"Per Section 3.1.2 of the AVC License (Title-by-Title AVC Video), the royalty for each title greater than 12 minutes in length is 2.0 percent of the remuneration paid to the Licensee or $0.02 per title, whichever is lower. In other words, the royalty would not exceed $0.02 per disc for the videographer," said MPEG LA spokesman Tom O'Reilly.

But practical matters also factor into the likelihood of actual enforcement--for example in the situation in which a Windows 7 user watches H.264 video.

"Realistically, it's unlikely that a consumer who unwittingly plays a video clip from an unlicensed source is going to be pursued by MPEG-LA or by patent owners. The legal framework for patent damages is different than it is in the copyright area, so you're not likely to see lawsuits against ordinary consumers, like some of the highly publicized suits filed by the RIAA [Recording Industry of America] in the United States," Homiller said.

Another way where professionals can get off the hook for payments is if the video is broadcast for free over the Internet. Earlier this year, MPEG LA extended through 2015 a provision that means streaming H.264 video over the Net requires no royalty payments as long as anyone can see the video without paying.

Ultimately, for the license terms one sees in software, MPEG LA errs on the side of sounding tough.

"The purpose of the provision in the MPEG LA license is to ensure that the license doesn't cover commercial distribution of H.264-encoded video," Homiller said. "It would be nice if there were a 'gentler' way to convey this, but it might be challenging to do so without opening up some loopholes that the licensers would regret."