Technicolor CIPO explains why the company left the HEVC Advance patent pool 16 May 16
Arvin Patel became the chief IP officer at Technicolor in November last year. As CIPO, Patel is responsible for licensing Technicolor’s IP to companies across a variety of industries, with major programmes focusing on digital TV, mobile communications and the connected home (which covers products and services for pay TV operators and network services providers and video coding). He is also responsible for Technicolor’s IP strategy and execution across all of its businesses.
Prior to Technicolor, Patel was senior vice-president of worldwide IP and licensing at Rovi, having joined the company from IBM, where he headed up a group that provided IP services for Global 1000 companies.
Technicolor – previously known as Thomson – has long been a leading media and entertainment business with a strong R&D focus, and has one of Europe’s biggest technology and patent licensing operations – first developed under the leadership of IP Hall of Famer Béatrix de Russé. In 2013, Boris Teksler was brought in to lead the company's technology operation, with a remit that included IP; and when Teksler departed in June 2015 he was replaced by Stéphane Rougeot, who has now also left the company. As if that was not enough, for much of 2014 and early 2015, the Technicolor board was involved in a bitter dispute about the company’s future direction with shareholder Vector Capital. That has now been settled.
All in all, then, Patel has brought his expertise to a company that has seen a lot of action over recent times. I caught up with him recently to talk about how he is settling in, recent changes at Technicolor and how he sees things developing at the company and, more specifically, a major new approach to licensing out high efficiency video coding (HEVC) technology and patents.
What’s it like leading being the CIPO and head of patent licensing at a company like Technicolor?
What brought me to Technicolor was the opportunity to lead one of the most recognised and industry-leading IP businesses in the world. But what I’ve discovered since I arrived is that Technicolor is doing incredible innovation across a really wide range of technology areas that span the media and entertainment industry. Some of the innovation comes from our operating business units and some of it from our research and innovation group, but all of it naturally flows from Technicolor’s expertise in film, broadcast and consumer electronics technology.
For example, our Entertainment Services business is leading the way in visual effects and animation. We are the global leader in visual effects with state-of-the-art facilities across the world. Our teams work on award winning Hollywood movies, premium TV series, iconic advertising campaigns as well as games and animation. As an illustration, our teams worked on more than half of the Super Bowl ads.
Technicolor is also working on a number of next generation technologies for the benefit of its business units that also address the television and video space. Technicolor is at the forefront of innovating the next-generation of image enhancement and HDR technologies, to deliver the most immersive experiences to the home and on the go. And following up on our history of innovation in video compression, from MPEG-2 to HEVC, Technicolor continues to innovate in the video compression space and is already looking for new breakthroughs in that space. We are also major contributors to the next generation digital TV standard, ATSC 3.0 that will be rolled out in 2019 in the US (tbc).
It’s just really exciting to be part of a company that is uniting creativity with technology to push the boundaries of what entertainment can be. These investments will lead to new categories of products and services, and will support our current licensing programs, and help to develop new onesas well.
This is one of the coolest businesses I’ve ever been a part of.
Have recent changes at the company led to any kind of reorganisation or meant you have taken on further responsibilities?
From my first day in I have been responsible for patent licensing inside the company. The IP mandate in leading technology companies, like Technicolor, is to maintain freedom to practise for our operating businesses, as well as to create new products and services ecosystems around our people, IP and know-how. That has not changed. In this regard, I have been working directly with our CEO and board members from day one.
It’s been a tough time for patent licensing companies. How are things going at Technicolor?
It’s getting more difficult. Technicolor has been putting about $150 million a year into R&D, and our return on those investments comes in multiple forms. In some cases, we deliver innovation through our products and services to customers across the entertainment industry, and in other cases we license IP and technology directly to our customers.
Changes in law around the world have made licensing more difficult in some ways, especially where the patents are of lower quality or have less technological merit. But we’re confident in our ability to continue to generate value from our patented technology, and we’re making that happen. In fact, during the first quarter of 2016 we were able to close a number of sizeable licensing deals. The most significant of these was one we signed with a leading device manufacturer to license our patent portfolio related to the HEVC standard. After closing that deal, we also announced that we have decided not to participate in the HEVC Advance patent pool, but rather will license our HEVC patents independently.
Yes, that was a significant move - can you bring us up to speed on that?
HEVC stands for high efficiency video coding and is the next generation of video compression which will make it possible for content providers to improve coding efficiency and move to the higher levels of video quality that are necessary for things like ultra high definition and high dynamic range video - think 4K and 8K video. This is the next big leap forward in video technology and it has implications across the entire consumer device ecosystem. Every content provider, from broadcast TV and pay TV to web publishers and streaming services of every variety, as well as every device manufacturer in the consumer products industry, will be touched by this new video standard. In fact, some content providers are already providing 4K video and many chip and device makers have already adopted HEVC capabilities.
We’ve been investing in video technology for decades and we own one of the strongest patent portfolios in the world related to video compression and specifically HEVC technology. Our take is that HEVC is the single best video compression technology and can can be used across devices and distribution channels. So as HEVC was coming to market, we had been exploring a variety of options to determine how best to encourage market adoption and generate a return from our investment in HEVC technology.
We were involved in the discussions that led to the MPEG LA pool as well as the HEVC Advance pool. But, ultimately, we decided to license our HEVC patents directly to manufacturers and we will not participate in any of the HEVC patent pools. This gives us more flexibility to tailor our agreements with device manufacturers to meet both their needs and ours. In some cases, these licences may include broader collaborations beyond mere patent licensing. In others, we may bundle other technologies together to make them available to device manufacturers who need a broader suite of the products, services and technologies that Technicolor has to offer.
Similar to MPEG LA, we have also decided not to require licences from content providers for our HEVC technology. We believe that the attempt to license HEVC patents to content providers creates a major impediment to industry-wide adoption. We believe that small amount of incremental revenue we might get from content providers is not worth the loss of market-share that is likely to result if the industry fragments.
What has been the market’s reaction to this licensing approach?
Excellent. Right off the bat, we signed that licence agreement with one of the world’s leading device manufacturers. This is significant for us both financially and strategically. Financially, Technicolor has unambiguously demonstrated the value of its HEVC assets and set the blueprint for future HEVC licensing deals with other leading companies. Strategically, this deal increases the likelihood that HEVC technology will become widely adopted. Prior to that deal, this device manufacturer had pulled back from its use of HEVC technology. Now that this deal is in place, we expect that this manufacturer is more likely to adopt HEVC across its suite of products.
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