New Licensing Program for DVD6C

The DVD6C Licensing Group (DVD6C) consisting of nine developers of DVD technology and formats – Hitachi, Ltd., Mitsubishi Electric Corporation, Panasonic Corporation, Samsung Electronics Co., Ltd., Sanyo Electric Co., Ltd., Sharp Corporation, Toshiba Corporation, Victor Company of Japan, Ltd. (JVC) and Warner Bros. Home Entertainment Inc. – has revised its worldwide patent licensing program beginning on and after January 1, 2010, including offering a new license agreement, which offers reduced royalty rates on certain products and additional licensing options.

Key changes to the new licensing program
include the following:

Reduced royalty rates for DVD Recorders (i.e., the DVD-RAM Drive, DVD-RW Drive, DVD-R Drive and DVD Video Recorder licensed DVD Product categories):

• from the greater of 4% of the net selling price or US$6.00 per recorder
• to a flat rate of US$4.00 per recorder on or after the effective date of the New DVD6C License Agreement; provided, however, that such reduced royalty rates will apply retroactively as of January 1, 2010 for licensees who sign the New DVD6C License Agreement by October 31, 2010.

Reduced royalty rates for DVD Players (i.e., the DVD-Video Player, DVD-ROM Drive and DVD-Audio Player licensed DVD Product categories):

• from the greater of 4% of the net selling price of the player (up to a maximum of US$8.00 per player) or US$4.00 per player (US$3.00 per player for licensees licensed on or after January 1, 2005)
• to a flat rate of US$2.00 per player effective on or after the later of (i) the effective date of the New DVD6C license Agreement and (ii) January 1, 2011.

Shortened initial term of the license, which now runs to the end of 2012. Clarification that Blu-ray Disc (BD) products are not covered by the new license, irrespective of whether they include DVD functionality.

Interested parties will remain free to negotiate individual license agreements with DVD6C’s member companies, rather than entering into a single portfolio license or license for a category of products. The member companies have committed to provide such licenses under fair, reasonable and non-discriminatory terms and conditions.

The royalty rates to be offered under the New DVD6C License Agreement are shown below:

DVD-Video Player
(Newly revised)
Royalty: The greater of (i) 4% of the net selling price (up to a maximum of US$8.00 per player) or (ii) US$4.00 per player (US$3.00 per player for licensees licensed on or after January 1, 2005); provided, that the reduced royalty rate of US$2.00 per player will apply on or after the later of (i) the effective date of the New DVD6C License Agreement and (ii) January 1, 2011

DVD-Audio Player
(Newly revised)
Royalty: The greater of (i) 4% of the net selling price (up to a maximum of US$8.00 per player) or (ii) US$4.00 per player (US$3.00 per player for licensees licensed on or after January 1, 2005); provided, that the reduced royalty rate of US$2.00 per player will apply on or after the later of (i) the effective date of the New DVD6C License Agreement and (ii) January 1, 2011

DVD-ROM Drive
(Newly revised)
Royalty: The greater of (i) 4% of the net selling price (up to a maximum of US$8.00 per drive) or (ii) US$4.00 per drive (US$3.00 per drive for licensees licensed on or after January 1, 2005); provided, that the reduced royalty rate of US$2.00 per drive will apply on or after the later of (i) the effective date of the New DVD6C License Agreement and (ii) January 1, 2011

DVD Video Recorder
(Newly revised)
Royalty: US$4.00 per recorder on or after the effective date of the New DVD6C License Agreement; provided, that the reduced royalty rate will apply retroactively as of January 1, 2010 for licensees who sign the New DVD6C License Agreement by October 31, 2010

DVD (Recordable Disc) Drive
(Newly revised)
Royalty: US$4.00 per drive on or after the effective date of the New DVD6C License Agreement; provided, that the reduced royalty rate will apply retroactively as of January 1, 2010 for licensees who sign the New DVD6C License Agreement by October 31, 2010

DVD-ROM Disc
US$0.04 per disc on or after the effective date of the New DVD6C License Agreement

DVD-Video Disc
US$0.04 per disc on or after the effective date of the New DVD6C License Agreement

DVD-Audio Disc
US$0.04 per disc on or after the effective date of the New DVD6C License Agreement

DVD Decoder
US$0.50 per decoder on or after the effective date of the New DVD6C License Agreement

DVD Encoder
US$0.75 per encoder on or after the effective date of the New DVD6C License Agreement

DVD-R Disc
The greater of (i) 4% of the net selling price or (ii) US$0.075 per disc or; $US0.045 per disc on or after January 1, 2006

DVD-RW Disc
The greater of (i) 4% of the net selling price or (ii) US$0.065 on or after the effective date of the New DVD6C License Agreement

DVD-RAM Disc
The greater of (i) 4% of the net selling price or (ii) US$0.065 per disc on or after the effective date of the New DVD6C License Agreement

Recordable Disc Case
The greater of(i) 4% of the net selling price or (ii) US$0.005 per case

+R Disc
The greater of (i) 4% of the net selling price or (ii) US$0.075 per disc or; US$0.045 per disc on or after January 1, 2006

+RW Disc
The greater of (i) 4% of the net selling price or (ii) US$0.065 per disc on or after the effective date of the New DVD6C License Agreement

Note that BD products, irrespective of whether they include DVD functionality, are not covered by the New DVD6C License Agreement. Licenses for the DVD portions of BD products granted to existing licensees under the prior DVD6C License remain unchanged until the existing licensees enter into the New DVD6C License Agreement.