FAQ: G.729 and G.723.1

G.729

Which companies are represented by Sipro Lab Telecom?
Sipro Lab Telecom represents the G.729 Consortium, which brings together France Telecom, Mitsubishi Electric Corporation, Nippon Telegraph and Telephone Corporation (NTT), and Université de Sherbrooke. These members have pooled their rights in a joint license agreement. Sipro Lab Telecom also represents, in separate agreements, the rights of Nokia and NEC.

What is a patent license agreement and what does it include?
The G.729 patent license agreements grant patent rights only, that is, the right to use patented technology of the G.729 licensors. No software code is delivered.

Is the G.729 Consortium License only required when the ITU-T G.729 standard is used for encoding signal ?
No. The license is required for both encoding and decoding voice signal.

How are royalty fees calculated?
Royalty fees are calculated on the basis of channel (also called port) volume. The cumulative number of channels is counted over time, and pricing is applied according to the channel volume reached. When a channel volume threshold is reached, a new price level, based on volume, is applied. The count is cumulative through the life of the license.

What is a channel?
A channel refers to the capacity of handling a single point-to-point voice conversation data stream, be it unidirectional or bidirectional, on a continuous or sequential basis.  

What does the initial fee correspond to? And the minimum annual fee?
The initial fee is required only for royalty-based payment under the general license and is paid only ONCE (at the signing of the agreement). The initial fee covers all products that use the G.729 standard. The initial fee does not provide any prepaid number of channels.

The minimum annual fee is a minimum annual commitment required for keeping the license active for the term of the agreement. The minimum annual fee is applicable at the end of the second year of the license and every subsequent year for the term of the agreement.

For example: A licensee sells 5,000 channels at $ 1.15 for a total of $5,750.00 during a year. This amount is inferior to the minimum annual fee. Therefore, the licensee will receive an invoice for $1,750.00 which is the difference between the minimum annual fees and the amount paid during the year.

What does the fully paid-up fee cover for general licenses? 
The fully paid-up fee required for the general license allows the licensee to sell and use an unlimited number of channels using the G.729 standard.

What is the upgrade fee for the pre-paid option?
It is the fee to purchase additional pre-paid channels. For example, at the signing of the agreement, a company may purchase 200,000 channels of G.729 for $217,000. After a certain period of time, they may sell more than 200,000 channels of G.729 and anticipate selling 300,000 additional channels, for a total cumulative number of 500,000 channels. The company will then pay up front the additional amount of $293,000, which corresponds to the Maximum Number of Channels Sold (200,000 to 500,000) in the Upgrade Fees for Pre-Paid Option table.

What is an Internet Telephony Application?
An Internet telephony application is a client-only software used for PC-to-PC and/or PC-to- Wireline telephone communications. A PC is defined as a multi-function desktop or notebook personal computer or workstation which has a hard disk drive and utilizes an alphanumeric keyboard designed for use with two hands as the primary input device.  

Why is it necessary to pay twice for patents that may be essential to both the G.729 and the G.723.1 standards?
The portfolios of patents essential to each standard are different even if some of the patent holders are the same. The standards were originally dedicated to different applications, and essential patent holders have thus established two different licensing entities (the G.729 Consortium and the G.723.1 Group) to address the different needs of potential licensees. The pricing structure for each of these standards was established by validating market acceptance for the overall portfolio.

What kinds of products require a G.729 patent license agreement?
End-products using the G.729 technology require a G.729 patent license agreement. Qualifying end-products would typically include access devices, audio/video conferencing equipment, call center equipment, IP phones, IP/PBXs, media gateways, etc. Generic Microprocessors or Chipsets are excluded from this category.

What is a Generic Microprocessor or Chipset?
A Generic Microprocessor or Chipset is a multipurpose digital signal processing device or other microprocessor, not dedicated to a specific application, which contains or is delivered with a G.729 Implementation for which the number of G.729 channels can not be counted.

G.723.1

Which companies are represented by Sipro Lab Telecom?
Sipro Lab Telecom represents the G.723.1 Group, which includes AudioCodes, France Telecom, and Université de Sherbrooke. In separate agreements, Sipro also represents the rights of Nippon Telegraph and Telephone Corporation (NTT) and Nokia.

What is a patent license agreement and what does it include?
The G.723.1 patent license agreements grant patent rights only, that is, the right to use patented technology of the G.723.1 licensors. No software code is delivered.

Are the G.723.1 licenses required only when the ITU-T G.723.1 standard is used for encoding signal?
No. The licenses are required for both encoding and decoding voice signal.

How are royalty fees calculated?
Royalty fees are calculated on the basis of channel (also called port) volume. The cumulative number of channels is counted over time, and pricing is applied according to the channel volume reached (please see the Licensing Terms for prices). When a channel volume threshold is reached, a new price level, based on volume, is applied. The count is cumulative through the life of the license. 

What is a channel?
A channel refers to the capacity of handling a single point-to-point voice conversation data stream, be it unidirectional or bidirectional, on a continuous or sequential basis.  

What are the G.723.1 pricing categories?
There are four (4) pricing categories for the rights to G.723.1, and each category is application based:

1. Full Use: This pricing category applies to hardware products or devices in which no more than two G.723.1 channels exist and in which each channel is permanently assigned to a specific client or workstation.
   
2. Single Application: This pricing category applies to client-only software applications.
   
3. Server: This pricing category applies to multiple-channel hardware or software products.
   
4. Decoder only: This pricing category applies to client decoder-only non-server device software that offers ONLY decoding functions.

What is the difference between an initial fee and a royalty advance?
The initial fee is an administrative fee required by the license which does not provide any prepaid number of channels. A royalty advance is a payment toward a number of prepaid channels .

What does the fully paid-up fee cover?
The fully paid-up fee allows the licensee to sell and use an unlimited number of channels using the G.723.1 standard.

Why is it necessary to pay twice for patents that may be essential to both the G.729 and the G.723.1 standards?
The portfolios of patents essential to each standard are different even if some of the patent holders are the same. The standards were originally dedicated to different applications, and essential patent holders have thus established two different licensing entities (the G.729 Consortium and the G.723.1 Group) to address the different needs of potential licensees. The pricing structure for each of these standards was established by validating market acceptance for the overall portfolio.