Clarifying HEVC licensing fees, royalties, and why vendors kill HEVC support

In these cases, users can pay for an HEVC video extension to restore hardware acceleration—the Microsoft Store sells it for $1—but it’s a frustrating ask when that capability was intentionally disabled. Another workaround is to play HEVC files in software with built-in decoding, such as VLC Media Player. That only goes so far, though—you can’t, for example, download a 4K episode of a show from Netflix and play it in VLC. The technologies required for HEVC decoding and encoding are patented by several companies, including Ericsson, InterDigital, and Nokia. For a product to use HEVC, its vendor must pay licensing fees and royalties to the relevant patent holders. Those fees vary depending on whether the vendor licensed the patent directly from the licensor or through a third party. In recent years, several tech companies have killed HEVC functionality in devices originally built to support the codec. Dell and HP disabled HEVC support that has been in Intel and AMD CPUs since 2015. In 2024, Synology removed HEVC, AVC, and VC-1 transcoding support from the DiskStation Manager (DSM) OS used in Synology NAS devices and the BeeStation OS used in its BeeStation private cloud devices. Lending more credence to that theory is Dell’s explanation when asked about disabling HEVC support in November. A company spokesperson said that only “premium systems” with “hardware or software, such as integrated 4K displays, discrete graphics cards, Dolby Vision, or CyberLink Blu-ray software” include HEVC support. When I asked why Synology removed HEVC support from its DSM and BeeStation OSes, a company spokesperson said the decision followed an evaluation of HEVC codec usage across Synology’s NAS lineup. “[Synology] found that the vast majority of customers were not relying on server-side HEVC transcoding, as most video processing was being handled directly by playback devices, such as smartphones, tablets, and smart TVs,” the spokesperson said. Synology also considered patent licensing costs, the spokesperson said: Discontinuing the usage of this codec allowed us to improve server efficiency, reduce unnecessary resource usage used in transcoding, and scale better in high-user environments. While licensing costs were a consideration, the primary driver behind this decision was long-term product optimization and delivering the best possible performance for our users. Synology has noted that customers often get HEVC support through end devices, but that support isn’t a given in consumer products, including PCs. So what makes HEVC support so costly, especially when it could be integrated through necessary components like CPUs? HEVC patent licensing deals typically happen behind closed doors and as part of newly consolidated and created programs. Companies can obtain patent licenses directly from a licensor and try to negotiate pricing or secure a deal that covers technologies beyond just HEVC. Some licensors work through third parties, like patent pool administrators, which allows licensees to offload pricing, operating principles, term negotiations, and other relevant housekeeping to the third party. Patent pools may also allow licensees to access thousands of patents from numerous holders. Access Advance and Velos Media are the only non-licensor entities administering HEVC patent licenses in the US. That has been the case since December, when Access acquired Via Licensing Alliance’s HEVC/VVC program. Access administers licenses through patent pools that cover about 80 percent of global HEVC patents. The company launched in 2015 with licensing for 500 HEVC patents and currently administers licenses for almost 29,000. Velos, meanwhile, claims to cover 450 HEVC-related patents, though it ended its HEVC patent pool in 2023. Velos didn’t respond to requests for comment, but we were still able to gain insight into how Access’ patent pools work. With respect to Dell and HP specifically, their rates as they currently stand are locked in until 2030. At that time, if the licensors chose, they could increase the rates, but no more than 20 percent for the period of 2031 to 2035. It’s possible that HP and Dell disabled HEVC in some laptops in anticipation of royalties potentially rising in 2031. Access could also eventually change rates for its other HEVS patent pool, VCL Advance. Still, Pint thinks it’s unlikely that HEVC Advance rates will increase in 2031, in part because they have not been raised for existing licensees in the past. He added that patents are time-limited assets, so there’s a “significant drop-off in the amount of patent coverage that will occur naturally by operation of law in the 2032 to 2033 timeframe,” meaning that “the patent coverage over that entire period is likely to be significantly less than it is today.” Many PCs support HEVC through third-party components like CPUs or GPUs, leading some customers to assume that chipmakers, not OEMs, are the entities subject to HEVC patent fees. Another common assumption is that OEMs are responsible for these fees but that chipmakers typically pay some or all of them. Neither assumption is always accurate. Intel declined to comment, and AMD didn’t respond to requests for comment. But Pint confirmed that the company only licenses consumer-facing products. For example, Access will license an HP laptop with HEVC support through an Intel chip but not the Intel chip itself. It’s true that chipmakers pay licensing fees, but they don’t pay Access. That leaves only patent holders and Velos as paths for HEVC licensing for B2B products like PC components and OSes. Further, Access’ HEVC pools don’t have a procedure for chipmakers to cover licensees’ royalty fees, Pint said. VIA Licensing Alliance previously ran a pool in which “vendors of semiconductor chips or other products that contain an HEVC encoder and/or decoder may pay royalties on behalf of their customer who is a Licensee (and has responsibility for assuring payment) subject to that Licensee’s annual cap,” according to an archived version of its website preserved by the Internet Archive. Access acquired VIA’s program, now called VCL Advance, in December. One of the difficulties that we had in licensing the PC industry was that our approach was a departure from past practice of the AVC pool where Microsoft or Intel could cover their customers. The way we do it is not the same. So if Microsoft has an OEM customer that they’re selling Windows to, Microsoft can’t cover that [licensing fee] for HP. Pint added that Access’ alternative strategy aims to provide more flexibility for OEMs so they can “put as many decoders in their products as they want” and then “just pay one royalty at the time of sale to cover all of them.” It’s possible that chipmakers are making private deals with OEMs or Velos regarding HEVC fees, but Pint thinks that practice generally doesn’t happen anymore. “I think the industry’s kind of moved away from that model,” he said. Acer and Asus argued that they were entitled to use Nokia’s HEVC technologies under FRAND licensing terms, but the Munich court ruled otherwise. FRAND terms vary among countries. Germany is considered a hotspot for patent litigation due to fast rulings and the potential for outcomes that favor patent holders, as noted by German IP law firm Finnegan. But there are also similar lawsuits in the US—Nokia has sued HP, Hisense, Amazon, Paramount, and Warner Bros. Discovery (WBD) over HEVC. HP, Hisense, and Amazon subsequently made licensing deals with Nokia, and the cases against Paramount and WBD are ongoing. Naturally, Pint believes that the removal of HEVC support is less about patent pool fees and more about companies’ concerns about lawsuits from licensors that don’t work with pools. Such firms, he suggested, may be asking for “an outsized piece of the royalty stack disproportionate to what their patent holdings are.” “It may be that HP was taking an action that would not only evade pool royalties but also make their risk with respect to somebody like Nokia less,” Pint speculated. Explaining Nokia’s reasoning behind its numerous HEVC patent lawsuits, a spokesperson told me: Nokia’s aim is to ensure that we receive fair compensation for the use of our technologies and to maintain a level playing field for companies who have already agreed to pay for the use [of] our technologies. Litigation is always a last resort, but sometimes it is the only way to respond to companies who choose not to play by the rules followed and respected by many others. In response to industry commentators blaming aggressive patent litigation for companies disabling HEVC support, Nokia’s rep said that third-party streaming services and hardware wouldn’t work as expected without Nokia’s research and development. “Nokia is seeking compensation for the use of these key inventions, royalties which we will reinvest along with substantial amounts of additional investment in the development of next-generation multimedia technology,” the spokesperson said. “It is a virtuous circle, a wheel that has been turning for many years, powering innovation.” Nokia isn’t the only litigious HEVC patent holder in the US. InterDigital, for example, has sued Amazon, Hisense, and TCL, and Ericsson has settled litigation against Lenovo. In March, Dolby Laboratories, whose patents are administered through an Access patent pool, sued Snap Inc. When tech companies decide that it’s not worth the money, effort, or risk to incorporate HEVC support, users may be forced to pay for the codec themselves. A commenter in the SysAdmin subreddit recently detailed how problematic disabled HEVC support can be for laptops: People with older hardware were not experiencing problems, whereas those with newer machines needed to either have the HEVC codec from the Microsoft Store removed entirely from [Microsoft Media Foundation] or have hardware acceleration disabled in their web browser/web app, which causes a number of other problems/feature [degradations]. For example, no background blurring in conference programs, significantly degraded system performance… A lack of HEVC support could deter shoppers who don’t want to worry about whether videos will work on their pricey new device. “There is a conscious decision being made to lessen or worsen the consumer experience by taking this functionality out or somehow hiding it in a way that they believe potentially evades royalties,” Pint said. I asked the Nokia representative if the company is concerned about patent litigation concerns limiting users’ access to HEVC innovations. The spokesperson said that Nokia’s “aim is for consumers to benefit from our video technologies, but the innovation ecosystem breaks down if innovators are not fairly compensated for the use of their technologies, as it becomes harder to fund research into next-generation technologies.” Another complication stems from attempts of companies outside AOMedia to collect licensing fees and royalties from companies that adopt AV1, despite AV1’s royalty-free goals. Firms such as Access and The Sisvel Group argue that AV1 relies on patented coding tools created by companies that aren’t AOMedia members and never agreed to a royalty-free system. AV1 critics also dispute whether the standard can legally be royalty-free. In a lawsuit last month, Dolby accused Snap Inc. of infringing its patents by implementing AV1 in Snapchat. InterDigital is also suing Amazon (PDF) over AV1 support in some of its Fire streaming devices. The outcomes of both cases could have lasting implications for AV1 adoption, potentially affecting HEVC support as well. European Union antitrust regulators have also investigated AV1; the investigation ended in 2023, with an EU spokesperson telling Reuters that the investigation’s closure was “not a finding of compliance or non-compliance of the conduct in question with EU competition rules.” Despite these challenges, AOMedia continues to push for AV1 adoption. In September 2024, the group said that about 95 percent of Netflix’s catalog and more than 50 percent of YouTube’s catalog are available in AV1. Some streaming services, including HBO Max, Peacock, and Paramount Plus, are still holding out. Dr. Lemieux declined to comment on how patent lawsuits are impacting consumers’ access to codecs like AV1 but said that AOMedia expects “growth to continue accelerating as the world moves to UHD and HDR video streaming.” Technology has reached the point where most people don’t expect to think about video codecs—and certainly not to pay for them—just to watch a 4K YouTube video on a PC. If HEVC keeps failing to meet expectations for simple video compression, AV1 will only become harder to ignore, even with its own legal baggage.