A German court has banned ASUS and Acer from selling computers in the country — a case that exposes a fascinating and little-known side of the video codec world.
-
The reason the two Taiwanese companies lost their right to continue selling computers in Germany is a lawsuit filed against them by Nokia.
Nokia claims that ASUS and Acer sell computers containing an HEVC media decoder, and since that technology is covered by Nokia patents, the company is entitled to royalties on those sales.
Although Nokia is in the right — and won the case accordingly — the story is far more complicated than it appears.
-
Video coding formats are a cornerstone of the modern internet.
Without efficient video compression to reduce file sizes to the smallest possible footprint, we wouldn't enjoy high-quality streaming on platforms like YouTube, Netflix, and TikTok today — and even playing high-quality local video files would demand exceptionally powerful and expensive hardware.
The H.264 video compression format was a genuine revolution when it came to market.
It emerged from technologies developed in parallel by numerous tech companies, each of which filed patents on their contributions. Those companies united under an umbrella organization that signed licensing agreements and collected royalties from every electronics manufacturer that used the codec.
Every modern processor includes a dedicated hardware block for encoding and decoding video in this format, and web browsers and media players support it by default.
The H.265 coding format — also known as HEVC — is what made the transition to 4K and even 8K resolutions possible, and it is now considered the standard in every camera, browser, and electronic device.
The problem with this format is that its licensing was never properly consolidated, so hardware manufacturers are forced to sign separate distribution and royalty agreements with each individual patent holder.
Because ASUS and Acer did not sign the required agreements in advance, they cannot continue selling computers in Germany until they reach a deal with Nokia — which now holds significant leverage in the negotiations and can use it to extract higher royalties.
-
The interesting twist in this story is that ASUS and Acer don't actually manufacture any hardware or software that uses these codecs.
The hardware encoders are made by companies like Intel, AMD, and NVIDIA, while software-side support is provided by companies like Microsoft, Google, and Adobe.
And yet, it is the PC manufacturers who are required to sign licensing agreements and pay royalties — because patent holders know they can charge more for a complete computer than for a processor alone or a piece of software.
You may have experienced this yourself: the last time you bought a Windows PC and tried to play a video, you were probably sent to the Microsoft Store to install an HEVC codec — because Microsoft goes to great lengths to keep its distance from the patents protecting this technology.
Cases like these will soon disappear, because the industry is already moving to the next chapter: AV1 encoding. That format was developed jointly by several major tech companies as a free and open format, designed to prevent future patent wars.
*Image: The location of the hardware encoders in Apple's M4 Max processor.*
--
👋 Hi, I'm Shlomo Strauss — follow me for more content on science and technology.