According to https://ec.europa.eu/assets/jrc/events/20110428-tto-circle/jrc_20110428_ttocirle_brufani.pdf https://ec.europa.eu/assets/jrc/events/20110428-tto-ci

According to https://ec.europa.eu/assets/jrc/events/20110428-tto-circle/jrc_20110428_ttocirle_brufani.pdf https://ec.europa.eu/assets/jrc/events/20110428-tto-circle/j... both Philips and Dolby collected royalties on AC-3 in DVD players totaling $1.05 for one capable of 5.1 output. By comparison, the high-volume per-unit fee for H.264 is $0.10, and because of the annual cap on H.264 fees, the effective per-unit fee for large companies is actually much smaller. So AC-3 costs over an order of magnitude more than a video codec (HEVC is, of course, aiming to fix this), and does not, to my knowledge, have an annual cap. You can view a sample license agreement, which does not mention such a cap, here: https://www.sec.gov/Archives/edgar/data/1114084/000101287003003164/dex106.htm https://www.sec.gov/Archives/edgar/data/1114084/000101287003... Annual caps are essential for anyone whose business model involves giving away software for free on the internet (even an existing user downloading a new version triggers another royalty). You may also notice that that agreement charges royalties for products made or distributed in "Non-Patent Countries", including those that purport not to have software patents. This is pretty standard. Essentially, if you'd like to sell your product in the US, you have to pay royalties on all units you sell, anywhere in the world.