Digital Domain Media Group Announces 3D Conversion Technology Licensing Program

Digital Domain Media Group (NYSE: DDMG), a leading digital production company focused on visual effects, original content animation and major studio co-productions, today announced its 3D conversion technology licensing program. Digital Domain Media Group’s wholly owned subsidiary, Digital Domain Stereo Group (“DDSG”), formerly In-Three, owns the six U.S. patents that represent the original commercially feasible computerized process for converting 2-dimensional filmed imagery into 3-dimensional stereoscopic imagery. These patents, developed by In Three, relate to methods for employing basic visual effects tools and processes in the performance of 3D conversions and the subsequent distribution of the converted images. The DDSG patents provide fundamental coverage of any modern conversion process that involves rotoscoping (i.e., computerized, semi-automatic and semi-automatic conversion with roto), and relate to any conversion process that includes horizontal image displacement / transform.

DDMG is now embarking on a program to license these patents to the various media and entertainment industry companies that may benefit from access to the technology embodied in DDMG’s patents. The company has not previously offered access to these patents to the media and entertainment industry through a comprehensive licensing program. However, given the growth of the 3D market in theaters, home entertainment and other platforms, DDMG has elected to make its patent portfolio available now to select companies the broader industry through a studio-friendly program.

The first such agreement was recently signed with the South Korean consumer electronics company Samsung Electronics Co., Ltd. This agreement provides a non-exclusive, non-transferable license for Samsung to use DDMG’s patented technology for 3D conversion for a term that ends with the expiration of the last licensed patent. The agreement allows Samsung to use the licensed technology in any kind of consumer electronics, components, services and software of Samsung and its affiliates. However, Samsung has no right to sublicense the technology and cannot transfer its rights to a third party without the approval of DDMG. In addition, Samsung agrees to notify DDMG of any suspected infringement of these patents and to cooperate with DDMG in prosecuting such infringement.

DDMG will continue to offer 3D stereoscopic conversion services to film studios through its DDSG subsidiary, and will include select competing 3D conversion companies in this licensing program. DDMG’s focus will be to actively negotiate licenses with its competitors while allowing them to continue to provide 3D conversion services to their studio customers so as not to disrupt current 3D conversion projects. Where negotiations are unsuccessful, DDMG will seek to enforce its patent rights, as is the case with DDMG’s patent infringement lawsuit against Prime Focus North America, Inc. and Prime Focus VFX USA, Inc.

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