(2) For MPEG-2 encoding products in hardware or software, the royalty is $4 (US) for each encode unit. There is no royalty on encoders that encode/produce DVDs or other MPEG-2 packaged medium; royalties are assessed on the MPEG-2 packaged medium itself. (Sections 2.3 and 3.1.2) Encoding product Licensees are required to give notice (covering the exclusion from the sublicense granted by Section 2.3) that encoding products may not be used in any manner for encoding MPEG-2 Packaged Media without a license under applicable patents (Section 7.16).