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Google (s GOOG) has struck a licensing deal with media codec patents licensing company MPEG LA that clears the path for a wider adoption of Google’s open VP8 video codec and its WebM video format. The deal means that MPEG LA will abandon its efforts to form a patent pool and go after Google and other users of VP8 and previous-generation video codecs owned by Google. It also clears the path for the development of VP9, which is currently underway at Google.

A press release quotes MPEG LA President and CEO Larry Horn with the words:

“We are pleased for the opportunity to facilitate agreements with Google to make VP8 widely available to users.”

Google’s deputy general counsel for patents Allen Lo is quoted saying:

“This is a significant milestone in Google’s efforts to establish VP8 as a widely-deployed web video format. We appreciate MPEG LA’s cooperation in making this happen.”

There is no word on the financial details of the deal, but one can assume that Google paid enough to get on MPEG LA’s good side and license patents from 11 companies that could be essential to VP8. It’s worth pointing ou that Google will be able to continue to freely relicense VP8, meaning that MPEG LA doesn’t have a claims against anyone using the codec.

Video codec patents are as inside-baseball as it gets in the online video industry. But this deal could have far-reaching implications for a whole range of applications from premium video services to video conferencing, which is why it’s worth to take a look back at the conflict between MPEG LA and Google:

Google open sourced VP8 as part of its WebM video format back in May of 2010. Right away, VP8 got attacked by patent holders for allegedly violating patents related to video compression and other technologies that are part of the competing H.264 video codec.

MPEG LA, whose business includes H.264 licensing, threatened to form a patent pool against VP8 just days after Google released the codec. The company followed up on this threat in 2011, when it said it had identified 12 companies whose patents were essential to VP8.

Google long rejected these threats, and they didn’t stop the company from using VP8 or working on a successor format. However, there definitely was a chilling effect: Microsoft (s MSFT) in particular expressed concerns about patent liabilities, and said it wouldn’t add support for WebM to Internet Explorer until these were resolved.

That not only hampered efforts to make WebM the default choice for plugin-free, HTML5-based video on the web, it also complicated industry-wide efforts to come up with a common standard for real-time video communication: Think video chat, but without the need to download Skype or any browser plugins.

Google is driving force in these efforts, which are known as WebRTC. Microsoft is participating, but has pushed for a standard that’s substantially different from Google’s implementation, in part because it doesn’t want to rely on VP8. A license for VP8 could possibly help to ease these concerns and get everyone to agree to a common standard more quickly.

Updated at 12:55 pm to clarify the licensing arrangement between Google and MPEG LA.