MPEG's patent policy was not its own. The Moving Picture Experts Group was Working Group 11 of Sub Committee 2 of ISO-IEC Joint Technical Committee 1. Other Working Groups in SC2 were the Joint Photographic Experts Group, the Joint Bi-Level Image Group, and the Multimedia/Hypermedia Experts Group. Therefore, the patent policy was the ISO-IEC policy for including patented technology in their standards.

MPEG was also joint with the video conferencing standards group within the CCITT (now International Telecommunications Union), which generally required FRAND declarations from patent holders.

My recollection is that MPEG-LA was set up as a clearing house so that implementers could go to one licensing organization, rather than negotiating with each patent owner individually.

All the patents for MPEG 1 and MPEG 2 must be expired by now.

Besides patent gridlock, there is a fundamental economic problem with developing new video coding algorithms. It's very difficult to develop an algorithm that will halve the bit rate for the same quality, to get it implemented in hardware products an software, and to introduce it broadly in the existing video services infrastructure. Plus, doubling the compression is likely to more than double the processing required. On the other hand, within a couple of years the network engineers will double the bit rate for the same cost, and the storage engineers will double the storage for the same cost. They, like processing, follow their own Moore's Law.

So reducing the cost by improving codecs is more expensive and takes more effort and time than just waiting for the processor, storage and networking cost reductions. At least that's been true over the 3 decades since MPEG 2.