One example of many from define:proprietary:
http://wordnetweb.princeton.edu/perl/webwn?o2=&o0=1&...
In this case, I believe Chris' terminology is correct. You are instead describing the difference between closed- and open-source.
For x264, an implementation of H.264, it is an open source implementation of a proprietary algorithm. In Theora's case, it is open source implementation of a free (as in libre) algorithm. RealVideo is a closed-source implementation of a proprietary algorithm.