Nobody would have predicted that the three of us would ever discover ourselves on the identical facet of the company patent wars, not to mention converse with one voice about finish them.
That’s as a result of one in every of us is the patent chief at a world smartphone maker (and an influential critic of patent licensing abuses); one other is the previous licensing chief at Apple and present chief government of a non-practicing entity (NPE) patent licensing firm that has been a goal of criticism from product producers; whereas the third is president of a patent pool operator, who has criticized corporations on each sides of the patent wars for his or her gamesmanship, lack of transparency, and litigiousness.
We have now come collectively as a result of we see that patent house owners and product makers have grow to be trapped in an infinite cycle of calls for, counter-demands, and unproductive litigation. Except we discover a means out of this battle, we are going to nearly definitely see a repeat of yesterday’s expensive and wasteful smartphone wars in tomorrow’s wi-fi related automotive sector.
Product makers accuse patent house owners of threatening lawsuits and utilizing the expense of the authorized course of so as to demand extortionate royalties for his or her patent rights. For his or her half, patent house owners say product makers refuse to pay honest compensation for the patented wi-fi, audio, and video options that give their merchandise worth as communication and leisure units.
The reality is, each side have some extent. That’s as a result of patent house owners and product makers are caught in a traditional “prisoner’s dilemma,” by which the shortage of transparency and honest floor guidelines in patent licensing lead corporations on all sides of a patent dispute to attempt to sport the opposite. This solely ensures that each side undergo a damaging final result in outrageously-expensive litigation.
In contrast to in the true property enterprise, in mental property (IP) licensing there may be little or no unbiased appraisal of the property (i.e., patents) or transparency as to how costs are decided. And as a result of most patent license agreements are confidential, there may be little or no info or “comps” on what others have paid for comparable patent rights. Nor are there any widely-accepted floor guidelines for what constitutes honest negotiating practices between consumers and sellers.
That is very true with regard to standards-essential wi-fi patents, that are presupposed to be licensed on honest, affordable, and non-discriminatory (FRAND) phrases. However what’s honest or affordable about the truth that an impossibly-large variety of LTE (4G) mobile patents — greater than 60,000, in actual fact — have been declared “requirements important” with none unbiased analysis of these patents in anyway?
That’s proper, these 60,000-plus patents have all been self-declared “standards-essential” by corporations every in search of their very own business benefit. What you’ve bought is a wi-fi gold rush — with loads of idiot’s gold posing as actual gold.
So the three of us, working with business leaders on each side of the patent proprietor vs. product maker divide, have developed a three-pronged plan for ending the wi-fi patent wars and making a extra productive and fewer litigious patent licensing sector.
First, whittle down this ridiculous mountain of self-interested wi-fi patent claims to the fewer than 2,000 patent households that almost all specialists consider are actually important to smartphone handset makers. We are able to do that by excluding duplicative patents, expired patents, patents not in drive in main financial markets, and patents for base station, infrastructure, and different improvements not related to handset makers. Unbiased, impartial evaluators will then verify every patent’s relevance to the LTE commonplace for handsets.
Second, base royalty costs not on the subjectively-argued worth of every particular person patent examined in a vacuum, however on the target worth of the complete stack of LTE patents in a cellphone. A latest court docket judgment valued that LTE stack at roughly $20 for a smartphone with a mean promoting value of $324, however with better value transparency from each side, the market itself will probably set a rational value for the LTE stack. Royalties can then be paid to patent house owners roughly proportionate to every patent proprietor’s proportion share of the whole LTE patent stack.
And third, guarantee better transparency by selling collective licensing options resembling patent swimming pools that overtly publish their pricing frameworks and supply constant phrases to all licensees. Given the “prisoner’s dilemma” dynamics in patent licensing at the moment, it’s unrealistic to anticipate anyone patent proprietor to unilaterally forego potential enterprise benefit by revealing its pricing methods. However collective licensing approaches resembling patent swimming pools scale back the dangers of transparency for everybody.
Because the IP journal Mental Asset Administration not too long ago famous, “There’s a rising sense collective method to licensing might assist resolve a number of the issues of the business which, in sectors like cellular, has been scarred by long-running and expensive disputes between patent house owners and potential licensees.”
Our “peace plan” would eradicate lots of the incentives and alternatives for gamesmanship in wi-fi patent licensing. And most significantly, it might assist patent house owners and product makers keep away from a repeat of yesterday’s expensive smartphone wars in tomorrow’s related automotive, autonomous automobile, and Web of Issues (IoT) industries.
It’s time for a brand new realignment within the business — one by which the battle is not between product maker and patent proprietor, however between those that license patents on a good and clear foundation, and people who don’t.