How to Create a Smoother Sep Licensing Eco-System for Iot?

Abstract

In the past decade SEP licensors and implementers of connectivity standards have increasingly used litigation as an instrument in their negotiations with the aim to reach a more favorable deal to them. The wider use of connectivity standards in various IoT-verticals means on the one hand that SEP licensors have to negotiate licenses for a broad range of different products with an increasing number of implementers, many of which are less familiar with standards and SEP licensing, whereas on the other hand implementers have to take licenses from an increasing number of SEP licensors for the different connectivity standards they may use in their products. If the current licensing practice in the telecom sector is replicated in the various IoT verticals, the number of SEP litigations will increase even more over time. This chapter describes a holistic end-to-end solution aimed at creating a smoother SEP licensing eco-system, in which licensors and implementers will be driven more towards negotiated agreements than towards using litigation to get to a deal. It addresses practical solutions for those elements in SEP license negotiations that are the cause for most litigations, including increasing SEP transparency, increasing likelihood of validity of SEPs, incentivizing implementers to seek SEP licenses, assessing a reasonable aggregate royalty for the total SEP stack, and securing a better level playing field among licensees.

Keywords: Patents, standard essential patents, essentiality, validity, aggregate royalty, license negotiations, non-discrimination, 5G, IoT

JEL Classification: L15, O31, 034, 038