IP is becoming an increasingly divisive issue in the semiconductor industry with companies like Nokia and Qualcomm spending around $200 million each, every year, on lawyers to protect themselves from patent claims, or try to enforce patent claims on others.
A solution for companies wanting to assess the IP costs of entering a particular market, could be to set up a registered pool of patents so that everyone in the industry knows what patents apply to a particular sector, what level of royalties is charged on them.
To this end, it has been proposed that a pool of patents involved in 4G technology, and the royalty payments required to license them, would be a way of allowing new entrants to the wireless industry to assess costs of market entry and learn who holds the relevant IP.
Called the Next Generation Mobile Networks (NGMN) initiative, the move is supported by Samsung and Intel, which clearly have much to gain from the disclosure, but companies with a lot of IP may not be so keen to get involved.
‘Qualcomm especially should be worried, because this development spells a continued drive towards marginalizing its position’, says a report from analysts ABI Research.
“The combined effect of NGMN reporting and a 4G patent pool will create a situation where there will be an evident divide between the patent pool rates reported, and royalty rates reported from the rest", says ABI Research vice president and research director Stuart Carlaw, "this will expose Qualcomm’s position (and those of any others not in the pool) to the public gaze.”
ABI reckons that the smaller vendors in the 4G IP market will be keen to join NGMN because they have much to gain, but adds: ‘The real question is how many of the major IP holders will be attracted to the pool’.
One of the frustrating issues that has plagued cellular technology licensing, according to ABI, is that ‘the average cumulative royalty rate is shrouded in secrecy’.
This secrecy makes it very difficult for new entrants to gauge costs for entering a market or for carriers to identify specifically which companies are responsible for the majority of royalty rates associated with products.
NGMN is a fine aspiration, but transparency has never been a characteristic of the telecommunications industry.
What would be witty would be to find a way to enforce a ruling that if patents are not registered with NGMN, then they cannot be legally asserted against other companies.
That would promote some transparency. And in double quick time too.
Leave a comment