Cellular technology continues to transform the world. That would not be possible without innovative companies investing billions of dollars in research and development (R&D) to come up with innovations that make up transformational standards, such as 5G, and obtaining standard essential patents (SEPs) based on those innovations. Over the last 15 years, many companies that sell products based on those standards have invested heavily in trying to pay as little as possible for relying on those innovations. That latter investment has spurred global litigation campaigns, heated debates, endless amounts of lobbying, and questionable actions by regulators.
Tim Pohlmann has seen the growth of these disagreements up close: initially, while working for the German government, and then as an economist who wrote his doctoral thesis on patenting and standardization. Based on that academic work, he started IPlytics – a company that provides software analytics tools for SEPs to companies that are on all different sides of the debates. This experience and independence has provided him with a unique vantage point on issues related to SEPs.
Tim’s fascinating podcast, The SEP Couch, draws on his deep knowledge and genuine interest as he interviews a very diverse group of industry leaders, prominent attorneys, academics, and policy makers on the subject of SEPs. The SEP Couch will also be hosted on IPWatchdog soon.
In addition to being the CEO of IPlytics and hosting the podcast, Tim is sought by governmental organizations that are trying to gain a better understanding of the subject. He was recently commissioned by the EU Commission to provide empirical studies for their work regarding SEPs.
On this episode, Tim and Eli discuss:
- The SEP Couch Podcast, including Eli’s favorite interviews with Carlos Olarte and Kirti Gupta
- How, as an economist, Tim became interested in patents, and specifically SEPs
- Founding IPlytics, the evolution of patent data, and keeping customers engaged
- Advice for starting a software company in the legal/patent space
- Incentivizing through SEPs and the ideal system for innovation related to standards
- Weighing transaction costs and role of actors purposefully increasing those costs
- The limits of data and media simplification
- Lobbying on SEPs issues
- Lexis Nexis’ acquisition of IPlytics
Tim’s Advice for Starting a Legal Tech Company
“It’s a long road and it’s tough. You always get slapped in your face. It never goes without roadblocks. I think that’s for sure . . . You have to think about what actual problem your software is there to solve and your own value proposition; how valuable is it to the user? I had so many people that looked at the software and said, ‘That’s great, it looks awesome.’ Everyone was happy, but no one bought it, no one subscribed to it, because they didn’t have a problem to start with. And at the beginning, you’re all excited, you go out, and you have this shiny interface and it all looks good. And it’s fast. And it’s super nice, but no one is subscribing – because you’re approaching people, they don’t have a problem. They’re always excited about new things but they don’t have a problem. So, identify the problem, the pain point. And, if you have that problem and pain point that people really struggle with, then you have to define and develop your value proposition around that problem and focus on that.”
On the Ideal System for Innovation
“In that particular standards development case, they wouldn’t mind saying everything is royalty free. Keep patents, but it’s royalty free. And other companies, they need the royalty income and they reinvest the royalty into it. So, I think it’s different business models in different industries that really matter, that make an economy work, that make markets work. I think in the end, if the price is right, if it’s really reasonable and fair, I think it’s perfect. If there are certain prices that are monopoly prices, that are too high, that are somehow pressured by whatever litigation, then that’s not ideal. As an economist, I would say, the monopoly prices should not happen. But if that is not the case, and if we have a regulatory framework that makes sure prices are reasonable, I think there’s nothing bad about SEPs.”
Emotional SEP Debates, Lobbying, and Work for the European Commission
“It’s a very emotional industry, and lobbyists in particular are very emotional on both sides. Even for us as a company, we’ve been in the middle of everything because some liked our reports and others hated our reports. [One side] pushed us to be implementer friendly, and [the other side] pushed us to be SEP owner friendly. And right now, for example, we’re involved in a study for the European Commission, and we’re providing the data and analysis for that. And I can tell you again, with people knowing about the study and lobbyists calling us it’s always the same. They keep saying we should make sure that this and that is in there, and then sometimes it’s about semantics of how you phrase something. It’s at that level of detail. So, it’s emotional, because there’s so much at stake. It’s a lot of transaction costs. It’s a lot of discussions, but often also good discussion. I think there are very many smart people also in there, leaving some of the lobbyists’ work aside.”
How Mass Media Gets Patent Stories Wrong
“They [took] a study from us that somehow got popular…and then suddenly, every licensing manager had this Wall Street Journal article that they were presented with. And that simplified the whole story. And then many people got upset, which I understand of course, about simplifying, in a very complex world, the story.
[It’s the] same with ‘patent trolls.’ It’s also a very emotional topic that was simplified by mass media, and even politicians. And then it looked like it’s a super bad business. Some people still call certain companies – like InterDigital – patent trolls just because they’re not producing anything. But [InterDigital is] a very well-respected innovator in the industry.”