Panel #9 – Patent Licensing for the Internet of Things *

Panel #9 – Patent Licensing for the Internet of Things *

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Patent licensing and technology transfer are cornerstones of modern economies. But with patent licensing, particularly relating to the licensing of standardized technologies, the disposal of the good (the technology covered by the patents) occurs before the user of the technology pays a licensing fee to the patent owner, and in fact it happens before the user has even agreed to pay anything at all for such license. What drives negotiations in the patent licensing business, therefore, are mainly two considerations: the cost of litigation, and the likelihood to succeed or lose in litigation.

The “Internet of Things” (IoT) provides for the connectedness of people and devices on an almost incomprehensible scale, creating its own unique technological and business hurdles. With the rise of the IoT sector companies that have previously had no reason or need to license patents must consider SEPs. Due to the fact that a variety of different companies require access to SEP-protected technologies, fresh concerns about patent hold-up are being raised. But are these concerns justified?

In order to balance the need for standardization with the rights of SEP-owners, standard-setting organizations (SSOs) require SEP-owners to offer licenses on FRAND terms (fair, reasonable, and nondiscriminatory). Arguments arise, however, when an agreement cannot be reached between the parties as to what is FRAND. Therefore, tension exists between SEPs (which protect substantial investment in R&D) and the desire to have widespread adoption of standards. Obviously, innovators are unable to innovate if they are not paid for the use of their innovations. Of course, not every vertical within the IoT universe can afford the same rate given the nature and price-point of products and services that make up the IoT.

What is certain is that standard essential patents (SEPs) will continue to proliferate into IoT verticals if the full promise of the connectivity is to become reality.

With this in mind. the panel will discuss:

(1) Why standardization is particularly important in the rapidly developing IoT.

(2) The nature of the IoT, which will involve very large numbers of small devices, which raises issues about the feasibility of a licensing regime, and what the approach to setting royalty rates should be.

(3) Whether a transparent, low transaction cost SEP licensing regime is essential for the continued development of the IoT sector, and what that might look like.

(4) SEP Litigation in the IoT Space.

Materials

Patent Licensing is a Risky Business: Let the Market Strike the Balance

Standard Essential Patents and the Internet of Things—The Evolving Patent Litigation Landscape

Frictionless Payments with IoT: The New Frontier for Retailers

Survey

https://www.surveymonkey.com/r/patent-licensing-for-iot