We help companies create intellectual property strategies to reduce their patent licensing costs and gain competitive advantage.
An essential patent is a patent in respect of which it is not technically possible to make a product which complies with a standard without infringing the patent. GSM/GPRS/W-CDMA/LTE cellular standards are administered by the European Telecommunications Standards Institute (“ETSI”).
There is no third party evaluation of the patents to determine essentiality (although it is possible to go to the High Court for a determination of essentiality) and there is no imposed limit by ETSI as to the royalty that an individual patent holder can charge, or what the overall cumulative royalty of all patent holders might be.
All rates differ from company to company, and in many cases rates change from negotiation to negotiation. It is possible to approach each essential patent holder and ask them what license fees they are seeking. However, there are numerous companies that have made declarations to ETSI that their patents are essential.
Inevitably, some patent holders are more assertive and litigious than others. Some use their patents for defensive purposes only. There is not any third party evaluation of what a “reasonable” royalty might be and nor is there any single body to whom the license fees can be paid.
It is therefore a problem for any company seeking to manufacture GSM/GPRS/3G/LTE compliant products, because they do not know how much they will have to pay, there is not a single rate they can provision for, and each negotiation has to be taken on its own.
The business of licensing standards essential patents is unsatisfactory in that it creates considerable uncertainty from a planning perspective. We help companies assess the impact and costs of essential patent licensing in the wireless sector and help devise and implement strategies to lower the licensing burden on them.