Put on your water wings folks, because it’s time to jump into the LTE patent pool.
Earlier this month, Sisvel, VIA Licensing and MPEG LA all issued separate shout-outs to companies holding patents essential to the LTE standard in the hopes that they can create a joint licensing agreement that would incorporate the patents of several different companies.
The firm that scores the largest pool of patents will become a one-stop-shop for LTE licenses, allowing vendors to acquire worldwide patent rights for the LTE standard in one fell swoop instead of negotiating a long series of individual licenses.
However, the waters of this particular pool are a bit murky because there are no signs of who, if anyone, will show up for the party.
The impetus for forming a patent pool came directly from companies currently holding LTE patents. They directly approached the licensing firms with the goal of using the firm as a third-party mediator to negotiate a joint license.
Though the companies refuse to disclose details about potential pool licensees, it’s unclear whether any major players are going to participate.
Consider the notable absences from last year’s agreement to commit to form the basic framework of a joint LTE license. Neither Motorola, Nortel nor Qualcomm voiced support for the arrangement, which aimed to establish IPR licensing fees and royalty rates for LTE patents.
As a result, the very basis for a patent pool is on unstable ground, as full cooperation from key IPR holders is vital to the success of joint licensing agreements.
It’s now unclear that enough cooperation can be garnered from key patent holders to make the effort a success. Companies must see a clear case to participate: A bungled licensing agreement could cost it billions of dollars.
Qualcomm makes $4 billion a year on its intellectual property rights alone, and the company is steering clear of joint licensing agreements. “At this point, we are not planning to go that route,” says Derek Aberle, Qualcomm’s president of technology licenses.
Aberle doesn’t see Qualcomm as being uncooperative. He doubts other companies with significant patent portfolios will joint the effort.
“If you look back on patent pools, what’s tended to be the case is that companies with larger portfolios tend not to participate… even when they have, [the pools] have broken down because they can’t decide who gets what. Everyone thinks their portfolio is more valuable,” Aberle says “What you’ll see is that companies who end up joining pools have a smaller patent position and don’t have the resources to develop a licensing portfolio.”
Aside from corporate financial concerns, joint licensing agreements do have the potential to smooth development of LTE technology by helping to avoid high-profile legal scuffles over patent infringement and giving developers a clearer idea of their IPR licensing costs.
If there is a winner to be had, it’s probably VIA Licensing, says Nadine Manjaro with ABI Research. The company already boasts patent holders Samsung and Nokia as its clients, although VIA declined to identify which companies approached them to create a patent pool.
But given the fragmentation amongst key players and the shaky rational for pooling patents, there doesn’t seem to be much incentive for patent holders to enter into a joint licensing agreement.
“[The proposed patent pools] are merely a preemptive attempt to quash the type of IPR fighting that happened in 3G and grow adoption for the technology,” says James Brehm, analyst with Frost & Sullivan.
However, Brehm shares Aberle’s skepticism. None of the companies seeking to pool LTE patents have secured any vendors yet, and Brehm says he’s unsure if their efforts will be successful. “I looked at what patents they’re asking for – I don’t know that it’s going to happen. None of them really have a background in pooling in this area.”
For now, it appears that the water is just too cold.