Via Licensing, a subsidiary of Dolby Laboratories, announced in February 2010 that 14 LTE patent owners from eight countries had met in San Francisco to build the framework for a joint patent licensing program to support the global adoption of the LTE standard. Via did not name its participants. Notably Via Licensing has also asked to be notified by holders of essential patents that cover technologies used in WiMax.
MPEG LA held its first meeting of essential LTE patent owners in Tokyo, Japan, in September 2009. At the meeting, 12 patent owners from five countries on three continents discussed the specific structure and terms of a patent pool for licensing patents that are essential to the LTE standards developed by 3GPP. Those patent owners included handset manufacturers, network equipment manufacturers, wireless carriers, chipmakers, and research institutions.
The situation is not necessarily going to resolve itself into a single patent pool, although that would be the ideal situation, said Sisvel's Corey. The clear benefit would lower transaction costs through a single process and payment system. However, in the reality it is a question of degree.
"It is impossible to know where all the patents are but we have identified more than 60 companies holding essential patents. It is a very large landscape and fragmented. If there was one major patent pool and a handful of individual companies to deal with, that would be possible. But signing license deals with 40 plus [entities] is not. A unified patent pool is best," said Corey.
A single patent pool would avoid the problem of multiple royalties which could drive up the cost of handsets and equipment. Many companies hold essential patents and have a high opinion of their worth. Companies such as Nokia, Ericsson, Qualcomm and Motorola will each typically expect to receive between 1.5 percent and 3.25 percent on the value of each LTE handset sold just for their essential royalties, said Corey in a slide presentation. Companies such as Alcatel-Lucent, Nortel, Huawei, ZTE and Vodafone also have their own expectations which can quickly lead to a double-digit percentage and market-inhibiting equipment cost.
Corey said there was no particular deadline to Sisvel's patent pooling effort but clearly as equipment starts to be rolled out, the possibility of patent infringement claims and the threat of unknown licensing costs would concern equipment makers and network operators, while patent holders – often the same companies – would be concerned that a failure to act could harm the value and enforceability of their patents.
"There's no deadline but time is a critical issue. They are still working on Release 9 at 3GPP. We think some time in 2011 for the launch of a pool. It depends in part on the group itself. The group needs to make compromises and come together," said Corey.
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