SAN FRANCISCO – Just what is reasonable licensing? That’s the next big intellectual property question cellular networking executives have started to debate.
An Apple executive recently asked the NGMN Alliance, a group of top technology leaders from carriers and their systems and semiconductor vendors, to weigh in on the subject. Officials at European Telecommunications Standards Institute also hosted a lively discussion of the issue recently.
The call among wireless execs for concrete parameters for reasonable licensing comes as Via Licensing is about to form the first patent pool for LTE. The effort has taken three years and even now lacks some key patent holders including Ericsson, Nokia and Qualcomm.
“My opinion is [settling] this [issue of defining reasonable licensing] is something that will take another five years or more,” said an NGMN Alliance member.
The topic got a public airing at an intellectual property panel at the NGMN Alliance’s recent conference here.
The problem is visceral, said Donglin Shen, chief technology officer for ZTE’s wireless group. When handset makers are asked to pay $4 in royalties on a feature phone that may have a $20 bill of materials cost, “all the profit is gone,” said Shen.
“What’s a reasonable royalty rate is really hard to say,” he added. “The industry talks about fair and reasonable terms, but this is just the intention and there’s no legal binding,” he said.
A royalty of two percent of a device’s cost is sometimes seen as reasonable, said Joe Alfred, director of patent licensing and sales at AT&T. “But what happens if 15 companies have technology they want to license--is 30 percent reasonable?” he asked.
“The industry needs to define reasonable rates, and we better address this before it gets the interest of regulators and their solution isn’t pleasant,” Alfred said.
“Today we see too many companies that don’t want to take a license--they don’t want to pay anything and others have spent billions on tech and standard development,” said Jari Vaario, director of standards IP at Nokia, a large wireless patent holder.
Apple, Google, Nokia, Microsoft, Samsung and others are now part of a sweeping mobile patent war that many say is getting out of hand with injunctions threatened on major new products. “If you stop the availability of a handset its really damaging for operators and now it happens often, so we have to solve it before it creates a crisis in the market,” said Luigi Licciardi, head of technology and standards at Telecom Italia.
“The industry has to find a better way to deal with patents because the patent war today is getting to be a mess,” said Shen of ZTE.
“How do we get to guidelines of what ‘reasonable’ means?” asked Reinhard Kreft, head of standards and IP for Vodafone. “You ask this one question and the hour [for the panel discussion] is gone,” he noted.