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Licensing Issues

Licensing Issues. Research In Motion Limited ETSI IPRR#01 meeting January 2006. There is a problem with Licensing. The telecom industry is heading towards troubled times

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Licensing Issues

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  1. Licensing Issues Research In Motion Limited ETSI IPRR#01 meeting January 2006

  2. There is a problemwith Licensing • The telecom industry is heading towards troubled times • The industry has developed way beyond the original mobile telephone – around which much of the current process was designed • Uncertainty about costs of services, handsets and infrastructure – delays deployment as well as recovery of already committed funds • We need to collectively discuss, understand and recommend possible solutions • none of which are easy to implement but necessary to move the industry forward

  3. Licensing Issues (1) • Cumulative Royalty Costs • Large number of IPR asserters (patent filing / exploitation process is being systematized) • Stacking of patents applying to services, devices and infrastructure • Unreasonable value assigned to patents / portfolios by some companies • Unrealistic assessment of essentiality (both technically or commercially) and numbers of essential patents • Royalty commonly charged on ASP (average selling price) of complete unit rather than to a specific portion of device (e.g. radio or phone)

  4. Licensing Issues (2) • FRAND • No consistency in evaluation of patent portfolios from different patent holders • Cross licensing valuation considerations • No industry benchmark for royalty negotiation (transparency) • No benchmark on ASP on which royalties are based • Lack of clarity and openness regarding sublicensing rights for third party IPR • No reasonable / efficient means for license negotiation / dispute resolution

  5. Industry Impact (1) • Barrier to entry for new entrants • Cumulative royalty cost burden • Cost of defending against unjust/unreasonable licensing demands • Barrier to innovation and path to market • Forces new companies to focus mainly on emerging niche areas • Failed companies will want return for their patents

  6. Industry Impact (2) • Raises costs for industry • Lack of predictability in deploying newer technologies • Public interest impact • Increases cost of handsets • Slower adoption of new services and technologies • Added burden on different regulatory, patent and judicial systems in different geographies • To settle licensing disputes

  7. Characteristics of solution space (1) • The issues are bigger than any standards body can solve within it’s current scope • Solution needs to work in different jurisdictions with help from more central standards body (e.g. ETSI) • Guidance on business as well as Technical aspects • Impartial institutional experts to help in • Deciding essentiality of claims • Benchmarks for royalty negotiations • Assistance for license negotiations

  8. Characteristics of solution space (2) • Patent pooling • With some kind of cap on disbursement per company for their portfolio of essential patents • Keeping the pool / standard viable in the marketplace • Balancing number of IPR holders with return for their IPR and keeping standard viable • Publishing benchmarks for return on patents – discouraging Troll behaviour • Open questions • # pools required • How to distribute funds collected by the pool • How to define essentiality of patents • How do we incentivize companies to join the pool • Use of pool for defensive purposes against companies outside of pool

  9. Possible way forward • It is wise to work in better defining the context of the solution and only then work on specific changes required to processes of a standards body like ETSI • While the longer term solution is being developed some actions can improve the current status e.g • Institutional experts helping define Benchmarks for • ASP • Reasonable royalty rates • Transparency to assist in license negotiations • Essentiality of claims

  10. Possible way forward: Recommendation • Identify potential solution spaces – besides the ones mentioned (providing the context) • Add more clarity / features for the context (e.g. institutional expert structure, patent pool rules) • Work on specific changes to standards body policy and process within this overall context (e.g. ex-ante, disclosure timing, openness)

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