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Patent pool uncertainty looms over LTE roll out

August 02, 2010 // Peter Clarke

Patent pool uncertainty looms over LTE roll out

Three patent pool administration organizations are each trying to garner support from essential patent holders for the Long Term Evolution (LTE) standard for fourth generation of mobile and broadband communications.

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However, the fact that all three groups are in play and that some companies have said they intend to act independently could create an expensive licensing environment that could hurt the roll out of LTE, according to one of the companies.

Sisvel Spa (Turin, Italy) began working with the companies creating the LTE standard in 2008 and responded to a request for information (RFI) from the Next Generation Mobile Networks (NGMN) Alliance issued in August 2009. Sisvel, originally formed in 1982 to extract the value from Italian television patents, also has experience in telecommunications. It announced a patent pool for the CDMA2000 3G standard, in June 2009. The NGMN Alliance is a group of about 60 network operators, technology vendors and research institutes and its RFI on LTE patent pooling was focused on an October 2009 deadline.

"Nine months on and there hasn't been a decision made," said Sean Corey, intellectual property counsel with Sisvel. Corey said that lack of a decision meant the overall situation "is still pretty uncertain," but he said he remains confident that Sisvel is in the lead in terms of putting together a critucal mass of patent holders.

Sisvel claims it is engaged with 32 companies holding LTE/SAE (service architecture evolution) patents, as it works toward forming the LTE/SAE patent pool. These companies represent over 60 percent of the essential LTE/SAE patents, based on declarations of essentiality to standardization bodies such as ETSI and TTA, Corey said. Corey would not name any of the 32 companies Sisvel is negotiating with at this time but Sisvel states that participants include device vendors, network equipment providers, and operators, consumer electronics and integrated circuit manufacturers, as well as research institutes, from China, Japan, Korea, Europe, and North America.

Back in April 2008 a number of patent holders said they would support an LTE/SAE patent pool. The companies included Alcatel-Lucent, Ericsson, NEC, NextWave Wireless, Nokia, Nokia Siemens Networks and Sony Ericsson, but not Qualcomm.

Meanwhile MPEG LA LLC (Denver, Colo.) and Via Licensing Corp. (San Francisco, Calif.) are also trying to put patent pools together. It is not clear whether that core group of holders is talking to any one of the three patent pool administrators or all three.

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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