The current January issue 75 of the IAM magazine has published an article on the landscape of standard essential patents. The study reveals the latest trends of patent files around standards using the IPlytics Platform tool.
Future technologies such as Internet of Things, smart cars, smart home and smart energy will increasingly rely on patented technology standards such as LTE, Wifi, NFC, RFID and Bluetooth. The number of patents that claim an invention on these standards is consequently constantly increasing. So called Standard Essential Patents (SEPs) can be extremely lucrative in terms of royalty income, but also in terms of being strong bargaining chips in cross-licensing negotiations. Accordingly, also the number of SEP litigation cases as well as the number of SEP transfer deals has been become more frequent. In recent years, standard essential patents are increasingly the subject of lively debate among market observers, but are they worth all the fuss?
Indeed, the IAM article provides evidence that declared SEPs are cited more often, are subject to larger patent families, are transferred more often and are litigated more frequently. While companies such as Qualcomm, Nokia and InterDigital still hold the largest SEP portfolios, emerging Asian companies such as Huawei, ZTE or Datang Mobile are catching up quickly. The analysis further confirms that declared SEP portfolios are by large still active and valid. Most of the declared SEPs either cite the relevant standards projects as prior art or are cited by other declared SEPs. Both measures indicate that declared SEPs have a close technical relationship with the respective standardized technology.
The study makes use of data from the IPlytics Platform tool, connecting information on:
- 80 million world-wide patents documents
- 2 million world-wide standards documents
- 300,000 declared standard essential patents (licensing statement, FRAND commitment, reciprocity statement, etc.)
- 450,000 patents referencing standard as prior art
- 15,000 patents that are subject to a patent pools
- 42,000 patents that are subject to US litigation
The article concludes with proving an action plan on how to deal with the interrelation of patents and standards. IPlytics CEO Tim Pohlmann states:
“The interplay between patents and standards is higher on the agenda than ever before. Senior managers and directors at patent-owning businesses which are active in fields where standards matter, or will matter in the future, should bear some key considerations in mind”:
- The number of declared SEPs is constantly increasing. IP directors should consider royalty costs for products that comply with technology standards.
- Not only has the number of declared SEPs been increasing, but so too have the number and diversity of rights holders. This is reflected in the increasing geographical variety of rights holders, as well as the increasing variety of business models. IP directors should conduct foresight screenings on the existence of relevant SEPs to identify possible licensing costs or legal problems at an early stage. The risk potential for the launch of new technologies or products can thus be quantified and valued during the early stages.
- While litigation around declared SEPs is rising, the market for declared SEPs has evolved in recent years. Senior managers should bear in mind that buying SEPs may be a way to enter new markets. SEPs may be good bargaining chips in licensing negotiations, which could avoid costly court disputes.
- The results of the analysis suggest that companies should pursue a common strategy for patenting and standardization in order to ensure that they are aware of the existence of SEPs and are exploiting patented inventions in technology fields where standards matter.