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  • Marta Beckwith

IoT - They Are Coming for You Next

I have been investigating how the large SEP licensors are targeting IoT next (now that their campaigns against handsets and connected cars are winding down[1]).  So when a meeting notice popped up in my LinkedIn feed for a program put on by the Licensing Executive Society – Silicon Valley Chapter (“LES-SVC”), it caught my eye.  The program was titled “The Ubiquitous World of Internet of Things (IoT) Connected Devices – and the Coming Tsunami of Patent Licensing.”  The panelists for the program included a representative from Avanci (a large patent assertion entity (PAE) that is a pure SEP licensor), a Vice President of Intellectual Property at Hitachi America (an implementer and patent owner) and someone who now has his own law firm but who used to be in charge of IP at Samsung (Samsung is both an implementer and a SEP licensor).  A representative from Ericsson was also supposed to participate but unfortunately was unable to attend. 


I’m going to break this discussion into different posts.  This post focuses on the nature of the coming IoT licensing campaigns and why indeed they look likely to be a “Tsunami.”  There will be a later post focused on some of the other interesting tidbits that were discussed during the program.


Nokia has historically been responsible for more SEP litigation than any other entity in the world, and owns somewhere on the order of 8% of the declared 5G patent stack and a bit over 7% of the declared 4G patent stack.[2]  Nokia has launched an IoT licensing program that currently targets smart meters, payment terminals, asset tracking and other connected products.[3]  Nokia appears to expect this to be quite a large IoT licensing campaign:  it is currently seeking to hire both a Director, Licensing IoT, in Finland and a Senior Legal Counsel, IoT Licensing (who can be based in Finland, France, the UK or USA) to join their “IoT Licensing Team.”[4]    


Ericsson has historically been the number two SEP patent litigant in the world (behind only Nokia) and owns more than 4% of the declared 5G patent stack and about 4.5% of the declared 4G patent stack.[3]  Ericsson also also has announced an IoT licensing campaign targeting a broad array of IoT industries including agriculture, asset tracking, connected health, EV charging, home security, payment terminals, smart metering and smartwatches.[5] 


Other entities also have announced IoT licensing campaigns.  Avanci (yes, the same PAE that participated in the LES-SVC program) has created an IoT licensing program targeting smart meters and EV charging.  Avanci does not itself create any patents or technology but asserts patents on behalf of others.  Its IoT campaign includes patents from (among others) many of the top ten holders of 4G/5G declared patents including: DT Mobile (a subsidiary of Datang Telecom), Ericsson, Interdigital, LG, Oppo, Samsung, Sharp and ZTE.  All told, Avanci claims to represent 42 SEP owners with respect to licensing in the smartmeter space and 44 SEP owners with respect to licensing in the EV charging space.[6] 


At the LES-SVC meeting, the Avanci representative claimed that Avanci was a “one stop shop” (which Avanci also claims on their website) to license SEP patents and that the Avanci licensing program includes 85-90% of all 4G/5G SEPs.   That percentage seemed higher than warranted by the list of entities Avanci claims to represent in licensing, so I quizzed the Avanci representative about this claim after the program. During our conversation, the Avanci representation stated that 4G/5G has an over-declaration problem. He then explained to me (apropos of no evidence of which I am aware) that Avanci’s licensing program represents 85-90% of the actual standard essential patents, but because of the over-declaration problem, the Avanci program does not represent 85-90% of the declared SEPs. 


I do wonder what analysis, if any, Avanci has done to reach the conclusion that their portfolio includes nearly all of the actual SEPs in the 4G/5G universe of SEPs, and that everyone else’s portfolios contain mostly what I have been calling bloatware (e.g. declared essential patents that are in fact non-essential or invalid).  Perhaps Avanci would be willing to post their analysis to their website given how many times the Avanci representative stated that Avanci supports transparency in SEP licensing.  Avanci’s representative also said that other areas ripe for licensing included connected medical diagnostic devices, drones and point of sale devices.


Sisvel (another PAE) also has launched a “cellular” IoT licensing program which also claims to be a “simple one-stop-shop.”  Sisvel’s licensing campaign includes patents from (among other entities) the following top ten declared patent holders: Huawei, ZTE, Datang Mobile Communications Equipment Co., Ltd. (a Datang Telecom’s subsidiary), NTT DOCOMO and yes, Ericsson again.[7] 


There does seem to be a bit of puffery and obfuscation going on – it is hard to understand how both Sisvel and Avanci can each be one stop shops for SEP licenses given that there are two of them licensing different patents, and there are many other SEP owners that neither of them claim to represent. 


These campaigns also are very inconsistent with what some of them told the European Commission in an effort to derail passage of the EU Proposal.  Some of these licensors insisted that there is no evidence of any impact of SEP licensing on SMEs,[8] while at the very same time undertaking IoT licensing campaigns that, by their nature, will adversely impact SMEs. 


As each of the panelists pointed out during the LES-SVC program, IoT is not like handsets or connected cars.  Whereas those industries are primarily served by large to very large companies, that is not true of IoT.  Avanci’s representative noted that, unlike the "vehicle space," IoT companies run the gamut from large, patent sophisticated companies to very small companies that do not have any experience with patent licensing at all.  The panel’s moderator stated that IoT licensing “necessitates dealing with people who have never dealt with patents or licensing before.”  The former Samsung in house counsel said: “SEP licensing will need to change for the IoT space which is made up of many small and medium sized companies.”


So, whatever they may have said to the European Commission, what they are now saying in a very public way is that if you are an IoT company—large, medium or small—they are coming for you and you had better be prepared.

 

[6]          Avanci IoT - Avanci

[8]          Nokia for example said in its comments to the EC: “This data alone suggests that SMEs do not find SEPs to be an issue. This is likely because SMEs are rarely the subject of SEP litigation because the cost of such litigation does not justify targeting SEPs. Another question is whether the information produced by the Commission’s proposals will be helpful to SMEs. It is doubtful that SMEs will have the resources to understand and evaluate a SEP database and associated essentiality check documentation.”  P12 of Feedback from: Nokia (europa.eu). And yet, somehow these same SMEs are now supposed to be sophisticated enough to engage in SEP licensing negotiations with Nokia.

 

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