Licensing in the Real World - Secrecy vs Transparency
- Marta Beckwith
- Aug 19, 2025
- 11 min read
My recent post, Licensing in the Real World - A Primer on SEP License Agreements, discussed and showed examples of key licensing provisions from actual SEP licenses. Now that you know what types of provisions are in most “pure”[1] SEP license agreements and what language is commonly used for those provisions, let’s revisit the question of confidentiality. The first question is, since most of us (and now you if you read my prior post) know what provisions are in most SEP licenses, and even have a general idea of the language used in those provisions, and so much of it appears online: why are most of these agreements confidential?
In a word, money. As I have repeatedly said, money is what divides parties in SEP licensing negotiations. Not willingness/unwillingness. With a few exceptions, SEP licensors want to license their patents if the money is high enough.[2] And at the right price, pretty much every SEP implementer would take a license. For the most part, it is the claimed valuation - how much U.S. Dollars, British Pounds, Euros, Yuans, Rupees or Reals (to name the currencies of the most-used jurisdictions for SEP litigation) each party thinks a SEP portfolio is worth – that makes the other party willing or unwilling to take/give a license. See, Time to Throw Away the Willing/Unwilling Paradigm.
Money is also what drives SEP licensors to keep their licenses secret. As discussed, we all know (more or less) what are the license terms. The main thing that is kept secret by requiring license agreements to be confidential is how much licensees are paying to license a given portfolio.
Secrecy of License Agreements
Let me start with a typical confidentiality provision which I borrowed from a template SEP license agreement that I found on the Internet. I used it as a publicly available example of language similar to what, in my experience, is found in many SEP licenses.
The existence of this AGREEMENT is not confidential, but LICENSEE and LICENSOR shall not disclose the terms and conditions of this AGREEMENT to any third party without the prior written consent of the other Party, except as required by law or by governmental requirement or court order or as required under the COMMITMENTS, provided that the disclosing Party shall promptly notify the other Party of such governmental requirement or court order.[3]
A few things to note from this. First, this type of SEP license confidentiality provision allows the licensor to disclose (if they so chose) that the licensee has entered into a license agreement. Many agreements do not allow even that much disclosure. Here’s a typical confidentiality provision from a SEP license that does not:
Neither Party hereto shall disclose the terms of this Agreement to any third party, without the prior written consent of the other Party. . . Notwithstanding the foregoing, disclosure of Confidential Information shall be permitted (i) if required by an order or request of a court or governmental body or otherwise required by law, provided the Party required to disclose gives the other Party written notice at least [X] days prior to disclosure to enable the other Party to seek a protective order, and reasonable steps are taken by the disclosing Party to maintain the confidentiality of the Confidential Information . . .
Second, both of these provisions allow the parties to disclose information about the agreement if required by law or court order: more about this below.[4] Finally, both prevent the parties from otherwise talking about the license terms without the permission of the other party. In other words, this language requires a party to obtain permission from the other party to disclose the terms (or even in the second example, the existence) of the agreement unless required by law. This prevents a party from responding to, or clarifying, information disclosed by the other party in nearly every circumstance.
In my experience, these types of provisions are used by licensors to claim that it would be too burdensome for them to contact all of their licensees to get permission for disclosure, even of the names of the licensees in the second example. Consequently, during SEP license negotiations, most SEP licensors’ refuse to provide their other license agreements (and often even the names of their licensees), even under an NDA. See Real World Negotiations Under the Willing/Unwilling Paradigm.
I once offered during a SEP license negotiation to do all of the work contacting licensees to see if the licensees would agree to disclose the license agreements. I asked the SEP licensor for only two things: (a) the names of the licensees so I could contact them and (b) the SEP licensor’s commitment that if the licensee agreed to disclose the license, the SEP licensor would too. My offer was flat out refused.
This type of confidentiality provision, which is very common in SEP licenses, allows for a lot of other forms of gamesmanship. As another example, companies that are publicly traded in the United States are required to disclose “material” agreements and “material” information. Interdigital, a large publicly traded SEP licensor, recently filed an SEC form 8-k reporting the results of an arbitration it had with Samsung. So what did Interdigital say?
On July 28, 2025, a panel of International Chamber of Commerce arbitrators determined the royalties of the patent license between InterDigital Inc. and Samsung Electronics Co., Ltd covering Samsung’s products other than digital televisions and computer display monitors, which have been licensed under a separate agreement.
The arbitration panel set the total royalties at $1.05 billion for the eight-year patent license, which commenced on January 1, 2023 and runs through December 31, 2030. Under this agreement, InterDigital will recognize approximately $131 million of recurring revenue per year, a 67% increase from the previous license agreement. In second quarter 2025, the agreement will contribute $119 million of catch-up sales in addition to $33 million of recurring revenue.[5]
So why is this gamesmanship? It is gamesmanship because Interdigital gets the benefit of announcing this very large amount without any of the details. Interdigital says that Samsung will pay over a billion dollars and that this is a 67% increase from previous agreements. But is this increase because of an increased rate or an increased number of products covered or something else? Is it because the previous royalty cap has been changed or eliminated?[6] In other words, Interdigital gets to say it’s getting a lot of money from Samsung without ever disclosing the royalty rate Samsung is paying, what products are licensed, or whether the amount is capped and if so, what is the cap. Interdigital has used what seems like a reasonable confidentiality provision to cherry pick what information it disclosed about this particular license.
This type of provision also allows Interdigital and other publicly traded licensors to cherry pick which agreements to disclose: only “material” agreements are exempted from secrecy. In other words, only large dollar agreements may be, and are, publicized. This tends to skew public, potential licensee and regulatory perception of the value of a license.[7]
Secrecy Benefits Licensors in Other Ways Too
Secrecy benefits licensors in other ways too. Licensors cling to confidentiality over designation and refuse to give information about their other licenses because it serves them well. Concealment creates information asymmetry between licensors and licensees. On the individual licensor/ee level, this creates an uneven playing field which favors licensors in SEP negotiations. It also prevents courts, legislators and regulators from truly grasping the magnitude of the issues involved in both individual matters and overall.
There are many reasons why licensors hide their licenses and, as previously discussed also information about related companies, their list of licensees and sometimes even their list of all of the patents to be licensed. Here’s a few of those reasons.
1. Non-Discrimination. I believe that a full disclosure of all licenses by certain SEP licensors would establish discriminatory conduct in violation of their FRAND commitments. For example, I suspect that certain SEP licensors that own or control both cellular and WiFi portfolios give much better WiFi license terms to entities that take a cellular license. In other words, I believe that full disclosure would establish that these licensors are unfairly burdening and discriminating against pure-WiFi implementers. I also believe that, for some standards, large implementers tend to get better deals in general than small implementers. In some circumstances, this results in participants in the standardization process getting overall better deals than non-participants. Is this going on and does it violate competition laws? By keeping agreements confidential, and in particular in keeping rates, caps and similar financial terms confidential, licensors obfuscate whether and to what extent they are discriminating against certain types of licensees or engaging in what might be considered to be anti-competitive behavior.
2. Reasonableness. Similarly, it is also extremely hard, if not outright impossible, for an implementer, regulator or court to determine whether an offer is FRAND compared to other licenses without knowing the scope and extent of those other licenses. It is also impossible for anyone to know how much overall it will cost to license all of the SEPs related to a particular standard. I once asked representatives of both Qualcomm and Nokia (both large cellular SEP holders and implementers and members of at least one of Avanci’s cellular licensing pools) how much an implementer should expect to pay in the aggregate for license rights for 4G/5G SEPs. Neither knew. See, Global Standards Leadership Conference - Part 3.
3. Double Dipping 1. On the practical side, it is extremely hard, if not outright impossible, for implementers to determine if they already are licensed, in whole or in part, unless they have a list of the other licensees. Many implementers are what I previously called “passive implementers” (see The Cellular Multiverse). These implementers purchase readily available component parts from other companies. It is these component parts (such as semiconductor chips or modules) that implement the standard. Under the doctrine of exhaustion (or possibly under the provisions of the specific license agreement), such implementers should have a license to use those parts if the component part supplier is licensed. Similarly, if an implementer’s customers already are licensed, then the implementer should not need to license its sales to these customers. But without a list of licensees, it’s impossible for an implementer to know whether some or all of their products, or their sales, already are licensed. This allows the SEP holder to double dip, e.g. to receive multiple payments for the same products and same sales.
4. Double Dipping 2. I recently posted about the years long battle Intel engaged in to establish that it was already licensed to patents asserted by the licensing entity VLSI Technology LLC. See Oh the Tangled Web Patent Investment Companies Weave. Hiding relatedness behind multiple layers of ownership, complex ownership structures and vastly different names allows entities to do an end run around existing license agreements. This is another form of double-dipping that transparency of information would prevent.
5. Increased Costs of Reviewing Alleged SEP Portfolios for Each Implementer. In my experience, it costs approximately $5,000 - $25,000 per patent to conduct an initial assessment of an asserted SEP. It costs much, much more (at least $100,000 and often vastly more) to conduct an assessment of that same patent once litigation on that patent has been filed. Secrecy means that implementers are not able to pool their resources to conduct these assessments. Smaller implementers in particular are disadvantaged by this – they often cannot afford to assess the patents in a portfolio or to fight a battle in court. This can lead them to take a license at non-FRAND rates or to pay to license invalid or not essential patents.
Conclusion
The problem of secrecy and the concealment of relevant information during SEP negotiations creates multiple problems that benefit licensors at the expense of licensees, the public, the courts and regulators. This secrecy is often termed “confidentiality” and is promoted as a reasonable accommodation for purportedly confidential information and which is often upheld by the courts. Licensor’s claim secrecy of claim charts, of lists of SEPs, of lists of licensees and of license agreements themselves.
This is, however, antithetical to the FRAND commitment. Ensuring that terms and amounts are FRAND, and providing an even playing field between SEP licensors and implementers, requires transparency. Without transparency, no one knows how much it costs to license SEPs, whether in a single portfolio or for all the SEPs a given standard. Licensees are in the dark about what patents are being licensed and why, who the licensors actually are and what are their relationships to each other, and even whether the potential licensee is already licensed through agreements reached with other licensees.
Without transparency, there can be no predictability in SEP licensing. Without transparency, companies have no ability to determine whether the return on investment (ROI) is worthwhile when implementing standardized technologies. Imagine going into a store to buy eggs. There is no pricing on the eggs and when you get to the front of the line, the cashier says that I will only tell you how much the eggs cost if you promise not to tell anyone else how much they are. Once you agree, the cashier looks you over and says “for you, the eggs will cost $18.” You wonder to yourself, why would they keep the price confidential unless they were charging me a different amount than someone else. Am I getting a worse deal? Since they won’t tell you how much everyone else is paying, you have no way to determine if you are getting ripped off.
Now imagine you went into the store to buy all of the ingredients for your breakfast: eggs, bread and chard (or as they call it here in New Zealand, silverbeet). There are no prices on the shelf, and you go through this same rigmarole. The amount ends up being so high that you decide to try to substitute ingredients. You ask the cashier whether it would be less, and by how much, if you bought spinach instead of chard. They say, I have no idea (or I know but will not tell you) how much that will be. You will have to go back and get the spinach and then go to that other cashier over there to find out the price and by the way, the price of eggs and bread may be different over there. But, even if I knew by how much, I would not tell you what the difference will be.
That is neither a fair nor efficient way to do business when you are the purchaser. It gives the grocery store the power to set unfair prices and to discriminate between customers. In fact, many jurisdictions require markets to put pricing on the shelves to combat this exact issue. So why don't we similarly require transparency in pricing for SEP licenses to ensure fairness and non-discrimination?
Without transparency, potential licensees, regulators, courts and legislators are like my breakfast example. Everyone is working in the dark and guessing whether and to what extent new regulations or enforcement of existing laws are needed.
Without transparency, it is difficult to know whether a particular SEP licensor is meeting its FRAND obligations or engaging in anti-competitive behavior.
Without transparency, lawsuits over SEP licensing are costly and long.
Transparency drives efficiency in licensing and in litigation. Transparency improves legal certainty and thus reduces litigation and the burden on the court system from disputes over whether a given offer complies with FRAND.
Transparency allows legislators and regulators to act on information rather than guess work. Transparency is necessary to level the playing field and make SEP licensing truly fair, reasonable and non-discriminatory.
It is time to stop allowing SEP licensors to use confidentiality to hide necessary information from implementers, the courts, legislators and regulators. Transparency is key to ensuring that FRAND obligations are met.
[1] This post, like the previous one, is about confidentiality as it relates to one way (or marginally two way) SEP licenses rather than confidentiality as it relates to cross-licenses, development agreements that contain a license and other more complex business arrangements which tend to have more bespoke provisions in them that may be more truly confidential.
[2] I have discussed some entities that seem to be using their portfolios to unfairly burden one standard in favor of another. See e.g. Convergence and Competition - A Tale of Two Standards Part 5: Huawei. Putting that issue aside, most entities that engage in SEP licensing want to license their patents. And, of course, if those patents are subject to a FRAND obligation, the entity is required to offer licenses on fair, reasonable and non-discriminatory terms even if it later changes its mind.
[4] This type of disclosure typically requires notice to the other party, but there generally are no grounds to object to disclosures if the party says they are “required” by law.
[5] idcc-20250728
[6] There are a number of previous Interdigital/Samsung agreements that have been partially disclosed. See, e.g. exv10w18; Patent License Agreement (see Section 6.2 for the cap).
[7] In my youth, I worked at a summer job at the diving center during the Los Angeles Olympics. We had a closed circuit TV feed of all of the diving events and all of the competitors. Turns out that not every competitor is terrific. What you see on TV is a carefully screened version of the actual events with only the best competitors shown (with occasional exceptions for human interest stories such as the Jamaican bobsled team). In contrast, on the continuous closed circuit feed, there were a number of competitors that got 0 or close to it for their dives. The point is, when only the best are shown, most people come away with the belief that the best is the average which many times simply is not true.
