LTE handset IPR will be single digit percentage of the sales price
A group of network infrastructure and device manufacturers have committed to a mutual agreement to sort out the way intellectual property rights for LTE and SAE are costed. The companies say the initiative is intended to stimulate early adoption of mobile broadband technology across the communications and consumer electronic industries. But there's no doubt the industry, and just as importantly its operator and carrier customers, doesn't want to see the same issues that surrounded GSM and W-CDMA IPRs taint LTE/SAE.
IPR disputes over 2G and 3G technology have involved Qualcomm and Nokia, most notably, but Broadcom and others have become involved in litlgation as well.
The companies who have signed up to the agreement, Alcatel-Lucent, Ericsson, NEC, NextWave Wireless, Nokia, Nokia Siemens Networks and Sony Ericsson, say they will work to establish a framework for establishing "predictable and more transparent maximum aggregate costs for licensing intellectual property rights (IPR) that relate to 3GPP Long Term Evolution and Service Architecture Evolution standards (LTE/SAE)".
Other companies that might be interested to join the agreement are invited to do so.
The companies say the framework is based on the prevalent industry principle of fair, reasonable and non-discriminatory (FRAND) licensing terms for essential patents – meaning the companies agree, subject to reciprocity, to reasonable, maximum aggregate royalty rates based on the value added by the technology in the end product and to flexible licensing arrangements according to the licensors' proportional share of all standard essential IPR for the relevant product category.
Specifically, the companies support that a reasonable maximum aggregate royalty level for LTE essential IPR in handsets is a single-digit percentage of the sales price. For notebooks, with embedded LTE capabilities, the companies support a single-digit dollar amount as the maximum aggregate royalty level. The parties believe the market will drive the LTE licensing regime to be in accordance with these principles and aggregate royalty levels.
"As our respective companies have now launched R&D efforts and trials for LTE technology, we hope that this initiative will help for a wide adoption of this technology across devices and applications, enabling a wireless lifestyle for consumers and enterprises and creating value for technology providers," said Olivier Baujard, Chief Technology Officer, Alcatel-Lucent.
"The adoption of this initiative will reassure operators of the early widespread adoption of LTE technology throughout the consumer electronics industry," Ericsson's Senior Vice President, General Manager and Chief Technology Officer Håkan Eriksson said. "It also confirms Ericsson's longstanding commitment to the FRAND principles as fundamental to the industry."
"NEC is excited about this initiative. LTE is a key technology in the transformation of voice-oriented telecom services into data-oriented communication services. In partnership with other LTE technology leaders and vendors, NEC, as both an infrastructure and handset provider, must play a crucial role in establishing a better environment in which to explore the LTE market, and we believe this initiative is an important first step. " said Dr. Katsumi Emura, Executive General Manager, Intellectual Asset Management Unit, NEC Corporation.
"The patent licensing market requires basic rules in order to properly develop and function", said Ilkka Rahnasto, Vice President, Intellectual Property Rights, Nokia. "Today's announcement is a step towards establishing more predictable and transparent licensing costs in a manner that enables faster adoption of new technologies. "