PA Consulting Group: Essential Patent rights in 3G wireless will win or lose companies millions
Modern telecoms standards include a great deal of embedded "Essential" intellectual property. Any product which complies with the standard infringes these Essential patents and the manufacturer needs a license from the patent holder. In second generation standards like GSM and cdmaOne, the licensing process is complex and expensive for the licensee since licenses are needed from a dozen or more Essential patent holders. Royalty rates payable can reach 20% of the handset's sale price. Conversely, for some licensors, Essential patents have proved to be an excellent source of revenue adding tens of millions to the bottom line.
Third generation systems such as UTRA (UMTS Terrestrial Radio Access) have been collaboratively developed by a hundred or so companies, and the industry belief is there are many more Essential patent holders than there are for second generation systems. However, unlike some other industries, today there is no central body locating, evaluating and licensing UTRA Essential patents so it is difficult for a manufacturer to know: which companies to approach for a license; which Essential patents are the subject of negotiations; what royalty rate will be payable.
For a licensee, UTRA Essential patent licensing is likely to be much more costly and time-consuming than (the already expensive) GSM. For a licensor, it could be a strong source of revenue - provided Essential patents can be located and the licensing process appropriately managed.
To help both licensors and licensees, PA Consulting Group today announced its range of patent evaluation services to the 3G wireless UTRA-FDD community. These services are aimed at helping patent licensors and licensees to quantify the cost of licenses, ease license negotiations and reduce barriers to entry for 3G manufacturers. The services are focused on the extremely valuable Essential patents, those that are embedded within the UTRA-FDD Specifications and for which a license is required by all manufacturers.
PA is well known for its work in the GSM patent arena, working for patent holders and licensees to search for and technically evaluate patents believed Essential to GSM. More recently PA has become well known for its technical work in UTRA-FDD, developing terminal and Node B products for our clients and as part of our own product licensing programmes.
Now PA brings together these two strands to offer to the UTRA-FDD development community patent evaluation services. PA helps companies identify patents they own which are Essential, and provides expert technical advice to either licensors or licensees during license negotiations. These services are based around PA's database of patents claimed to be Essential to the FDD Specifications and our technical analysis of their strengths and weaknesses.
Dr Mark Paxman, who leads PA's patent evaluation team, comments:
"In GSM, patent licensing was a minefield because of the lack of certainty about which patents were and were not Essential. PA's database of Essential UTRA-FDD patents is a major step to increasing certainty. By providing an independent viewpoint, and by working with both patent holders and licensees PA helps improve the level of understanding in this complex area. This will benefit the entire mobile manufacturing community."