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www.sisvel.com Key Elements for a Successful LTE Patent Pool Giustino de Sanctis Amsterdam, May 18,
www.sisvel.com
Key Elements for a
Successful LTE Patent Pool
Giustino de Sanctis
Amsterdam, May 18, 2010
Confidential
www.sisvel.com SISVEL A BRIEF INTRODUCTION Confidential 2
www.sisvel.com
SISVEL
A BRIEF INTRODUCTION
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www.sisvel.com Sisvel: a Brief Introduction • Founded in 1982 to spin-off a significant portfolio of
www.sisvel.com
Sisvel: a Brief Introduction
• Founded in 1982 to spin-off a significant portfolio of television
patents developed by Indesit, Sisvel is a dynamic and full
service patent management company.
• Today Sisvel is a truly independent company, but it has deep
roots in the industry.
• Sisvel is one of the oldest and, with a team of nearly 80
professionals, one of the largest administrators of IP Rights.
• Sisvel is headquartered in Europe, but operates as a
multinational company with subsidiaries and offices on three
continents.
• Sisvel has its own research laboratories and engineering team.
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www.sisvel.com Sisvel’s Global Presence SISVEL S.P.A. SISVEL Japan Turin, Italy SISVEL Germany GmbH Stuttgart,
www.sisvel.com
Sisvel’s Global Presence
SISVEL S.P.A.
SISVEL Japan
Turin, Italy
SISVEL Germany GmbH
Stuttgart, Germany
Tokyo, Japan
SISVEL (Hong Kong) Ltd.
Hong Kong
SISVEL US, Inc.
Audio MPEG, Inc.
Alexandria, VA
Edico, Srl
Rome, Italy
SISVEL Technology, Srl
Turin, Italy
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www.sisvel.com Licensing Programs Current Programs: MPEG AUDIO Programs under Development: Confidential 5
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Licensing Programs
Current Programs:
MPEG AUDIO
Programs under Development:
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www.sisvel.com PATENT POOLS BASICS AND BENEFITS Confidential 6
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PATENT POOLS
BASICS AND BENEFITS
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www.sisvel.com Patent Pools: Basics • A “Patent Pool” is a portfolio of patents essential to
www.sisvel.com
Patent Pools: Basics
• A “Patent Pool” is a portfolio of patents essential to the same
standardized technology but owned by different parties.
• The purpose of the pool is to facilitate licensing essential patents.
• Patent pools are pro-competitive:
– provide more certainty and predictability to those who are
interested in adopting the standard and creates a leveled playing
field;
– reduce aggregate royalties by establishing a single royalty rate for
the participating companies patents;
– reduce transaction and administrative costs for both patent owners
and licensees;
– promote FRAND licensing terms and conditions.
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www.sisvel.com A PATENT POOL FOR LTE KEY ELEMENTS Confidential 8
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A PATENT POOL FOR LTE
KEY ELEMENTS
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www.sisvel.com Sisvel LTE/SAE Patent Pool Facilitation • 32 Partecipating Companies – from Europe, US, China,
www.sisvel.com
Sisvel LTE/SAE Patent Pool Facilitation
• 32 Partecipating Companies – from Europe, US, China,
Japan, and Korea, including major telecommunications
companies (both network operators and equipment
vendors), consumer electronics and integrated circuit
manufacturers and research institutes
,
• Last Facilitation Meeting
– 21 - 22 April, 2010 in Hong Kong
• Next Facilitation Meeting
– 15 – 16 June, 2010 in Washington DC
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www.sisvel.com Sisvel LTE/SAE Patent Pool Facilitation • 32 companies – from Europe, US, China, Japan
www.sisvel.com
Sisvel LTE/SAE Patent Pool Facilitation
• 32 companies – from Europe, US,
China, Japan and Korea, including
telecom companies (both network
operators and equipment vendors),
consumer electronics and IC
manufacturers, and research institutes
Sisvel Facilitation
Not in any Facilitation
Unknown
4%
34%
• Based on declarations of essentiality
to standardization bodies such as ETSI
and TTA, these 32 POs hold over 60%
of the intellectual property relevant to
LTE
62%
Last Facilitation meeting:
Next Facilitation meeting:
21 - 22 April, 2010: Hong Kong
15 – 16 June, 2010: Washington
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www.sisvel.com Key factors for Building a Successful LTE Patent Pool (1 of 2) • A
www.sisvel.com
Key factors for Building a Successful
LTE Patent Pool (1 of 2)
• A well-balanced, customized pool is much more likely to
achieve these goals than one based on a “cookie cutter”
approach
• g
to reach Critical mass (in terms of participation and patent
coverage) and offer all Licensees a compelling licensing solution
A successful
p
ool needs to attract both lar e and small Licensors
• To attract Licensors a pool:
– Be attractive for all Licensors
– Adopt a simplified and transparent process
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www.sisvel.com Key factors for Building a Successful LTE Patent Pool (1 of 2) • To
www.sisvel.com
Key factors for Building a Successful
LTE Patent Pool (1 of 2)
• To achieve wide acceptance among Licensees, a pool should:
– Non-discriminatory licensing by a truly independent
administrator acting globally include enforcement and
compliance mechanisms to give Licensees confidence that all
market participants are treated equally
– Include administrative tools that enhance efficiency and
make the reporting and payment process easy
– Offer a license with a royalty that is reflective of what is
offered:
Value based proposition
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www.sisvel.com A PATENT POOL FOR LTE ROYALTY RATE Confidential 13
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A PATENT POOL FOR LTE
ROYALTY RATE
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LTE: What Level of Royalties? • A first step to address royalty stacking was taken
LTE: What Level of Royalties?
• A first step to address royalty stacking was taken by NGMN by
the introduction of the "Trusted Third Party IPR Process” (TTP)
• The results are not publicly available, but some have Declared
Maximum Rates (as % of handset selling price)
• The aggregated value of only 10 parties is already a 2-digit
figure and there could be as many as 50 parties holding
t
essen a
ti
l LTE
pa en s.
t
Nokia
1,50% *
ALU
2,00%
NSN
0,80%
Nortel
1,00%
Ericsson
1,50%
Huawei
1,50%
Qualcomm
3,25%
ZTE
1,00%
Motorola
2,25%
Vodafone
0,00%
* 2% for multistandard
This chart reports for some companies the “maximum” LTE desired royalty rates that have been publically declared by those companies.
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www.sisvel.com LTE Royalty Level No Patent Pool – Possible Scenario Based on Public Declaration and
www.sisvel.com
LTE Royalty Level
No Patent Pool – Possible Scenario
Based on Public Declaration and Sisvel’s Assumption
cumulative
++
3.25%
2.00% 1.50% 1.50% 2.25% 1.50% 1.00% 0.80%
0.00% 1.00%
This chart reports for some companies the “maximum” LTE desired royalty rates that have been publically declared by those companies.
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% of hand set selling price
www.sisvel.com Royalty Level two patent pools and outside patent owners cumulative ++ Confidential 16 %
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Royalty Level
two patent pools and outside patent owners
cumulative
++
Confidential
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% of handse t selling price
www.sisvel.com Royalty Level one patent pool and outside patent owners cumulative ++ Confidential 17 %
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Royalty Level
one patent pool and outside patent owners
cumulative
++
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% of handse t selling price
www.sisvel.com Royalty Level Ideal scenario = Confidential 18 % of handse t selling price
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Royalty Level
Ideal scenario
=
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% of handse t selling price
www.sisvel.com The Challenge of Setting Royalty Rates Participation and Royalty Rates The chicken and the
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The Challenge of Setting Royalty Rates
Participation and Royalty Rates
The chicken and the egg problem:
what comes first?
ROYALTY RATES
PATENT OWNERS
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www.sisvel.com The Challenge of Setting Royalty Rates Two Methods Traditional Method Participation Method Royalty
www.sisvel.com
The Challenge of Setting Royalty Rates
Two Methods
Traditional Method
Participation Method
Royalty Comes First
Patent Owners Come First
• Royalty rate is decided by the
group
• Participation negotiated with
all members
• Participants decide whether to
join after royalty is set
• Pool royalty rate set as a result
of the above negotiations
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www.sisvel.com Aggregated Rate vs. Patents/POs Pool Number of Patent Owners 21 Confidential 21 Royalty Rate
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Aggregated Rate vs. Patents/POs
Pool
Number of Patent Owners
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Royalty Rate
www.sisvel.com Aggregated Rate vs. Patents/POs Pool Outside of Pool Number of Patent Owners 22 Confidential
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Aggregated Rate vs. Patents/POs
Pool
Outside of Pool
Number of Patent Owners
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Royalty Rate
www.sisvel.com Aggregated Rate vs. Patents/POs Pool Outside of Pool Aggregate Number of Patent Owners 23
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Aggregated Rate vs. Patents/POs
Pool
Outside of Pool
Aggregate
Number of Patent Owners
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Royalty Rate
www.sisvel.com Aggregated Rate vs. Patents/POs Pool Outside of Pool Aggregate Number of Patent Owners 24
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Aggregated Rate vs. Patents/POs
Pool
Outside of Pool
Aggregate
Number of Patent Owners
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Royalty Rate
www.sisvel.com Aggregated Rate vs. Patents/POs Pool Outside of Pool Aggregate Number of Patent Owners 25
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Aggregated Rate vs. Patents/POs
Pool
Outside of Pool
Aggregate
Number of Patent Owners
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Royalty Rate
www.sisvel.com Thank You Confidential
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Thank You
Confidential
www.sisvel.com Confidential
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Confidential