Valuing IP in Smartphones and LTE

Is this where we'd
still be without
FRAND ...?

In "Valuing IP in Smartphones and LTE", the eighth in the series of guest posts authored by Keith Mallinson (WiseHarbor), Keith observes that extensive IP litigation between various smartphone ecosystem participants —- most notably between Apple and Android licensees Samsung and HTC -— reflects the ever-increasing importance of a business strategy based on first developing or acquiring IP, then licensing and defending it. In this diverse, IP-rich and rapidly changing product sector, disputes erupt over standards-essential patents, software and hardware designs.

In this context, attempt to value IP -- including those rights that stem from essential patent ownership “determinations” -- are subject to great uncertainties, inaccuracies and biases. Keith argues that negotiated licensing agreements can overcome these problems while reflecting significantly different positions among licensors and licensees. For example, Keith calculates that there's virtually no correlation between the results of two different studies purporting to determine essential patent ownership in LTE. Keith concludes that the oft-stated belief that smartphone IP litigation and licensing costs are stifling innovation and foreclosing market entry is a "popular and yet unproven and erroneous refrain". Far from supporting this position, such evidence as there is actually points to the opposite effect: licensing costs are modest; smartphone innovation is extensive and shows no signs of slowing with faster connections, more powerful processing and richer applications, mainly on account of FRAND-based licences.

For ease of reading, Keith's contribution (which is a good deal longer than usual and contains many tables and diagrams) can be accessed here as a PDF document.