Be fast and effective

There have been many important milestones in the development of 5G, the next generation of cellular technology tipped to revolutionise new areas of the economy and bring them into the hyper-connected, digital age.

The first 5G-enabled smartphones are already on the market, albeit with limited 5G network coverage. There is also fierce debate over who should provide the infrastructure that underpins it all, with the UK following the US’s lead in shutting out market leader Huawei.

Less likely to generate headlines are the mechanisms by which the patents essential to 5G will be licensed. But the manner in which 5G is made available through the underlying IP will be key to the rollout of the technology.

The announcement in late July from patent pool operator Avanci that it has received antitrust clearance from the US Department of Justice (DoJ) for its 5G licensing programme is significant for a number of reasons. The DoJ’s business review letter (BRL) gives a green light, from an antitrust perspective, to the licensing model favoured by Avanci and standard-essential patent (SEP) owners.

It also marks one step closer to the launch of the first 5G licensing pool. Whether that will be Avanci’s is not clear, but the licensing infrastructure is being put in place to make 5G available to a new generation of implementers.

What are the licence terms?

On what terms? The BRL gives specific clearance to a licensing model where patents are licensed to end-device manufacturers, rather than component suppliers. This is the model favoured by SEP owners as it affords them the greatest return on investment.

From the point of view of SEP owners, their patented technology is central to the appeal of these high-value consumer products, and they feel they should be compensated accordingly.

A spokesperson for Nokia, a world leader in telecommunications SEPs, told WIPR: “We congratulate Avanci on the clearance by DoJ of their business model as a licensing platform and welcome the views by DoJ highlighting the benefits of ‘end-device level’ licensing for standard-essential patents.”

Implementers, meanwhile, tend to take a different view. But judging by recent events, it’s SEP owners who seem to be getting their way.

The end-device level licensing model has been attracting attention from some competition authorities and has been at the heart of litigation between patent owners and implementers.

According to German carmaker Daimler, Nokia’s policy of licensing to end-device manufacturers is in violation of SEP owners’ fair, reasonable and non-discriminatory (FRAND) commitments.

Specifically, Daimler has argued in the German court that Nokia’s refusal to license its SEPs directly to Daimler’s suppliers is in violation of FRAND rules.

The Federal Cartel Office, Germany’s competition regulator, has also taken an interest. The Cartel Office took the unusual step of asking a first-instance court, in this case the Mannheim Regional Court, to refer the issue of end-device level licensing to the Court of Justice of the European Union.

The Mannheim court ruled in favour of Nokia, and declined to refer the case to the EU’s top court. A spokesperson for Daimler told WIPR at the time that “we would welcome an EU judicial clarification, as it would answer the questions on the licensing obligation of SEPs”.

The case could also foreshadow potential conflicts down the line involving 5G. The patents at issue were part of an Avanci patent pool.

Alongside the BRL, the Mannheim court’s decision hands the momentum to SEP owners as both sides grapple to shape the licensing infrastructure for the next generation of cellular technology.

“The DoJ approved our approach, which grants licences to complete vehicles,” says Luke McLeroy, senior vice president at Avanci. “We believe that simplicity for all parties is best served by licensing at a single point in the value chain,” McLeroy continues.