Our Auto Royalty Rates Won’t Change No Matter How Many Patent Owners Join Us, Avanci Confirms

There will be no changes to the $3 to $15 per car royalty fees licensees are asked to pay to access the patents that form the Avanci auto patent platform, the firm has told IAM. “As we add new patent owners to the Avanci platform, the price the licensees pay for a licence will not increase,” Luke McLeroy, vice president of business development, said. “In fact, after publishing our rates in December of 2017, Avanci added four patent owners to the platform and the price didn’t increase. This is the case even if all standard essential patent owners join the platform.”

McLeroy was speaking after it emerged at the recent IAM Auto IP events in Detroit and Munich that there was some confusion among IP executives in the auto sector and their legal advisers about the terms under which Avanci is offering access to the patents it manages. Some delegates were openly hostile to a programme which they believed would become increasingly expensive as more patent owners signed up to it. McLeroy has now made it clear that this is not the case: “An important feature of our model is that the price of the Avanci licence for a vehicle will never increase no matter how many 2G, 3G and 4G essential patents are added to the licence. And no matter how many patent owners join our platform.”

The Avanci auto platform was launched in December 2017 to offer manufacturers a one-stop shop for the licensing of standard essential wireless patents. With so many car models now boasting high levels of connectivity, this has become a key issue in the sector. The platform currently includes rights owned by companies such as Qualcomm, Ericsson, ZTE and, more recently, BT, BlackBerry, IP Bridge and TNO.

At the time of its launch, Avanci CEO Kasim Alfalahi estimated that the platform’s patents covered close to 50% of the SEPs relating to 2G, 3G and 4G technology. As of now, only BMW has taken a licence, but McLeroy said that the firm is in “positive discussions with other automotive companies across the globe”.

Each of the manufacturers that Avanci is talking to, said McLeroy, “is on its own journey in determining how wireless can be implemented within their respective products”. He continued: “Within this journey, there are different stages of understanding on how the licensing process works in the telecommunications space vs the automotive industry and it takes time to find that common ground where a licence can be taken.”

To be fair to Avanci, it is hard to see how the firm could have been clearer at the time of the auto platform’s launch that the rates being asked were not going to change. It is there as plain as day on its website and was certainly made obvious in the interview Alfalahi did with IAM. What the confusion we heard in Detroit and Muncih probably tells us above all else is that the auto sector is moving into IP territory that is not familiar and in which there are ways of doing things that currently feel alien.

This is a challenge that both sides in licensing talks have to find solutions to. It is also something of which McLeroy is well aware: “We’ve got to this point by meeting with everyone involved – OEMs and suppliers – to understand their traditions and pain points. In addition, because of our experience in the telecom and wireless area, we are able to act as a guide for them as they navigate essential patent licensing issues.”

Having spent years hearing and reading about the smartphone wars, patent hold-up and hold-out, NPEs and everything else that comes with the global IP market, auto companies are now beginning to live these issues, too. That for some, at least, this is coming as a culture shock should be no great surprise.

But the bottom line in the auto sector is the same as it is in every other one: if you want to use someone else’s technology that is going to involve taking a licence; there is no way around that. By offering a fixed price, instead of the percentage rate so prevalent in other sectors, Avanci is seeking to keep things as simple and as predictable as possible. It’s now a case of ensuring that those on the other side of the table appreciate this.

Luke McLeroy (Avanci): “We Provide a Licensing Solution for Licensees that is Transparent, Predictable and Fair to All Competitors in the Industry”

Luke McLeroy is vice president and head of business development for the Dallas-based licensing platform Avanci. Prior to this he led Ericsson’s North American patent licensing business. He speaks to Leaders League about how Avanci is seeking to accelerate development of the internet of things.

Leaders League. What were the reasons behind the establishment of Avanci? Were you aiming to fill a particular gap in the market?

Luke McLeroy. Avanci is focused on simplifying wireless essential patent licensing in the internet of things (IoT). We saw the need for a new patent licensing solution for the IoT, different from what has been done before in other industries because of the size of the IoT, which, by most estimates is going to have four times the number of subscribers as traditional wireless devices, such as smartphones. On top of that, the IoT will be filled with many companies with limited knowledge in wireless technology or in licensing standard-essential patents. As an example, before we started Avanci, we were discussing standard-essential patent licensing with some of the car companies that were adding wireless connectivity to their products. Through multiple meetings we were able to explain to them what standard-essential patents actually are and what it means to license them under reasonable and non-discriminatory terms. After these meetings, the companies understood they needed to take licenses, but they weren’t sure about fair prices for them or even which firms they should reach out to in order to obtain the licenses. Their question to us was: “Can’t you put together all those patents into a license for us?”

So that is where Avanci comes from. There was an industry-driven need for someone to gather all of the essential patents, set up a fair price and then divide this price fairly amongst the different patent owners. This was truly the gap we were aiming to fill: to have a simpler, more predictable patent licensing solution for the IoT.

You previously led the North American patent licensing business for Ericsson. What did you learn from your time there and what key challenges did you face?

The biggest thing I learned was that you need to be solution-driven to succeed in patent license negotiations. It is very important to listen to the other company you are negotiating with, understand their concerns and requirements and find a solution for everyone involved in the deal. Being solution-driven is now a core value at Avanci as we look to find common ground, a licensing solution that will work between not just companies in the wireless industry but also companies in the automobile industry, the utility industry – wherever the IoT extends to next. These are all industries with very different traditions in terms of how they handle patents and other IP issues and we must be solution-driven to find licensing solutions that work for both patent owners and licensees.

How do you feel Avanci will aid the progression of and/or directly benefit the development of the IoT?

There are a couple of key ways in which we feel Avanci will aid the progression of the IoT. First, we provide a licensing solution for licensees that is transparent, predictable and fair to all competitors in the industry, regardless of their size or sophistication in terms of wireless technology and IP. From the patent-owners point of view, we provide the opportunity to receive a fair return on investments and incentivize them to do the research and development that will result in new standards that will advance the IoT in the future. Putting these two things together ensures that patent licensing and other IP issues are not going to be a reason to delay adding connectivity to products or slow the progression of the IoT – instead it will provide an easy way to handle all IP concerns and let companies focus on innovation for the IoT.

Some of your recent work has been concentrated on the automobile industry. Can carmakers avoid the ‘patent wars’ synonymous with Silicon Valley?

We have focused on the automobile industry because that industry has been early to adopt connectivity and the IoT for their products. We signed our first license agreement with BMW, at the end of last year. We have noticed a real interest in the auto industry to proactively get patent licenses in place, rather than just sitting back and waiting for a dispute to arise if they’re selling unlicensed technology in their products. There are two main reasons for this interest. Firstly, they recognize the need to pay a fair price for the technology they are using and secondly they are aware of the risk of selling unlicensed technology in their cars as it could lead to a legal dispute which would interrupt delivery of their products.

Interview by Eloise Lake

IP Bridge Joins the Avanci’s Licensing Platform of Wireless Communications SEPs for IoT Products

Godo Kaisha IP Bridge 1, a wholly-owned subsidiary of IP Bridge, Inc. (“IP Bridge”), announced that it joined the patent licensing platform launched and administrated by Avanci, LLC (“Avanci”) as a licensor in terms of its own wireless communications standards essential patents.

The licensing platform administrated by Avanci is a structure or program that offers one-stop licenses for patented wireless technologies of 2G, 3G and 4G standards to the Internet of Things (IoT) products such as Connected Car, Smart Meter and so on. The licenses are granted for companies which need to use the technologies for their IoT business on fair, reasonable and non-discriminatory terms (FRAND). The companies intending to enter the IoT industry will be relieved from spending excessive resources for negotiating individual licenses with multiple patent holders by taking this one stop licenses through the platform, and will be able to operate the IoT business in transparent environment.

IP Bridge would contribute to the healthy growth of the IoT industry through joining as a licensor in the Avanci’s efficient and transparent licensing platform.

About Avanci: http://avanci.com/

About IP Bridge

 At IP Bridge, our focus is on promoting technological innovation and cooperation within Japan and around the world. We’ve worked with our investors, including Innovation Network Corporation of Japan – a unique partnership between 26 major corporations and the Japanese government – to establish the first and largest fund in Japan (approximately $300M) aimed at global innovation and IP-related investments. Our mission is to activate and leverage high-quality, under-utilized intellectual property assets to the benefit of a variety of IP owners based in and outside of Japan. And our vision is that these activities will stimulate economic development and a healthy growth of industries worldwide.

 We’ve worked with leading technology companies, small and medium size enterprises (SMEs) and universities to build large, high quality portfolios of 3,500 worldwide patents and growing, including patents in the fields of wireless communications, semiconductors, video codecs, display technologies, automotive technologies, robotics, home appliances, electric devices, healthcare, environment and energy, food technologies, and medical engineering.

 Our world class team includes experienced professionals from IP and corporate management of major technology companies, investment funds, financial institutions, and law firms. We have the global experience and relationships to provide comprehensive IP services, including IP-based business incubation, monetization, licensing and financing to generate revenue and fuel innovation and business expansion, syndicated transactions to remove potential IP risks to our clients, and IP consulting services to build IP strategies, maximize IP value, and best position our clients for success.

Carmakers Want Silicon Valley’s Tech Without Its Patent Wars

As automakers turn their vehicles into app-laden computers on wheels, there’s one habit they don’t want to acquire from Silicon Valley: fighting over patents in court.

Manufacturers from BMW AG to Hyundai Motor Co. to Ford Motor Co. are trying to learn from the smartphone wars, which cost technology companies hundreds of millions of dollars in legal fees, as they prepare to revolutionize their vehicles.

“No sane automaker wants to repeat these wars, where the lawyers were the only winners,” said William Coughlin, chief executive officer of Ford Global Technologies, Ford’s intellectual property arm.

Automakers have ramped up their patent applications as they compete to roll out crash avoidance systems, on-board Wi-Fi and cars that can drive themselves. To avoid court battles over who gets paid and how much, competitors are banding together to jointly license technology, use non-proprietary software and buying or challenging patents that might be used in lawsuits against them.

Both Toyota Motor Corp. and Ford were among the top 21 recipients of U.S. patents last year, with 1,540 and 1,530, putting them in company with Apple Inc., Qualcomm Inc., and Alphabet Inc.’s Google, according to figures compiled by the Intellectual Property Owners Association.

Toyota’s recent patents cover ways to keep a vehicle in the proper lane and respond correctly at a traffic signal; Ford won rights to sensors that gather data from other vehicles and a system to measure customer satisfaction by expressions or statements made while driving.

The smartphone wars that began in 2010 were sparked by a clash of the phone and computer industries and pitted iPhone-maker Apple against manufacturers of phones that ran on Android, the operating system owned by Google. Microsoft Corp. also got swept in when it demanded royalties on phones that used Android.

Technology companies frequently resolve patent disputes — others have been over computer memory, networking and video cards — in court. But the big automakers tend to settle their fights more informally or let suppliers duke it out.

One way is by joining with other companies to share technologies. Many of the groups that are attracting automakers as members were created by Silicon Valley companies to limit the number of lawsuits filed by licensing firms known as patent assertion entities — or by the pejorative term “troll.”

Ford, Honda Motor Co., Hyundai, Tesla Inc. and Volkswagen AG are members of the LOT Network, a non-profit consortium in which companies pledge to continue to make their patents available to all members even if they sell them to another firm. Daimler AG, Ford, and Toyota are among those belonging to Unified Patents, which challenges patents at the U.S. Patent and Trademark Office. Ford also is a member of RPX Corp., a risk management service that buys up patents and challenges patents that already have been issued.

Last week, BMW became the latest automaker to enter a licensing deal, agreeing to pay a per-car fee to gain access to a “pool” of patents related to wireless industry standards from companies including Qualcomm, Ericsson AB, Sony Corp. and eight others.

Pricing Patents

“They see every day there is litigation and they don’t want that,” said Kasim Alfalahi, head of Avanci LLC, a Dallas-based group that operates the patent pool. “They say, ‘We have looked at this, we have studied this and we would like to avoid it.’ ”

Figuring out the proper royalty rates for use of industry standard technology has led to global fights among technology companies, the most prominent being Apple and Qualcomm’s three-continent combat over what patent fees Qualcomm collects from each iPhone.

Automakers “look at the fights right now, and they understand that a lot of it has to deal with the pricing and expectations,” said Alfalahi, who was Ericsson’s top intellectual property counsel before starting Avanci.

Another way carmakers are cutting costs is by using non-patented technology.

‘Wild West’

Open Invention Network, which buys and cross licenses patents related to the open source Linux operating system, has signed up companies such as General Motors Co. and Daimler, giving them free access so they can then build their own individual applications for on-board systems to monitor traffic patterns, help cars avoid crashes or perform other functions akin to a computer or smartphone.

Keith Bergelt, the network’s CEO, said the battle between Apple and phones that used Google’s Android operating system “created a culture that brought out the worst in many companies.”

The automotive industry hasn’t been completely immune to litigation. When it comes to self-driving vehicles, it’s still somewhat of a “Wild West,” with companies all over the country doing research and hoping to come up with the next big thing. That’s already spawned a nasty fight, with Alphabet’s Waymo claiming Uber Technologies Inc. stole trade secrets for the laser-based sensors known as Lidar.

Thousands of cars now run Apple and Google’s operating systems for infotainment through their dashboard touchscreens in the form of Apple CarPlay and Android Auto. Ford and BMW are integrating the Amazon.com Inc.’s Echo into their dashboards.

A big chunk of the lawsuits against tech companies were an outgrowth of the dot-com bust, during which sharks picked up patents from bankrupt internet companies and then demanded royalties from companies that were still in business. Companies like Delphi Automotive Plc have expressed concern that the same thing may happen to companies that don’t succeed in the autonomous car market, said Bruce Rubinger, founder of Global Prior Art, which conducts research on the validity of patents.

The automakers and suppliers have been investing in technology companies, so they will own rights to some of the research no matter what happens with the company, Rubinger said.

The relatively slow pace of change in the auto industry can help it avoid some legal problems. In the technology industry, new products are introduced every 18 months, but it can take four years or more for a new feature to go from the design stage to the showroom floor.

“Car manufacturing is different from that perspective — it’s not like smartphones where you can just outsource it,” said Shawn Ambwani, co-founder of Unified Patents. “There are very few players who get into the market. Market share doesn’t change dramatically every five years.”

And the auto industry will be able to draw on the legacy of the technology industry’s patent cases. Court rulings make it easier to invalidate patents and lower the amount of damages that can be awarded. Legislation also created a new procedure at the U.S. patent office that’s been embraced by Silicon Valley for its reputation as a “death squad” for patents.

So far there have been few lawsuits over the new cars, though Ford’s Coughlin said they will come because “everybody wants to protect their investments.” Still, he said, he’s not expecting a lot of patent litigation “unless somebody is acting unreasonably.”

— With assistance by Keith Naughton

Avanci Announces Pricing for Auto Sector – Range from $3 to $15 per car

Richard Lloyd

Avanci, the platform headed by former Ericsson CIPO Kasim Alfalahi focused on licensing wireless technology into different verticals in the Internet of Things (IoT), has published its royalty rates for car companies. Licensees will be expected to pay between $3 and $15 per car depending on the level of wireless technology in the vehicle. The news comes a little over a week since Avanci announced that German car giant BMW had signed up as its first licensee.

For the most basic level of connectivity, which gives drivers the ability to make emergency calls, manufacturers will have to pay $3 per vehicle. For 2G and 3G wireless technology (including emergency calls) the price is $9 and for 4G (which also includes 2G/3G and emergency call functionality) it is $15. The price will remain fixed regardless of whether additional patent owners join Avanci.

The news comes more than a year since Avanci launched with the aim of simplifying the licensing process for mobile technology in the car industry, as well as in other IoT verticals including smart meters and connected homes (Avanci is yet to announce its rate for either of those sectors).

We have spent a lot of time talking to all of the stakeholders who are willing to engage with us to understand the telecom culture and the automaker culture which is very different,” Alfalahi commented. “The aim was to find a common ground between these two industries and I think we’ve got a price that auto companies are willing to pay and which is fair and reasonable.”

The announcement of Avanci’s pricing structure provides the auto industry with the first clear guidance on what it can expect to pay for a licence to wireless patents that cover a significant part of the total SEP universe. Alfalahi has claimed that Avanci’s licensors – which include Qualcomm, Ericsson and ZTE and, most recently, Japanese sovereign patent fund IP Bridge – covers almost 50% of the standard essential patents (SEPs) relating to 2G, 3G and 4G technology. As connected cars have come onto the market and with vehicles set to become increasingly sophisticated, thanks to the forces of convergence, so auto makers and their suppliers have been facing up to a very different patent licensing world.

Avanci’s fixed price applies to all makes of car and does not depend on a vehicle’s final price, which means that an automaker will be paying the same for connectivity whether its Hyundai or Ferrari. “This model means it’s very easy for companies to understand that everyone is being treated the same and getting the same deal,” Alfalahi stressed.

The rate will also apply worldwide and so will not vary according to where the cars are sold, which is in contrast to some licensing pools like Via, which have started to introduce different rates for domestic manufacturers in emerging markets. Alfalahi admitted that they had looked at the option of offering differential rates but had ultimately decided against. “For us it’s really a matter of having a very clear, simple model and a customer who thinks that this is a fair price,” he said.

It is notable that in its recently issued Communication on SEP licensing, the European Commission put a great deal of emphasis on the importance of transparency and on the role that patent pools could play in enabling the diffusion of IoT-related technology. With today’s announcement, Avanci looks to be delivering on both fronts.

So is it a fair price? According to auto industry data source, Kelley Blue Book, the average price of a new car or light vehicle in the US is around $35,000. That means that Avanci’s top rate of $15 represents about 0.04% of an average car’s price. If Alfalahi is right about the proportion of the mobile SEPs that Avanci’s licensors currently own, then, using his number as a guide, the price to license the entire SEP universe for 2G, 3G and 4G connectivity in a car currently should be around $30 – assuming that no more patent owners join Avanci. As a proportion of the final price of a typical car that’s much less than SEP owners receive for a smartphone whose functionality depends more on its connectivity than a car’s currently does. That said, a car’s connectivity is only going to become more important as vehicles becomes more sophisticated.

That calculation of $30 also assumes that no more patent owners will join Avanci which would mean that it wouldn’t grow the proportion of SEPs that it has to license. That seems unlikely which means that the overall price of connectivity for a manufacturer effectively drops as more IP owners sign onto the platform.

Whether this pricing structure results in push back from the industry remains to be seen. Things will become clearer if and when Avanci announces more deals. But given the amount of time it has taken for this announcement to be made it’s going to be hard for licensors and licensees to argue that they at least haven’t done their homework.

Deal with BMW is the First of Many with Auto-makers, says Avanci Boss

Richard Lloyd

German car giant BMW has become the first automaker to take a licence with Avanci, the patent licensing platform for certain Internet of Things (IoT) industry verticals headed by former Ericsson chief IP officer Kasim Alfalahi.

The news was announced late last week with the press release from Avanci revealing that while the deal has been agreed with BMW, it will to a large extent be handled through the German carmaker’s supplier for telematics units. The release did not name that supplier although according to a 2012 article in Telematics News the Germany company Peiker Acustic is the supplier of LTE internet hotspot technology to BMW.

The agreement with BMW comes almost 15 months after Avanci officially launched to license 2G, 3G and 4G wireless technology in a number of IoT verticals including auto, connected homes and smart meters. Qualcomm, InterDigital, Ericsson, ZTE and KPN were first to sign up as licensors and have since been joined by the likes of Sharp, Panasonic and Vodafone.

Attempts to pool wireless patents have largely failed in the past because most of the big players such as Qualcomm and Ericsson have refused to sign up. That does give Avanci an edge and Alfalahi claimed that the platform has around 50% of all 2G, 3G and 4G standard essential patents. What it had been lacking, until BMW signed up, was a licensee.

Alfalahi, who was speaking to the IAM blog shortly after the deal was announced, admitted that putting the first agreement in place was particularly significant. He then added: “I think BMW decided to do the right thing to put this agreement in place knowing that they get 11 companies’ patent portfolios with just one signature.”

It’s not clear yet just how much BMW is paying as Avanci has so far declined to make its royalty rates public. Alfalahi insisted that they remained committed to publishing thesde and that they would do so soon. “We wanted this announcement to be focused on the actual deal with BMW, we didn’t want the focus to be on pricing or anything like that but we are committed to publishing the price,” he said.

Despite Avanci’s collection of patents and the licensing expertise of Alfalahi and his team, they have been faced with an auto industry that is unaccustomed to the licensing practices of the mobile world and other tech sectors. Traditionally a complex web of cross-licensing agreements has covered the automakers and their universe of suppliers meaning that patent infringement disputes have been very rare.

As more technology, including wireless, has been incorporated into new vehicles and new players such as Waymo have emerged as significant players in autonomous vehicle development, so speculation has mounted that the car giants might be pitched into the kind of patent litigation battles that dominated the smartphone industry for a number of years. Avanci and other licensing platforms should theoretically help avert those kinds of disputes, but it was always going to be a challenge to convince car makers to start taking licences at a price that works for both patent owners and prospective licensees to technology that is still relatively rare in most cars on the road.

The BMW deal suggests that Alfalahi and co have been making significant headway, but the question now is whether more carmakers will follow. The Avanci head was in no doubt on that one. “My prediction is that all the automakers will take a licence from Avanci and that more and more patent holders will be added to our licence,” Alfalahi insisted.

Ericsson, Qualcomm, Sony, Others Sign on With DFW Licensing Platform From Former Ericsson CIPO

Ericsson’s former chief intellectual property officer is hoping his new platform for licensing patented technology related to the Internet of Things will catch on with innovators diving into the area.

Kasim Alfalahi has already lured big-name patent-holders to the platform, named Avanci. Ericsson, Qualcomm, InterDigital, KPN and ZTE have all signed on. Thursday, Avanci added Sony to the mix.

Ericsson announced in February that it would spin out the new independent platform with Alfalahi, who served as Ericsson’s CIPO for 5 years, at the helm. Avanci makes it easier on IoT inventors looking to cease cellular technology to connect their inventions.

An exponentially growing number of things and devices will be connected and communicating to each other in the coming years as the Internet of Things expands. Some of the products will use 2G, 3G and 4G networks to gain connectivity.

Ericsson and Qualcomm are among the leaders in the technology that makes such connections possible. But Alfalahi says the tech generally spreads across several patents, which can make licensing a nightmare. Manufacturers have been left to negotiate with several companies to license patented tech for their own products.

Alfalahi’s platform centralizes the process. Inventors decide what tech they need and license it through Avanci for a flat rate per unit. Then, Avanci splits up the fee and pays companies that own patents the particular technology touches, keeping a cut of the revenue for itself.

The flat rate will change depending on the product in which it’s used.

“The value of connectivity in a smart meter or a trash can is different from the value of connectivity in a car,” Alfalahi told the Dallas Business Journal.

Alfalahi said he has high hopes to add more companies to the fold – and that it’s been a warm reception thus far. Upon its launch this week, Ericsson and Qualcomm put out statements in support of the platform.

“Avanci’s licensing platform enables the adoption of our essential wireless technology among IoT device manufacturers, accelerates the development of the Internet of Things and the global uptake of LTE for IoT,” said Gustav Brismark, chief intellectual property officer at Ericsson.

New IoT platform off to a good start but deals will ultimately determine success

The news yesterday that five major patent owning companies have signed up to the new Internet of Things (IoT) licensing platform Avanci, represents the first industry attempt to ensure that the expected explosion in connected devices doesn’t result in the kind of stand-offs and costly court battles we saw in the smartphone wars.

In many ways, Avanci is taking a well-established concept – a patent pool – and applying it to the IoT. But, in contrast to pools like MPEG LA, Avanci will be making standard essential patents (SEPs) that read on 2G, 3G and 4G technologies available for licensing in specific sectors or use cases, starting with connected vehicles and smart meters.

The five companies that have signed up so far – Ericsson, InterDigital, KPN, Qualcomm and ZTE – represent some of the largest SEP patent owners in the cellular space. Plus, in former Ericsson CIPO Kasim Alfalahi, Avanci has a CEO drawn from the small pool of IP executives that can both recruit such a list of businesses and convince device manufacturers, in sufficient numbers, to take a licence. In other word’s Avanci’s prospects look pretty good.

“The platform creates accessibility and simplicity,” explained Alex Rogers, head of Qualcomm Technology Licensing. “One of the things that we’ve been hearing is that as new industries become interested in making new products with cellular connections, they understand that there are a certain number of rights holders that have important essential patent portfolios and so the question for companies like that, who have never been involved in cellular, is how do I engage in this licensing process? This platform provides simplicity and efficiency for them.”

But this is patent licensing and SEP licensing to boot, so while the news of Avanci’s launch might be welcomed as a relatively simple approach to paying for relevant IP, things may not be quite as straightforward as Qualcomm et al hope. Here are the IAM blog’s takeaways from yesterday’s announcement.

Will the price be right?

In the release announcing the launch of the new platform, Avanci declared that: “Companies can expect a transparent, flat-rate price for each device that will vary based on the value the technology brings to the device.” In an interview Alfalahi stressed that the pricing will be based on FRAND terms and that the rates will be made public.

But as Alfalahi is fully aware, SEP licensing in parts of the tech space has seen some marked disagreements between licensors and licensees on just how much a licence is worth. There remains, for instance, a clear stand off between Qualcomm, Ericsson, InterDigital and several other companies over a new policy introduced by the IEEE, which has changed the terms on which some SEPs relating to standards administered by the IEEE, such as its popular 802.11 wifi standard, should be licensed. Avanci might look to simplify the licensing process but if the pricing isn’t right then it will struggle to get the volume of licensees that it needs.

Not surprisingly, Alfalahi was bullish when asked how confident he was that he and his team would be able to agree on a pricing structure that satisfied patent owners and device manufacturers. “We’re talking to both and we’re spending a lot of time thinking together with them and listening very carefully to both sides. We know very well that the only way that this will work is that we find a comfort zone for everyone involved – that the price is something that will encourage more companies to have connectivity in their products.”

The aim, he underlined, was that by making pricing predictable, licensees would not have to worry about haggling over a deal and fretting over whether they had paid the right amount. Clearly conscious of some of the ongoing arguments over SEPs and the IEEE’s new policy, Ericsson CIPO Gustav Brismark, was quick to counter any misconceptions over how the price of a license might be calculated. “It is not the case that patent owners want a percentage of the price of a Ferrari. The price will be based on the use case and the value that a technology brings to a product.”

Perhaps one of the biggest challenges that Avanci faces is that the IoT and the forces of convergence behind it mean that royalty-based patent licensing is about to become a cost of doing business to a much larger universe of companies, many of which may have had little or no experience of SEPs. That’s not to say that they won’t pay up, but it may just take them a little longer to fully appreciate the benefits of taking a licence from Avanci.

Who’s not on the list?

While the first five companies to sign up represent a good start – Ericsson and Qualcomm between them have among the largest and highest quality cellular patent portfolios in the business – this is by no means an exhaustive list of players in the space. Alfalahi stressed that Avanci was in talks with more companies and so we can expect some new joiners in the coming months. But who’s missing?

Perhaps most glaringly Nokia is not part of the launch. That could be because of the recent changes at the Finnish tech giant which saw Nokia Technologies head Ramzi Haidamus step down, somewhat abruptly, on 1st September. He was responsible for the company’s patent licensing business and so it’s possible that the decision on whether to join Avanci will be left to his successor. With Nokia having just bought Alcatel Lucent in a deal which greatly enlarges its patent portfolio, getting it on board would add significantly to Avanci’s appeal as an IoT licensing one-stop-shop.

Others missing from the major owners of 2G, 3G and 4G SEPs are the Japanese giants NTT DoCoMo and NEC. There’s also ZTE’s Chinese rival Huawei and Samsung which as patent owner and device manufacturer sits on both sides of the licensing table. And finally, there’s the matter of the old Motorola portfolio, much of which has been retained by Google although some did transfer to Lenovo when the search giant sold most of the legacy Motorola Mobility business.

China on board

It’s notable that in ZTE, one of China’s leading tech players has thrown its support behind Avanci. Not only does the company have a cellular portfolio that places it among the world’s leaders but it is also one of the new breed of Chinese multinational tech players. That should significantly help the new platform license the country’s IoT companies. China has proved tricky territory for some leading patent owners, including Qualcomm. It surely makes it easier for Avanci that rather than a bunch of Western companies demanding licensing dues from local manufacturers, ZTE will be one of the businesses receiving a return on their technology.

The right kind of leadership

For all the questions that remain to be answered around Avanci, and all the licensing deals to be done, there’s no doubt that the launch confirmed Kasim Alfalahi’s status as one of the shrewdest operators in the licensing business. That was perhaps to be expected given that as Ericsson’s IP head he had grown the company’s licensing arm into a $1 billion operation and had helped elevate the CIPO position reporting directly to the CEO. Alfalahi has a reputation as a consummate dealmaker and to get from a standing start in February to yesterday’s launch in just six months shows that the Swede has a contact book to die for and an ability to get things done. His ongoing role is key and not only as a recruiter and dealmaker. As Avanci’s membership increases, anti-trust considerations could come to the fore, particularly in places like South Korea and China where regulators have shown a willingness to get tough with licensors on competition grounds. It will be Alfalahi’s job to demonstrate in word and deed that he is acting independently of the patent owners whose assets he is offering for license.

Tech Giants Back IoT Licensing Platform

Ericsson, Qualcomm and ZTE are among the backers of a “one-stop licensing platform” targeting IoT device makers.

Run by Avanci, a company founded this year by former Ericsson executive Kasim Alfalahi, it will see the three vendors, along with KPN and InterDigital, offer patents through a single licence on fair, reasonable and non-discriminatory terms.

“Companies can expect a transparent flat rate price for each device that will vary based on the value the technology brings to the devices,” it said.

The initial focus will be on 2G, 3G and 4G technologies for connected cars and smart metres, before expanding to other IoT product areas.

The company said the new, open platform will also accelerate the process of securing technology rights and time to market for IoT.

Companies that are seeking to add connectivity to their products, and players with a portfolio of standard essential wireless patents to share can join the marketplace.

Alfalahi said since beginning in April, Avanci received a warm reception from both IoT device manufacturers and patent owners, and expects to add more companies to the platform in the months ahead.

“With Avanci, something that would require time and resources to negotiate with many technology holders can now be done in one place, with one licence,” he said.

Ericsson, Qualcomm Join Avanci to Offer One-Stop Shop for IoT Patent Licenses

A new platform for patent licenses is aiming to make the lives of Internet of Things (IoT) device makers a little bit easier.

Avanci, a newly formed company headed by former Ericsson Chief Intellectual Property Officer Kasim Alfalahi, on Wednesday announced the launch of a new one-stop platform that will grant manufacturers a single license for standard-essential patents from several major technology companies. Avanci said licenses will be offered with a flat-rate price per device that will vary based on the technology used.

According to the release, companies contributing patents include telecommunications giants Ercisson and Qualcomm, as well as ZTE, KPN and InterDigital. The Avanci licenses grant access to all of the existing standard-essential cellular patents in the participating companies’ portfolios as well as any additional patents that are developed during the license term.

“The number of companies incorporating connectivity in their business models is rapidly increasing,” current Ericsson Chief Intellectual Property Officer Gustav Brismark said. “By having efficient access to essential wireless technology and leveraging the global network, these companies can reduce time to market and reach scale faster. Avanci’s licensing platform enables the adoption of our essential wireless technology among IoT device manufacturers, accelerates the development of the Internet of Things and the global uptake of LTE for IoT.”

Avanci said it will initially offer 2G, 3G and 4G cellular technologies for smart meters and connected cars, but will expand to include other IoT areas soon.

Avanci said the goal of its new platform is to accelerate the process of securing technology rights and time to market for IoT devices.