NGMN's Calls for an LTE Patent Pool will be Futile in Current IPR Climate

(Sep 6 2011) 4G , LTE , WiMAX

1. By Caroline Gabriel, Research Director, Rethink Technology Research

   The operator-driven technology body, the Next Generation Mobile Network (NGMN), has called for the industry to adopt patent pools for LTE, calling these "the best way to speed up the successful implementation of LTE by giving licensees a safe and efficient way to secure the necessary licenses and have reasonable, as well as predictable, [intellectual property right] IPR costs." But despite such demands from many wireless standards agencies looking to reduce the royalties and the legal risk associated with emerging platforms, the patents war continues to escalate, raising the question of whether the mobile sector will ever accept the logic of the pool.

   While many of the current high-profile disputes focus on software, user interfaces and device design, control of essential 4G IPR is also considered a major factor in the evolving wireless balance of power. It saw a group of players led by Apple outbidding Google for Nortel's 4G-heavy portfolio, and paying a huge $4.5 billion, and Google's acquisition of Motorola Mobility will also bring it a wide range of IPR that is directly related to LTE technology. Such deep pockets and high-stakes power games risk eclipsing the efforts of groups like ETSI (which wants all patent holders to declare their hand at the earliest stage of defining standards) or patent pool advocates like the WiMAX-oriented Open Patent Alliance (OPA).

   That alliance was formed to devise a pool for WiMAX, a technology which often touted its more open approach to IPR as an advantage over the norms of the cellular industry and the 3GPP platforms. It had hoped to interest the LTE community in its activities too, but early interest in pooling seems to have been overshadowed by the determination of some major IPR holders, like Qualcomm and Ericsson, to stick to the status quo--and of the new mobile giants, from China and the Web world, to stake their own claims.

   The latest patent lawsuit comes from Openwave, once the pioneer of mobile browsers and more recently focused on mobile Web solutions, such as messaging and analytics, for carriers. It has filed suit with the U.S. International Trade Commission (ITC) and a federal court in Delaware, accusing Apple and RIM of infringing five of its mobile Internet connection patents. The complaint cites Apple's iPhone 3G, 3GS, iPhone 4, iPod touch, iPad and iPad 2, plus RIM's BlackBerry Curve 9330 and PlayBook.

   The patents at issue include IPR related to: using mobile e-mail offline; connecting to a server seamlessly from a mobile device; accessing updated versions of apps; rapid Web page navigation on a handset; and accessing or sharing cloud data from a mobile product.

   Openwave is demanding royalties or an ITC ban on the import and sale of the accused devices. In a statement, CEO Ken Denman said: "Openwave invented technologies that became foundational to the mobile Internet. We believe that these large companies should pay us for the use of our technologies, particularly in light of the substantial revenue these companies have earned from devices that use our intellectual property. Before filing these complaints, we approached both of these companies numerous times in an attempt to negotiate a license of our technology with them and did not receive a substantive response."

   Meanwhile, all players are building up their patent arsenals in order to defend themselves against the wave of IPR assaults. One hopeful vendor is Kodak, whose CEO Antonio Perez said that numerous parties have expressed interest, and that investment bank Lazard is advising Kodak on the sale. He added that selling certain patents could help Kodak avoid costly patent litigation--the ITC has delayed a ruling on Kodak's bid to get $1 billion in licensing fees from Apple and RIM--but Perez told Bloomberg: "All of this litigation takes a lot of time, and it's very expensive and demands a lot of my time. We would rather get an infusion of cash in advance, being able to have a series of relationships with many of those companies that otherwise we'd have to be in legal conflict with."

   Those comments suggest that Apple and possibly RIM may be interested parties, and Google, Microsoft and Samsung are also expected to be studying the IPR. Earlier this month, the Wall Street Journal reported that Kodak had started the bidding on its IPR assets even though a buyer would be saddled with a complex list of Kodak's ongoing licensing deals with OEMs, some presumably rivals. The report, citing unnamed sources, said one of the bidders was a "large, strategic buyer in the wireless industry looking to use the patents for defensive protection," which of course pointed the finger at Google. However, having agreed to acquire Motorola Mobility, plus substantial assets from IBM, it is questionable whether the search giant really needs to purchase further IPR, either from Kodak or the other major firm currently selling its arsenal, InterDigital, whose auction will take place this week.

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