Will patent pools ever come about in the LTE world?

editor's corner

The Next Generation Mobile Network (NGMN) technology body last week called on the LTE industry to adopt patent pools for LTE, declaring they are "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."

That was the first call I've heard in 2011. Back in 2010, companies were tripping over themselves to create patent pools. The Open Patent Alliance was doing some pretty heavy lobbying, recognizing that the vision for 4G is drastically different than the 3G world since a plethora of ecosystems such as operators, PC makers and consumer electronics vendors are coming together.

It makes sense. Intellectual property rights licensing in the PC and consumer electronics worlds are typically done through a patent pool. Moreover, OFDM/OFDMA technology, the foundation of LTE, dates many decades back in various industries such as the television industry. As such, companies outside of the mobile industry also claim patents.

But it's not turning out that way. Big players like Qualcomm (NASDAQ:QCOM) and Ericsson (NASDAQ:ERIC) prefer to do licensing old school--via reciprocal deals. It doesn't appear that those patent holders in favor of a patent pool have that critical mass to push a pool along at this point. Moreover, the move by Apple (NASDAQ:AAPL), Research In Motion (NASDAQ:RIMM), Ericsson and others to outbid Google for Nortel's LTE patent portfolio by paying $4.5 billion, stymies the efforts of patent pool advocates.

Patent holders are now jockeying for position. One wireless patent expert I spoke with indicated that the royalty rates the industry will see for LTE won't be much different than W-CDMA royalty rates, but who has the valid IP and receives the bulk of royalty rates is up for debate.-Lynnette