Via Licensing, a subsidiary of Dolby, is launching an LTE patent pool with 10 participating companies including AT&T (NYSE:T), Clearwire (NASDAQ:CLWR), DirecTV, Hewlett Packard, KDDI, NTT DoCoMo, SK Telecom, Telefonica and ZTE. The company said that more patent holders are likely to join the group in the coming weeks and months.
According to Roger Ross, president of Via Licensing, some patent holders are interested in joining the LTE patent pool but are waiting for the resolution of existing patent disputes before committing. "It's difficult for companies to join if there are essential patents in dispute," Ross said. Ultimately Via Licensing hopes to secure 20 percent of the intellectual property behind LTE in its pool. "If we have a patent pool that reaches between 20 percent and 40 percent of the industry, that is significant," he said.
Ross said that Via Licensing hopes to be a one-stop shop for access to LTE patents. Companies that want to build LTE devices or equipment realize that they have to take care of IPR issues and most are waiting for a patent pool so that they can more easily ink patent-licensing deals. However, Via Licensing isn't the only company interested in an LTE patent pool. The Open Mobile Alliance, Sisvel, MPEG LA and others have talked about creating an LTE patent pool with the goal of streamlining the licensing process and letting companies build LTE devices more quickly.
Ross added that there are companies, such as Qualcomm (NASDAQ:QCOM) and Ericsson (NASDAQ:ERIC), that do not join patent pools because IP licensing is a key part of their business model. He said that monetizing LTE patents isn't likely to change with the advent of a patent pool. However, essential patents--those that are necessary to building LTE products--will benefit from being part of a pool because it allows licensees to more easily predict their financials.
LTE patent licensing is a big business. ABI Research estimates that royalties raised from 4G cellular technologies will reach $6 billion in 2017, nearly quadruple of what it is in 2012.
Indeed, patents are big business. Earlier this year a group of companies including Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) purchased bankrupt Nortel Networks' LTE patent portfolio for $4.5 billion.
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