Patent trolls may be a frequent topic of conversation in the legal technology space, however, there are still a number of companies that license and distribute patent rights in the proper way. Consider some of the most prevalent technology of our time that helps to power the smartphones and mobile devices that dictate our lives today, such as Bluetooth enabled headsets, voice activated software and wireless device technology.
According to a recent Forbes article, in the tech industry, it’s common practice for a governing body to develop technical standards for any given technology to promote widespread adoption and compatibility among various devices. Not only do these technologies span from device to device but they also help opposing manufacturers to integrate their devices with that of another competitor. While the notion of working together with a competing provider may seem ineffective for profitability, with the proliferation of multi-channel devices, any consumer has the potential to own and use an array of different brands at one time; therefore, it is actually in a manufacturer’s favor to integrate their products to work well with others so they are compatible.
Intellectual property owners that are smart, work to have their patents included in these standards, so in order to comply with any given standard, it’s necessary to license their patents. These patents are known as standard-essential patents (SEPs) and the owners of the patent can charge fees to anyone wanting to act in accordance with with the standard requirements.
The report adds that standards bodies often act as regulators, setting rules in order to prevent the owners of SEPs from abusing their newfound power. But the rules tend to be surprisingly indefinable, especially considering the precise technical specifications of the patents at hand.
A new research paper investigates ways to make these patents more efficient. The paper goes on to explore and endorse the idea of “structured price commitments,” where all holders of potentially relevant patents agree to a price cap on royalties just before a standard is set.
Oftentimes, more than one organization will compete to set standards for technologies with similar functions, each competing for market share. One way to compete for the best patents is to offer terms that are more loose than those of the competing standard-setting organization.
Unfortunately, the only way to make structured pricing work is to enact a federal policy that mandates it, despite inevitable protestations from big firms with thousands of standards-potential patents.
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