IPR for Femtocells
How IPR will Impact the Femtocell Market
Graham Bell
November 2008

Summary
As products implementing elements of the 3GPP standards, Femtocells infringe a
number of essential IPRs and are therefore exposed to unavoidable licensing costs.
Femtocell manufacturers faced with the complexity of essential IPR need to develop
strategies that address the royalty exposure of their products while simultaneously
developing their own war-chest of essential patents.
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IPR

Agenda
• Essential IPR: An inevitable consequence of standards?
• Fear and uncertainty: How the wireless industry manages IPR
• Next on the radar: Will femtocell manufacturers be next on licensors' radar?
• Negotiation and licensing: Strategies for minimising exposure
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Essential IPR: An inevitable consequence of standards? ...
Why is IPR an Issue for Femtocells?
• Essential patents are an unavoidable
consequence of complex standards
developed by consortia. B
• Essential IPRs do not in themselves
cause problems. It is the identification
A C
and licensing of essential IPRs that
causes problems.
• Licensing of patents should be a
mechanism to reward investment in
R&D and as such stimulate innovation.
• However licensing of Essential patents
can be used for competitive purposes
unrelated to R&D without the positive
effects.
SDO
• Essential patents are a major problem
for the industry: standards bodies,
vendors, operators and ultimately
consumers…
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IPR

Essential IPR: An inevitable consequence of standards? ...
Essential Patents – Those mandated by standards
• Patent landscape can be analysed Ericsson US 5550809
spread/scramble
– Most standards bodies require some
kind of declaration of essential IP
Motorola US 5329547
during the standardisation process
time muxed pilot
• Patent owners tend to be involved in
standards bodies
Nokia FI106504B
Higher layer PDUs
– although some exist outside (trolls)
• Licensing terms may be restricted by
Siemens US 09/806646
standards bodies IPR policy, e.g. ETSI’s
TPC after Tx gap
FRAND
• Infringement is easy prove – any Qualcomm US 5101501
standard compliant product infringes soft handover
essential patents
• Essential patents cannot be identified NTT DoCoMo JP 2993554
until standard is formalised (stable) TPC bits
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Fear and uncertainty: How the wireless industry manages IPR ...
3G case study: Only a third of patents declared to ETSI are really Essential
ETSI maintains a database of patents
declared potentially essential to WCDMA.
In PA’s opinion less than 40% of declared
patents are probably Technically
Essential.
Essential*
Companies:
• may be “bluffing” to enhance their
patent portfolios and licensing revenues
• may not have carried out a detailed
evaluation
• may not be aware that a patent
application’s claims have changed
• the ETSI database just needs to be
cleaned up * Around 950 distinct patent families
owned by 41 companies
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IPR

Fear and uncertainty: How the wireless industry manages IPR ...
And the ratio varies wildly between companies:
In PA’s opinion companies few
companies have as many Essential
patents as they declare
Understanding who owns what is a
negotiation tool used by major companies
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IPR

Next on the radar: Will femtocell manufacturers be next on licensors' radar? ...
Femtocells next on licensors' radar?
• As products implementing elements of the 3GPP standards, Femtocells infringe a
number of essential IPRs and are therefore exposed to unavoidable licensing costs.
• Femtocells are relatively new concepts with licensing models still to be developed.
• For the licensor licensing issues can affect stock price enormously & volatility.
• For the licensee licenses can affect margin enormously. Real or spurious litigation
can result in injunctions, inability to sell, customer nervousness, new product delays
etc…
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Next on the radar: Will femtocell manufacturers be next on licensors' radar? ...
Transparency of Licensing – Licensee perspective
• Should we actively seek licenses?
– Smaller companies might not be approached by licensors
• Who do we need to pay?
– Who are the dominant players?
– How do they behave? Open to negotiation or aggressive?
– Who are the Trolls?
• How much do we need to pay?
– Is this fair and reasonable?
– Is this what everyone else pays?
• Are the patents being asserted actually required?
– Are they technically essential?
– Are they useful?
– Are they infringed?
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Contact details
For more information, contact:
Graham Bell
Communications and Electronic Systems
Cambridge Technology Centre
Melbourn
Hertfordshire
Tel: +44 1763 267 325
E-mail: graham.bell@paconsulting.com
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