Are Standard Essential Patents Valuable?

The recent patent deal between Nokia and Xiaomi – a cross license to each company’s cellular standard essential patents have become a subject of lively debate in the market on Standard essential patents.

We have various examples of big deals: Nokia & Xiaomi, Nokia & Huawei and many more.

What are Standard Essential Patents?
Patent that claims or protects an invention that must comply with an industry standard is a standard essential patent. This means that any manufacturer who wants to manufacture standard compliant products such as cameras, smartphones and many more will have to use standard technologies that are protected by the standard essential patents.

Origin and Technology Revolutions
For the early developers of wireless technologies, SEP licensing has become big business for them. From here, Licensing or cross-licensing of standard essential patents came into picture.

There is a massive revolution in future technologies such as the Internet of things (IOT’s), smart cars, smart homes and all which heavily rely on Standardized technologies such as WiFi, LTE, or Bluetooth. If these standardized technologies are protected by the patent then it will create hurdles in the overall development of IoT and it will also end up in infringing patents.

Various companies want to get their fair return for licensing their patented technology but if the patented technology is used for big products like smart cars then these companies will bring additional value tax and it will put brakes on the path of innovation and bring an emergency stop on the internet of things.

Patent Transformation to SEPs
Patents are declared as SEP’s on various standard setting organizations (SSOs). SSOs have created a term called FRAND (fair, reasonable and nondiscriminatory). SSO members have to license SEPs on FRAND terms to the other members or non-members of the SSO. It also facilitates the widespread use of the technology standards and also ensures that each SEP owner gets in return from use of their patented technology without gaining an unfair dealing advantage.

It is a time to see in all four corners of the world to ensure that the internet of things and its economic benefits are not held slaves for the profit of a few and at the expense of the many.