Intellectual Property Rights and licensing of radio standards
We at Nordic Semiconductor are a long term, strong supporter of open radio standards. We have products supporting the three major established radio standards today, namely Bluetooth® Low Energy, Wi-Fi 6, and cellular.
We truly believe that the future potential of wireless communications can only be realized using open standards.
Adherence to open radio standards spurs competition and innovation, leading to better quality and more affordable solutions. It also ensures that communication technologies can operate internationally, facilitating global connectivity and cooperation. Open standards help future-proof investments in technology by allowing for easier updates and adaptability to new advancements.
What are standard essential patents (SEPs)
To accelerate adoption of technologies and to ensure products are compatible, most industries collaborate on setting global standards on how technologies should work. In the radio technology industry there are several standards, including Bluetooth® Low Energy, Wi-Fi 6, and LTE-M / NB-IoT (both subsets of 4G and 5G). These radio technology standards are established and developed by different standard bodies and their participating members, who file patent applications for new and inventive technologies. If adopted into the standard, and therefore necessary to operate the standard, they are referred to as Standard Essential Patents, or “SEPs”. Developing new global cellular radio standards is complex and resource demanding, and there are thousands of patents declared to be essential. In return we access an unmatched innovation rate from 2G to 5G with a reliable, future-proof and secure infrastructure with global access for a variety of consumer, automotive and industrial use cases.
Patent owners and participants at standard development organizations are normally obligated to license their patents on Fair, Reasonable, And Non-Discriminatory (“FRAND”) terms and conditions. There is however limited guidance on what should be considered Fair and Reasonable.
SEP licensing for cellular
Licensing of the cellular SEPs has for many been regarded as complex, as it is not organized like for example the Bluetooth Special Interest Group (SIG). There are many individual patent owners, who until recently were only partially organized, and they were focused on licensing the handheld device and automotive markets.
Many are using cellular radio standards for other use cases, such as IoT, and they are not licensed or able to get a license today. There are multiple reasons for that, such as a lack of guidance on what is Fair and what is Reasonable, low overall transparency or awareness of the need for a license, and no practical easy way to get access to license agreements. Another reason is the contentious issue of where in the value-chain the patent license should be granted and paid for. Nordic took a public stand early on that the license should be granted to the component maker who, especially in IoT, is much closer to the radio technology than its customers who create the end products. However, several SEP owners choose to only license the end-product maker directly based on the end-product use case or value.
Why an agreement with Sisvel?
From a legal and compliance perspective there is little doubt that the patent owners who invested time and money in developing the standards are entitled to be compensated for the use that various IoT products and devices make of the standards. This follows from international patent law. The traditional focus on licensing in handheld device market, have in recent years been joined by patent pool licensing programs that have enabled licensing in automotive and other selected use cases.
Now the time has come to find a solution that can work for the fast evolving, and much more diverse cellular IoT market. For this, Nordic chose to actively be part of the solution. This way, we have had an opportunity to influence the terms and conditions. In addition, Nordic makes licensing very simple by giving its customers the option to get a license for the Sisvel cellular IoT patent pool.
Sisvel cellular IoT patent pool
In 2022 Sisvel launched a patent pool for the cellular IoT standards LTE-M and NB-IoT together with a handful of patent owners, including Ericsson. Since then the pool has grown steadily, and it now includes more than 30 individual patent owners with an estimate share of around 50% of the total SEPs.
Since the launch, Nordic has been in dialogue with Sisvel, supporting them in creating a patent pool that takes the realities of the IoT industry into consideration and that could be considered reasonable by all parties involved. Nordic fear that without a workable solution, projects with a large deployment of cellular devices are at risk. Nordic bring better transparency and predictability on the cost of deploying a cellular device using LTE-M or NB-IoT radio standards. The agreement is also important as it helps set an important comparable, of what more than 30 individual patent owners consider as a correct aggregate royalty for the use of the standards for low-power IoT devices.
With this agreement, our customers have the option to pay a transparent license fee to the patents of more than 30 individual patent owners, at a transparent price. Nordic pass-on the license that has been granted to it, to its customers, who if accepting the license terms will report and pay directly to Nordic. The fee is per device and will depend on the price that the device is sold for by Nordic’s customers. This is an easy and effective solution.
Rates:
| Product Category | Selling Price | LTE-M (Inc. NB-IoT) | NB-IoT |
| IoT Sensor Device | < = US$6 | US$0.08 ( - 1.3%) | $0.08 |
| US$6 - 20 | US$0.35 (1.7 - 5.8%) | $0.35 | |
| US$20 - 60 |
US$0.66 (1.1 - 3.3%) | $0.66 | |
| US$60 - 130 | US$1.33 (1 - 2.2%) | $0.66 |
|
| > US$130 | $0.66 | ||
| Smart Utility Meter Device | $2.00 |
Rates are seen as aggregate, and will not increase as additional patent owners join the pool.
The benefits of a license
- Compliance with laws and regulation
- Increased legal and financial visibility
- Access to the latest cellular technologies.
- Passively participating in the continuous evolution of cellular communication standards
- Seen as a ‘willing licensee’ and not as someone ‘holding-out’
If you have any questions or want additional details, please get in touch with Nordic.