The Sisvel and Nordic Semiconductor cellular IoT deal is a big win-win
The recent agreement shows that technology developers and implementers have a shared interest in developing market-based solutions to the complexities of IoT patent licensing
By Mattia Fogliacco
Last month Sisvel announced an agreement with Nordic Semiconductor that will enable the Norwegian company’s customers to obtain end-product licences from more than 30 patent owners holding LTE-M and NB-IoT standard essential patents (SEPs) offered via the Sisvel Cellular IoT pool.
For rapidly evolving areas such as IoT, this kind of agreement is vital. Without simple, efficient access to cutting edge technology, the wide range of innovative work that companies – large and small – are undertaking in areas as diverse as smart health, smart energy, smart agriculture and smart cities would be in danger of stalling. To make the investments necessary to take projects forward, businesses need predictability and transparency in SEP licensing, as well as realistically priced royalties.
By offering a licence that fits these criteria, our agreement will reduce uncertainty and the possibility of litigation. This will allow companies to focus on what they do best - developing new, innovative products and services for the IoT market.
Made public on 8th May, the deal was the result of an immense amount of hard work. The efforts put in by the C-IoT pool’s programme manager Sven Törringer and our head of licensing programmes David Muus was matched on the other side of the negotiating table by Nordic’s senior legal counsel Martin Ekelund, product director of cellular IoT Kristian Sӕther and their team.
But it was not just them. While we liaised with the pool’s patent holders on a constant basis throughout the process to keep them informed and to get their feedback, Nordic was also in regular contact with its customer base to understand what kind of solutions they were looking for.
The negotiations were tough but amicable, with everyone determined to find solutions to promote technology adoption and make life easier for those deploying the IP.
Practical solutions
Of course, technology developers and pool administrators on one side and technology implementers on the other are not going to agree about everything. In a recent interview with IAM (paywall), for example, Ekelund and Sӕther both acknowledge Nordic's support for the proposed EU SEP licensing regulation. It is no secret that at Sisvel we see the proposed legislation differently. But like us, what matters most to Nordic is finding viable solutions to the challenges the IoT creates.
This was a point Sæther emphasised to IAM. “Something needs to happen to make the market efficient – but we cannot wait for the regulation to come into force (if it comes into force),” he said. “For many of our customers, as opposed to handheld and automotive industries, there are competing technologies in IoT. If licensing of cellular SEPs is not made easy and at sensible rates, they have no alternatives than to look at the other alternatives even if they are not as good.”
For Ekelund this is why the Sisvel pool stands out. “In IoT, we have thousands and thousands of products, many of which have not yet been invented, with prices ranging from $10 to $1,000, and all of which have so many different uses. The idea of licensing the standard and not the vertical is what made Sisvel’s plans so attractive,” he explained. “We would never have joined if we didn’t believe this could be a reasonable solution.”
It was also interesting, as well as gratifying, to hear Nordic hopes other component makers will look positively at this kind of deal. “There will be a short period where we are alone but we hope that will be short and the whole industry will adopt this approach so we can have a functioning IoT ecosystem geared for growth,” Ekelund told IAM. I could not agree more.
The takeaways
So, what can we learn from our agreement with Nordic? There are several points I would like to emphasise:
This is a true win-win for everyone concerned. The patent holders in the Sisvel Cellular IoT pool will receive royalties that reflect the investments they have made in world class innovation and the opportunity for speedier technology adoption, while Nordic's customers now have three licensing choices - bilateral negotiations with 30+ patent owners, a pool licence directly from Sisvel or one via Nordic. Importantly, this applies to new Nordic customers, as well as existing ones.
It is a new kind of deal that has been agreed by two European entities, on behalf of technology developers and implementers, framed specifically with the needs of SMEs in mind. This is something the European Commission might want to consider, with the SEP regulation in mind.
The deal took a year to do but it's now been well over a year since the proposed SEP licensing regulation was introduced. If everything moves as quickly as possible, it will still be several more years until the legislation is adopted and implemented. Imagine how far things will have moved on by then.
That’s why market solutions will always be speedier and more efficient than regulatory ones: they are devised by people who work in and understand the market and have a direct stake in it being successful.
Listen and learn
At Sisvel, we strongly believe that building and managing world class pools is a continuous process. It involves interaction not only with patent owners but also the implementers of their technologies.
Quite rightly, patent holders want a return on their R&D investments, but they want technology adoption too. This only happens with what we call TPE (transparency, predictability and efficiency), as well as royalties set at a level the market deems reasonable.
Just a week after the Nordic agreement, we announced revised, lower pricing for the Cellular IoT pool. This new framework provides for royalties as low as $0.08 per unit for NB-IoT products, depending on selling price. Previously, these products were subject to a flat royalty of $0.66 per unit.
For LTE-M and devices that implement both LTE-M/NB-IoT, a new mid-tier $0.66 royalty rate has been introduced for smart sensor devices with a selling price between $20 and $60. This represents a 50% rate reduction for the segment.
Listening to all sides and then acting constructively on the feedback received. This is what Sisvel is all about. It is how we will power innovation for many years to come.
Mattia Fogliacco is President of the Sisvel Group