Jack Ellis

It emerged last week that BT has launched a campaign to license its patents covering SIP trunking, a key technology in the voice over internet protocol (VoIP) space. BT’s proposed licensing terms, as well as price points and a list of the 99 US patents it is seeking royalties for, can be viewed here. In contrast with the norm, the British company has outlined a comprehensive royalty payment structure on its website – possibly signifying the adoption of a new strategy for monetising its patents.

Several of BT’s previous efforts at IP monetisation have caused controversy. In December last year, it was revealed that the company had assigned patents to an NPE called Suffolk Technologies, which had gone on to sue AOL and Google for infringing the same assets. Court documents gave details of BT’s ongoing interest in the patents. The following month, a number of telecoms industry players including Apple, HTC, Verizon and AT&T found themselves on the receiving end of infringement suits filed by Steelhead Licensing, an entity asserting a patent that had originally belonged to BT (though the British company appeared to deny it had any remaining stake in the asset).

One of the factors that makes privateering an attractive option for operating companies is that it keeps litigation at arm’s length. By assigning patents to a third party, the operating company can avoid coming into direct conflict with business partners and competitors – as well as keeping out of the media glare – while maintaining some skin in the game. But that benefit is reliant on the relationship between operating company and privateer remaining under wraps. It only took a couple of months after BT’s connection to Suffolk Technologies was out in the open for Google launch its first ever patent infringement lawsuit against the British company in February this year.

Furthermore, the practice of privateering – and more generally, the use of third parties and shell companies to assert patents – is increasingly coming under fire as calls for greater transparency in the patent system intensify.

BT could well continue to consider privateering as a viable monetisation strategy – after all, there are plenty of other companies that are doing the same. But with the reputational damage and the increased risk of litigation that can come with an ‘outed’ privateering set-up, it may be the case that BT has decided to take a different approach.

By publishing its price points for all to see, BT is sacrificing some of the leverage that it – or one of its NPE partners – could have deployed in one-to-one negotiations with prospective licensees (as well as providing handy benchmarking material for other potential VoIP licensors and licensees). But faced with the choice of either paying a lump sum of $50,000 to secure freedom to operate – possibly with a discount for those who agree to pay up in a timely fashion – or being dragged to court and potentially spending millions, many businesses in the VoIP space may well decide it makes a lot of sense to take the former option. That, of course, is the rationale behind patent trolling too!