Our auto royalty rates won't change no matter how many patent owners join us, Avanci confirms

There will be no changes to the $3 to $15 per car royalty fees licensees are asked to pay to access the patents that form the Avanci auto patent platform, the firm has told IAM.  “As we add new patent owners to the Avanci platform, the price the licensees pay for a licence will not increase,” Luke McLeroy, vice president of business development, said. “In fact, after publishing our rates in December of 2017, Avanci added four patent owners to the platform and the price didn’t increase. This is the case even if all standard essential patent owners join the platform.”

McLeroy was speaking after it emerged at the recent IAM Auto IP events in Detroit and Munich that there was some confusion among IP executives in the auto sector and their legal advisers about the terms under which Avanci is offering access to the patents it manages. Some delegates were openly hostile to a programme which they believed would become increasingly expensive as more patent owners signed up to it. McLeroy has now made it clear that this is not the case: “An important feature of our model is that the price of the Avanci licence for a vehicle will never increase no matter how many 2G, 3G and 4G essential patents are added to the licence. And no matter how many patent owners join our platform.”

The Avanci auto platform was launched in December 2017 to offer manufacturers a one-stop shop for the licensing of standard essential wireless patents. With so many car models now boasting high levels of connectivity, this has become a key issue in the sector. The platform currently includes rights owned by companies such as Qualcomm, Ericsson, ZTE and, more recently, BT, BlackBerry, IP Bridge and TNO.

At the time of its launch, Avanci CEO Kasim Alfalahi estimated that the platform's patents covered close to 50% of the SEPs relating to 2G, 3G and 4G technology. As of now, only BMW has taken a licence, but McLeroy said that the firm is in “positive discussions with other automotive companies across the globe”.

Each of the manufacturers that Avanci is talking to, said McLeroy, “is on its own journey in determining how wireless can be implemented within their respective products”. He continued: “Within this journey, there are different stages of understanding on how the licensing process works in the telecommunications space vs the automotive industry and it takes time to find that common ground where a licence can be taken.”

To be fair to Avanci, it is hard to see how the firm could have been clearer at the time of the auto platform’s launch that the rates being asked were not going to change. It is there as plain as day on its website and was certainly made obvious in the interview Alfalahi did with IAM.  What the confusion we heard in Detroit and Muncih probably tells us above all else is that the auto sector is moving into IP territory that is not familiar and in which there are ways of doing things that currently feel alien.

This is a challenge that both sides in licensing talks have to find solutions to. It is also something of which McLeroy is well aware: “We’ve got to this point by meeting with everyone involved – OEMs and suppliers – to understand their traditions and pain points. In addition, because of our experience in the telecom and wireless area, we are able to act as a guide for them as they navigate essential patent licensing issues.”

Having spent years hearing and reading about the smartphone wars, patent hold-up and hold-out, NPEs and everything else that comes with the global IP market, auto companies are now beginning to live these issues, too. That for some, at least, this is coming as a culture shock should be no great surprise.

But the bottom line in the auto sector is the same as it is in every other one: if you want to use someone else's technology that is going to involve taking a licence; there is no way around that. By offering a fixed price, instead of the percentage rate so prevalent in other sectors, Avanci is seeking to keep things as simple and as predictable as possible. It's now a case of ensuring that those on the other side of the table appreciate this.  

To avoid all doubt, here are those Avanci rates: