After the smartphone revolution the next step change in global connectivity is undoubtedly going to be the proliferation of the Internet of Things (IoT). Machine to machine connections which bring everything from simple household appliances to cars and industrial machinery online, will markedly increase the number of connected devices worldwide. Gatrner, for instance, predicts that by 2020 there will be more than 20 billion connected “things” in use up from around five billion today. That represents not just a fundamental shift in the technology world, but a potential seismic shift in patent licensing as well.
As companies grapple with the numerous challenges and opportunities thrown up by the IoT, last week’s news that Ericsson is setting up an independent licensing platform to license relevant patents was particularly noteworthy. To underline how serious the company is about the initiative, it announced that current chief IP officer Kasim Alfalahi will be leaving his role to head-up the new venture.
The idea behind the licensing platform is that it will give licensors and licensees something of a one-stop shop for IoT technology relating to different sectors or verticals. In that sense there are some obvious parallels with patent pools, except the scope of the new IoT platform is much broader because it will extend across numerous sectors . The sheer number of potential IoT licensees is a point that Alfalahi emphasised when I caught up with him on Friday.
“At the moment there are hundreds of companies that we license, but when more things become connected there are going to be thousands of players,” he said. That increase, Alfalahi explained, will mean that more companies which have had little need for connectivity in their products will need to license technology from companies like Ericsson that have built a lot of the infrastructure around the mobile internet.
In talking to businesses in different sectors Alfalahi said that it had become clear that many would like a simplified approach, with a common theme being that they would like to take one licence to solve their problems, rather than a multiplicity of them. The new platform, he said, “is going to be predictable, simple and efficient and based on a revenue-sharing model.”
He then added: “This is quite a big change in the way the industry works, but the whole connected network society and the internet of things is a big change and licensing has to accommodate that.”
Licensor and licensees will both have predictability over pricing, which will in part be determined by how often a device actually needs to connect. The licensing model for a self-driving car which needs constant access to data, for example, will differ to a household appliance which may only need to be connected once a month.
Alfalahi added that he hoped one of the benefits of the initiative would be the greater clarity it will bring to technology licensing. “There are verticals that want connectivity but where companies have a difficult time knowing who is contributing to the technology,” he remarked. “With the new platform we will make sure we have a holistic picture and from that we can much more easily have a predictable product price.”
He wouldn’t be drawn on whether the new company will assert the patents that it is seeking to license, insisting that he had been focused on “speaking to companies” rather than deliberating on what to do with any refuseniks. Of course, it would do Alfalahi no good if he were to say now that they would head to the courtroom if infringers refused to play ball or dragged their feet in negotiations. If this is going to work, it needs broad buy-in and so he has to be focused on bringing in potential licensors and licensees not stirring up trouble.
Building a broad-based licensing platform in the rapidly evolving IoT sector is going to be a tall order. As is replacing Alfalahi. It’s not clear yet who will replace him as CIPO at Ericsson – and the man himself refused to comment – but having built the company’s licensing programme so significantly he leaves quite a legacy.