HTC joins handset top three in defensive patent pool

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Mobile Industry & Technology Journalist - freelance

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HTC joins handset top three in defensive patent pool

By CAROLINE GABRIEL

Published: 7 December, 2009

READ MORE: US | HTC | Standards | Handset | LTE

Patent royalty burdens, and their impact on competitive pricing, are a key concern in the handset community and the dream that LTE might deliver the virtually royalty free phone seems unachievable. The goal, set by Nokia and others, of getting royalties in 4G devices below 5% of handset price, seems unrealistic given the fees involved in the bilateral licensing deals already agreed between some major IPR holders. Some vendors are supporting various patent pools to set up an LTE system, but important players like Qualcomm remain unconvinced. And there is the ever present danger, as in any new technology where the IPR situation remains fluid, of patent trolls. One initiative to help reduce their impact is start-up patent pool RPX, which has just signed HTC as its twentieth member in the year since it was set up in San Francisco.

The pool is a defensive one, designed to provide a protection for electronics firms, especially in wireless, against infringement suits by trolls. It says that the threat of patent infringement litigation remains significant even though headline hitting cases like those between RIM and various rivals have subsided somewhat recently.

RPX was set up by a former executive from Intellectual Ventures (IV), itself a patent aggregator founded in 2000 by top IPR executives from Intel and Microsoft. It offers a lower cost approach than IV's, though both firms acquire large numbers of patents and then license them on. So far, the new organization has spent $115m in buying over 1,000 US and international patents and patent rights in mobile, internet search, telecoms, networking, consumer electronics and RFID markets.

RPX then provides rights to these technologies, to members which pay annual fees ranging from $35,000 to $4.9m depending on company size. Members include many of the handset giants - Nokia, Samsung, LG, Sony (though not Ericsson), Panasonic and now HTC. Other members include Cisco, Hewlett-Packard and Seiko-Epson.

Izhar Armony, a partner in Charles River Ventures, one of the investors in RPX, commented in a statement: "RPX has generated higher revenues in its first year of operations than any other early stage start-up in CRV's history. The fact that RPX was able to achieve such growth in spite of the economic downturn is evidence of the compelling value proposition of the RPX service." The downturn may actually have helped - companies often get more aggressive about claiming their patent rights when other revenues are tight.

The interest in the service does indicate how many wireless firms are now exploring alternatives to the traditional bilateral deals, many focused around various types of pools. While the three main patent pools are all trying to gain the lead position in LTE - and sufficient support to make a pool meaningful - WiMAX has made more progress, via the Open Patent Alliance, which includes a majority of the major IPR holders.