Dealing with SEP Demands & Royalty Stacking

Seeking More Granularity on Patent Pools?

Patent pools and groupings of standard essential patents (SEPs) facilitate one-stop shopping of patent licensees. When operated fairly, these arrangements can provide meaningful efficiencies to licensors and licensees alike. On the other hand, there is also ample room for abuse given the brute strength of such large portfolios.

While the Patent Trial & Appeal Board (PTAB) can be an appealing solution to combat improvidently granted patents, it is not a realistic option for an implementer facing a large pool that might include patents of questionable merit.  Thus, when this “big stick” leverage is abused, unreasonable license valuations/demands can go unchecked. When such undesirable economic practices are multiplied across pools, “royalty stacking” becomes especially problematic for implementers, and ultimately, consumers.

In an effort to regulate potentially abusive licensing practices for patent pools/SEPs, Unified Patents has begun to offer independent economic studies on these large patent licensing entities as part of its suite of patent risk management services. The studies endeavor to provide an independent economic evaluation of fair royalty rates as a function of benefit/risk. For example, see the HEVC codec press release (here).

Together with additional Unified Patent tools offered to members of its “SEP zones,” royalty and validity granularity can be assessed to make more informed decisions on license valuations.

Scott A. McKeown is an author of the Patents Post Grant