SEP Licensing for the Internet of Things – Challenges for Patent Owners and Implementers

Licensing standard essential patents (“SEPs”) for the Internet of Things (“IoT”) will create novel challenges for parties involved in both standardization and the licensing process. This paper explains how the IoT will affect the creation and implementation of standardized technology and then examines four emerging questions about SEP licensing for the IoT that need to be answered: (i) How to create transparency related to standardized technology and IP license offers? (ii) Who may obtain a license in the IoT market? (iii) Will patent pools help streamline licensing for the IoT? and (iv) How to reduce the possibility of litigation?

By Matthias Schneider¹

I. THE IoT WILL INCREASE THE DEMAND FOR AND IMPLEMENTATION OF STANDARDIZED TECHNOLOGY

While early forecasts of more than 27 billion devices in the Internet of Things (“IoT”) by 2020 may have been exaggerated, there can be no doubt that the number of IoT devices implementing standardized technologies is growing rapidly and will continue to grow for the foreseeable future. Many “dumb” devices will become “smart” when they implement standardized technology to connect to the IoT, and many new devices that never existed before will be invented. Diverse markets – everything from drones to agriculture – will make up the IoT and the characteristics, requirements, and the standardized technologies integrated in these devices will diverge accordingly.

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