Nearly a decade after taking the mobile communications market by storm, smartphones not only reshaped the consumer electronics industry but our everyday lives. As smartphones started to generate enormous amount of revenue across the world, corporations and inventors that owns rights to the technologies used in smartphones have been actively pursuing to monetize their intellectual assets through patent licensing.
Patent licensing of the technologies used in smartphones brought a lot of unique cases in the patent licensing industry since smartphone is a one-of-a-kind product that contains tens of thousands of patented technologies across different technical fields such as mobile communications, computing, software operating systems, display technologies.
The objective of the article is to examine patent rulings in the past few years that have made major impacts on the smartphone industry in four different regions: United States, Europe, India and China. In particular, this article will examine the following two aspects of the patent industry that are relevant to the smartphone market:
I. Rulings made on Standard Essential Patent (SEP) royalty rates:
Royalty rate in patent licensing refers to the rate (typically shown as a percentage of licensed product's average selling price or as a dollar amount per unit sold) agreed by the patent licensee to pay the patent licensor for using the patented technology(s) typically after the patent negotiation but also after court rulings.
The standard essential patents are mandated to be licensed to every potential licensees in a Fair, Reasonable and Nondiscriminatory (FRAND) basis. However, since the definition of FRAND is not always clear, the most recent rulings from different jurisdictions act as guidelines for royalty rates on SEPs. Therefore, any recent court decisions on royalty calculation of SEPs makes significant impact on future licensing agreements. Smartphone market is strongly impacted by these SEP related rulings, since smartphones use 2G,3G and 4G communications technologies that are included in tens of thousands of SEPs licensed in a variable cost rate schedule.
II. Recent changes in patent laws for each region:
In addition to the rulings made on SEPs, all four regions described in this article has had significant developments in its patent systems in the past few years. This article will provide brief details of the recent developments in the patent system for each region and examine the impact on the smartphone industry.