Qualcomm, Ericsson Join Program to License Patents to Automakers

Some of the biggest holders of telecommunications patents are joining together to license their technology to automakers, creators of smart meters and others.

Qualcomm, Ericsson, ZTE and Royal KPN will license the patents through a newly formed company called Avanci, headed by a former Ericsson executive. It aims to provide a one-stop licensing shop for some of the largest patent portfolios in 2G, 3G and 4G technology.

The group said it will offer flat-rate licenses that vary "based on the value the technology brings to the device," according to an announcement being released Wednesday.

Cars are learning to talk to each other, drive themselves and connect to the Internet. The lowly household thermostat can now monitor a home's water and energy use or turn on the heat just before you get home.

The Internet of Things is piggybacking on the same technology that turned the brick-like mobile phone into a sleek device that can be used to watch movies, make calls, play videogames and send instant messages. It required industry-wide meetings to standardize the technology so the phone devices could work smoothly, and resulted in thousands of patents, a dizzying array of cross-licensing deals and dozens of lawsuit.

By bringing together some of the largest owners of patents for telecommunications and offering a single license for standard-essential patents they own, Avanci is trying to help automakers and meter companies wade through that thicket with fewer headaches, said Kasim Alfalahi, who left Ericsson to found the new group.

"Something that would require time and resources to negotiate with many technology holders can now be done in one place, with one license, allowing IoT manufacturing companies access to the most advanced wireless technology in the world while they focus on bringing new products to the market," he said, using an acronym for "internet of things."

For the telecommunications companies, it opens new licensing opportunities beyond smartphones and tablets, and helps them dodge debates over the licensing rates for patents essential to industry standards such as Wi-Fi.

The smartphone industry has been split over how to value and license patents that relate to standardized technology.

Some of the businesses that make up Avanci - Qualcomm, Ericsson and InterDigital Inc. - have been fighting off efforts by companies like Microsoft, Apple and Intel Corp. to alter how standard-essential technology is licensed, and have been the subject of regulatory scrutiny. One goal is to increase licensing profit without all that hassle.

"We've created something where we can help new industries get the benefit of new connectivity and at the same time ensure that innovators like Ericsson get fair credit," said Gustav Brismark, chief intellectual property officer at Ericsson.

Businesses such as automaker Ford and thermostat maker Honeywell International don't have the experience of dealing with the hundreds of thousands of patents that come with modern telecommunications, the Avanci companies said.

"This platform makes the process of licensing easier for people who are not familiar with that process," said Alex Rogers, president of Qualcomm Technology Licensing.

© 2016 Bloomberg L.P.