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Nortel stakes IPR claims to LTE

Campfire sing-along over LTE patents appears unlikely

May 5 2008 - 1:18 pm ET | Phil Carson |

Nortel Networks Corp. said today that it would charge “about” a 1% royalty rate* to handset vendors licensing Nortel's Long Term Evolution patents.

(Yes, that asterisk is intentional. See below or Nortel’s statement.)

The infrastructure vendor said its motive was “to provide increased transparency and predictability” for LTE patent costs and “reduce the risks of early deployment” by handset vendors.

Further, Nortel said that publishing its royalty position today would “help simplify the current guesswork, while ensuring that its innovation is rewarded.”

In declaring its devotion to rewards for innovation, Nortel appeared to be staking out a position closer to Qualcomm Inc. — a go-it-alone approach — than a recent announcement by a group of patent holders that they would work together in some manner.

“Nortel believes that pioneers and innovators should be entitled to a reasonable return on their investment in R&D and leading contributions to the next-generation standard, where not all patents are created equal,” said John Hoadley, VP of 4G ecosystem and development at Nortel, in a prepared statement.

Nortel included a brief history of what the company characterized as its pioneering and innovative work in the LTE patent arena.

Here’s Nortel’s footnote on “about” 1% royalties:

“Nortel will license its LTE standards essential patent claims for LTE handsets at a royalty rate of about 1% on the sale price, subject to specific terms to reciprocity, defensive suspension, and grantback to Nortel products, services and solutions, as well as other customary license terms and conditions.”

Apparently, in patent-licensing positioning, nothing is simple and even the qualifiers have qualifiers. To say “the devil’s in the details” would be an appropriate use of cliché.

The precise meaning of Nortel’s asterisked announcement remains to be dissected by technologists and patent attorneys. But the upshot is that public relations jockeying is already taking place, long before LTE handsets or LTE infrastructure hit the market.

The conventional wisdom on LTE patents early on was that most players would attempt to avoid patent battles that have often characterized UMTS/W-CDMA licensing deals.

Just Google “Nokia and Qualcomm” for a refresher on that topic. The short version: Nokia Corp. and Qualcomm will face off in a Delaware court in July to review provisions of their now-expired cross-licensing pact, more than a year after it lapsed. Qualcomm is optimistic that the court case will lead to a resolution of their stand-off, while Nokia has said the case likely will not bring closure.

In mid-April, seven industry players announced they were “committed to a framework for establishing predictable and transparent maximum aggregate costs” for licensing IPR that relate to 3GPP LTE standards. The list of players included Alcatel-Lucent, L.M. Ericsson Telephone Co., NEC Corp., NextWave Wireless Inc., Nokia, Nokia Siemens Networks and Sony Ericsson Mobile Communications. (The 3G Partnership Project was established in 1998 by six telecommunications standards bodies to develop global specifications for GSM/GPRS/EDGE technologies.)

Qualcomm immediately signaled that it would not be joining the group.

“This type of approach would have a negative impact on competition within the industry and consumer choice as it would restrict the innovations” reaching the market, said Christine Trimble, in an e-mail response to RCR Wireless News’ questions on the company’s position on LTE patents.

Thus far, with Nortel’s announcement today, three distinct positions are being staked out. Nortel forecast that early LTE handset deployments could begin as early as next year.

And the jockeying for position — at least in the public discussion of these complex issues — has begun.




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