WiMAX Vision

Open Patent Alliance Promises 4G IPR Simplicity – In Theory

| Jun 11, 2008 | Wireless Infrastructure | Show Update

| Analyst: Peter Jarich

Current Perspective: Positive/Neutral
Vendor Importance: High
Market Impact: Moderate

Event Summary

June 9, 2008 – Alcatel-Lucent, Cisco, Clearwire, Intel, Samsung and Sprint announced the formation of the Open Patent Alliance (OPA). Focused on WiMAX intellectual property rights, the OPA will form a patent pool for participating companies to obtain license access to essential WiMAX patents (based on the 802.16e standard and WiMAX Forum certification profiles) at a set cost. The OPA intends to recruit an additional six to nine “investor companies” who will maintain board seats.

Analytical Summary

• Current Perspective: Slightly positive on the formation of the Open Patent Alliance (OPA) by six leading members of the WiMAX ecosystem: Alcatel-Lucent, Cisco, Clearwire, Intel, Samsung and Sprint. A focus on well-defined intellectual property costs should help to control product costs and drive operator interest in WiMAX. Ultimately, a patent pool can only work if a broad set of the market’s patent holders join – and there’s no way to know if this will actually happen.

• Vendor Importance: High to the OPA’s founding vendor members, because a WiMAX patent is something would-be WiMAX operators have asked for in the past. Where bilateral cross-licensing has proven successful in various wireless industries, it may be a difficult proposition for a market like WiMAX where hundreds of people claim essential WiMAX patents. Intellectual property squabbles, in turn, could result in unclear (or higher) product pricing as well as service-impacting lawsuits – all of which could derail progress with WiMAX network builds.

• Market Impact: Moderate on the WiMAX infrastructure market, because the greater certainty around WiMAX license costs promised by the OPA would be good for the industry. It could even set a precedent for the value of WiMAX licenses should vendors outside the pool (such as Qualcomm) sue over their rights some day. Participation in the pool, however, is not mandatory, meaning that only time will tell whether or not the OPA has any teeth.

Perspective

We are taking a slightly positive stance on the formation of the Open Patent Alliance (OPA) by six leading members of the WiMAX ecosystem: Alcatel-Lucent, Cisco, Clearwire, Intel, Samsung and Sprint. With operators worried about the potential of intellectual property rights (IPR) to derail service launches, anything that results in more predictable and – hopefully – cheaper WiMAX IPR licensing is bound to be a good thing. To be effective, however, the OPA still needs to recruit a broader set of WiMAX patent holders into its ranks and proposed patent pool.

Intellectual property is a thorny issue for any new wireless technology. Consider the example of 3G - on the one hand, a complex web of cross licensing and royalty schemes has resulted in an ecosystem supporting a diverse set of network infrastructure and user devices. On the other hand, detractors have claimed that continuing patent squabbles have resulted in inflated device costs along with the potential for service disrupting lawsuits. Ideally, an arrangement that could set a precedent for patent valuation would keep patent conflicts in check, and support simpler licensing would deliver the best of both worlds – supporting ecosystem development while keeping costs in check.

Ultimately, this is the goal of the OPA. Driven, in part, by operator requests, the OPA plans to form a WiMAX patent pool where interested patent holders contribute their IPR assets and a third-party “patent referee” will judge the value of the contributed portfolios. Where a well-documented, fairly transparent licensing scheme supports low-cost devices and the innovative services that follow, few people will argue with the logic of the OPA’s patent pool – especially in a market (like WiMAX) where hundreds of parties claim essential WiMAX IPR. Where patent holders feel they can extract more value from their IPR outside the pool, bilateral agreements will still be allowed.

Of course, the OPA’s patent pool will only be successful if IPR holders sign up. To its credit, its founding members are important and launching prior to the WiMAX Forum’s upcoming conference sets the stage for face-to-face recruitment in Amsterdam. Yet, until the OPA can point to additional members and an agreement on the pool’s terms – not to mention the share of WiMAX IPR contained in the pool – it’s far too early to deem it a success.

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