| Nortel shuns LTE patents initiative, offers "competitive" royalty rate |
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| by Stuart Corner | |
| Tuesday, 06 May 2008 | |
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Now, Nortel has clearly indicated that it intends to go it alone on LTE IPR fees, announcing what it claims is "a competitive handset royalty rate" of about one percent [of the handset sale price], subject to terms, for its portfolio of LTE standards-essential patents. This would guarantee Nortel's income from handset royalties. The fee structure proposed by the seven member initiative called for an aggregate per handset royalty fee in the single digit percentage range, but this would have to be divided up among all owners of IPR required to the handset. Nortel says it is "taking this exceptional step of publishing its competitive patent royalty rates in order to provide increased transparency and predictability of IPR costs that could help prevent uncertainties in handset costs from inhibiting the growth of the 4G market..[and] in order to help service providers and their handset vendors develop business plans for launching LTE." However the structure proposed by the alliance limiting the total IPR cost to a single digit percentage would seem likely to provide more certainty on IPR costs for handset manufacturers but less for individual IPR owners on the level of licence fees they will receive. In a statement, Nortel said: "It is Nortel's position that compensation provided through licensing standards-essential patent claims under fair, reasonable and non-discriminatory terms (FRAND) should be based on the significance of the patented technology in the standard and the value of the patented technology to the licensed implementation. That way, innovators that develop technological breakthroughs are appropriately rewarded for their IPR and their portfolio value while standardised technologies can remain accessible to anyone through licenses on reasonable terms."
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