intelligent

When setting up the standard , the owners of SEPs voluntarily commit to making their patents available on fair , reasonable and nondiscriminatory ( FRAND ) terms . However , SEP holders don ’ t always keep that commitment . For example , some SEP holders refuse to license to innovators unless they are at the end of the value chain , where the SEP holder can seek more royalties based on the value of the end product , instead of just the part that uses their patented technology . Let ’ s take cars as an example . The value of an individual IoT sensor is much lower than the overall value of a car because the IoT component only does one thing , whereas the value of the car is based on a range of factors , such as brand , design , safety and efficiency . If some SEP holders get their way , manufacturers would be paying royalties over the final product ’ s value instead of just the IoT part where the SEP is located . This is unfair because much of that claimed value ( of , for example , the car ) is completely unrelated to the SEP .

And let ’ s not forget , the car company doesn ’ t have a choice – if they want to connect their vehicle to the Internet , they must use the technical standard and license the corresponding SEPs . This puts SEP holders in a gatekeeping position , giving rise to significant competition concerns and is exactly why SEP holders should commit to abide by the FRAND terms .

This type of SEP abuse has historically been seen in the telecom industry but has spread over time to emerging and critical spaces , such as automotive and healthcare markets . Without changes in legislation , we will continue to see SEP licensing abuses spread to SMEs in the broader IoT communities , including any businesses using off-the-shelf IoT solutions in their products .

Even when innovators integrate off-theshelf components in good faith , they are increasingly vulnerable to attacks from SEP holders ’ claims of SEP infringement simply because their components rely on standardised solutions . These claims

Mike Sax , Founder and Chairperson , The App Association

THE ABILITY TO MAKE A PROFIT SHOULD NOT BE AT THE EXPENSE OF SMES SEEKING TO ENTER THE IOT MARKET WITH INNOVATIVE NEW PRODUCTS .