Published: February 7, 2018
Publisher: Bloomberg Law
The Internet of Things, or IoT, has the characteristics to become the next patent war zone as new standards are adopted and the convergence of disparate technologies leads to new disputes. This convergence of technologies will likely result in an increase in litigation between both traditional competitors and companies that historically have not competed. While there are numerous legal issues associated with the emergence of IoT-enabled technology, patent lawyers and in-house counsel should be aware of three particular issues.
First, the convergence of different technological fields and patent licensing schemes may lead to atypical rates proposed during licensing negotiations, including very high royalty rates that may prevent a product from being successful in the market or very low royalty rates that dis-incentivize future innovation. Second, the convergence of technology and resulting complications in licensing negotiations may result in an increase in litigation. Third, because convergence of technology may complicate the patent licensing environment for IoT technology, there may be an increase in patent pool activity, specifically involving those that directly deal with IoT-specific issues or technological fields, in an effort to address the wide disparity in sales prices for IoT devices. Finally, fair, reasonable, and non- discriminatory (FRAND) licensing of patents essential to IoT standards (or standards that relate to IoT technologies) will become more prominent.