With wireless technologies continuing to grow, including 4G, the telecommunications industry is dealing with competing standards when it comes to patent infrastructures, causing considerable confusion and uncertainty. Patents are the building blocks for the standards that define technologies like WiMax or LTE. These IP standards tell companies what technologies they can or cannot use, how and where they can be used, and how much that technology will cost in terms of royalties paid to the patent holder.
When it's a relatively homogenous industry with a limited number of companies who hold the necessary patents, the process can be fairly straightforward. But that's not always the case. "The time it takes to negotiate these licenses is often critical. It can take months—even up to a year—for these patent licenses to be negotiated," says Sachs. "That is critical in time-to-market."
The fault can also be laid at the feet of the standard's authors. "Some standards are written without a clear understanding of how technology in the standard would be licensed into the marketplace," Sachs adds.
One alternative to chasing down licenses one-by-one is to participate in a patent pool. "Patent pools contribute in a number of ways beyond the initial 'We make it a one-stop shop,'" says Fenwick & West's Sachs. And as more and more companies jump on board, the network effect kicks in, further growing the market. 'They have feedback effects,' Sachs says. 'That's the Zeitgeist that propels the pools. Particularly as we move toward more standardized platforms in consumer electronic devices, this becomes more and more compelling.'"
However, participating in a patent pool doesn't eliminate the need for due diligence. "You don't have a guarantee going into a pool that you have all the rights you need," Sachs says. "Joining a pool doesn't give you absolute clearance, but it gives you some assurance. The more licensors who join the pool, the more likely it is that the universe is complete."
Are trolls a big problem? "For those who have been sued by NPEs, it's a big issue," Sachs says. "If you’ve been bitten by a shark, then sharks are scary things."