IPlytics fails to justify glaring discrepancies between 2020 and 2022 reports on narrowband IoT standard-essential patents

This is a follow-up to yesterday's post on why actual numbers of narrowband IoT-related standard-essential patents are hard to come up with, and keyword searches are inherently unreliable in this context. Tim Pohlmann, the founder and CEO of IPlytics, reacted on LinkedIn, first under his personal and then posting the same statement under IPlytics' corporate account. He "doth protest too much"--and he contradicts himself:

The actual report purports to "paint a robust picture of the NB-IoT landscape" (emphasis added) and to "provide meaningful, actionable insights." The headline is "Who is winning the IoT SEP race?" (on the website: "Who is leading the IoT SEP race?") On LinkedIn, however, Mr. Pohlmann wrote the following, which contrasts nicely with his marketing claims:

"Our reports are not published to provide the truth about the winner[s]. We publish reports to show[]case what can be done with the data we provide. We do not care who ranks first[,] second or third."

IPlytics wants to have it both ways. They make bold claims and promises in public, and their reports have been used not only in licensing negotiations but also by litigants. Once you challenge the methodology and question the results of a particular report, they distance themselves even from its very headline ("Who is winning..."), downgrade the piece to a "showcase," suddenly discover humility, and place the emphasis on a disclaimer ("our data analysis and report results are limited to the approach of a patent declaration-based keywords search").

I would recommend to litigants whose adversaries proffer IPlytics reports to show to the court what Mr. Pohlmann publicly stated on LinkedIn in response to my criticism. Toying around with a database isn't necessarily admissible evidence.

Sadly, the inconsistencies don't end there. Just two examples in the NB-IoT context, comparing last week's report to its 2020 predecessor (Who owns patents, SEPs and develops standards for smart home technologies?) in the specific context of NB-IoT portfolio size:

1. Huawei--of which I said yesterday that it and Qualcomm indisputably deserve the two top spots--was not even listed among the top NB-IoT SEP holders in the 2020 report, and now it is (credibly) the number one.

   What was IPlytics doing and thinking two years ago? The complete absence of Huawei from the list of leading patent owners should have been more than enough for the report to fail any plausibility check before it was published. IPlytics should have asked themselves whether their methodology was sound given that such an outcome was inexplicable. Instead, they went ahead and published their report anyway. How "robust" and "actionable" is that?

2. For Nokia, Figure 4 of the 2020 report indicated approximately 2,300 patents from 500 patent families. In the 2022 report, however, those numbers are down to approximately 400 patents from 150 patent families (Figure 1). How can Nokia possibly have lost 5 out of 6 assets--and more than 2 out of 3 patent families--during a two-year timespan? Again, how is that "robust" and "actionable" short of a patent cliff of unprecedented proportions in the field of wireless communications technology? And how is it responsible to create such confusion around a key long-term growth area for a publicly traded company like Nokia?

I emailed Mr. Pohlmann before German office hours on Thursday, and received a reply a few hours later: a detailed email that for the most part sidesteps the issue I raised (the above discrepancies between the 2020 and 2022 reports). Only one paragraph really addresses my question, and Mr. Pohlmann (with whose company I signed an NDA a long time ago) authorized publication of his email, so let me quote:

"The smart home report from 2020 used a much simpler approach. Here only TS [technical specifications] that mention NB-IoT and LTE-M were identified to then connect this given list [of] TS to declared patents. So this report uses a keyword search in TS documents that have declared patents associated. The data approach of both reports are quite different. Also I must say that the number of declared patents has very much increased since July 2020."

The "much simpler approach" in 2020 did not dissuade IPlytics from publishing it (and declaring "winners") at any rate. If they say in 2022 that they've improved since the 2020 report, what will they tell us in 2024?

The last sentence about a massive increase in the number of declared patents (by the way, we're talking about subsets of the 4G standard, which is already quite mature by now) still doesn't explain why they published a list in 2020 (instead of immediately identifying an issue) without Huawei--the actual number one--among the top 10 patent owners. Mr. Pohlmann is a frequent speaker at SEP conferences, which in addition to his own company's patent database provides him with plenty of opportunity to get a feel for the market.

It is unfortunate that it is so hard to determine portfolio sizes in the narrowband IoT context. There are some companies who may only have a 1% or 2% share of all 4G/LTE SEPs, but their research may be disproportionately focused on parts of the standard that are relevant to its narrowband subsets (LTE-M and NB-IoT). Someone who is an average-sized fish in the larger pond may be a bigger fish in the smaller pond. Someone who filed for patents before those narrowband subsets were defined will not have used certain keywords in the claims or specification of a given patent application, but it may later read on NB-IoT and/or LTE-M anyway (false negatives under a keyword-based approach), while someone else may just have thrown in some keywords at a later stage, which doesn't guarantee that a given patent actually maps to the relevant specification of the standard.

IPlytics should be lower-key in its PR and marketing communications. That will lead to greater consistency. It's always better to underpromise and overdeliver, especially when there is the possibility of those reports being used in litigation or relied upon by policy makers and regulators.

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Beware of pseudoscience: actual numbers of narrowband IoT-related standard-essential patents are hard to come up with, and keyword searches are inherently unreliable in this context

The Internet of Things (IoT) is a tremendous growth area in multiple respects: for product makers, for standard-essential patent (SEP) holders, and for patent analytics companies looking to acquire new categories of customers. But in the midst of a gold rush, not all that glitters is really gold.

Last week there were two IoT SEP-related announcements: Sisvel's new narrowband IoT pool, which started with 20 licensors, most notably also Ericsson; and just one day earlier, IPlytics released a report on who is supposedly winning the IoT SEP race. As an IP and antitrust commentator, I wish to help my readers avoid being misled. That's why I criticized a ranking of German patent litigation firms last month, and suffice it to say I received a lot of positive feedback from people who appreciated it. And there are serious issues with that IPlytics report, which I believe someone has to call out.

Prior to this one, I publicly criticized IPlytics only once, and that was when Tim Pohlmann interviewed the president of an Apple astroturfing operation claiming to represent small app developers and IoT companies while actually working against the interests of small innovators, especially in the App Store antitrust context. When that interview took place, there was enough information out there already to know that ACT is not a legitimate representative of whom the claim to speak for, and IPlytics should (or must) have known that.

Now IPlytics has been acquired by RELX (congratulations!), a company known for such services as LexisNexis. I have no problem with RELX, and I have no position at this stage on whether WIRED is right that RELX's practices represent a threat to data privacy.

That recent IPlytics report on IoT patent holdings is nothing that decision makers, whether in the public sector (such as competition enforcers and policy makers) or in companies (patent holders, pool administrators, or implementers), should rely on. I have problems with its methodology and with some of the results.

If it wasn't free, I'd have to say: caveat emptor!

First, the methodology makes it a clear Daubert case (those familiar with U.S. litigation know what I mean, and the others can figure).

The report mentions a "keyword approach" three times. On the penultimate page, there is a disclaimer:

"We used a keyword approach without additional filters for the active or granted status of a patent or patent family. We want to highlight that other keywords or additional selected filters might result in other ranking positions and shares. Further, we refrain from making assessments of the technical relevance of patent portfolios."

A "keyword approach" cannot make up for a problem facing anyone (not just IPlytics) who will undertake to evaluate the narrowband IoT patent space: there are no databases of NB-IoT- or LTE-M-specific declarations. The reason being that NB-IoT and LTE-M are simply true subsets of the wider 4G/LTE standard, and that's where the declarations and concomitant FRAND pledges were made. Those narrowband standard-setting efforts started when 4G/LTE was already far along, and what they did was to select those parts of LTE that they deemed suitable to task.

Keywords are a poor indicator, and actually they are no indicator when many patents were filed before it was possible to know or even just predict the relevant keywords. Many 4G/LTE patents read on narrowband IoT, but when the applications were drafted, the keywords simply weren't floating around yet.

The sad truth is that one would have to get down almost to the level of claim charts to really find out who owns how many narrowband IoT SEPs. That's obviously not going to happen.

Second, there are some implausible results. And some of those implausible results are plausibly attributable to the methodology issues I just outlined.

I don't have a plausibility problem with Huawei and Qualcomm coming out on top here. Those two companies have powerful portfolios and long-standing strategic interests related to IoT. It's hard to think of any wireless technology where they wouldn't be very strong. My problems are mostly at the level right below Huawei and Qualcomm:

I would normally assume that companies like Ericsson, Nokia, Samsung, and LG are roughly on an equal footing (Ericsson probably being the number one among them)--to give you a ballpark figure, I would expect each of them to hold around 10% of the relevant patents. Those are companies that clearly have not only a general interest in IoT but also participate quite actively in the related standard-setting. But in IPlytics' narrowband IoT ranking, Nokia is roughly at a level with a company like Lenovo, which has a rather different focus and business model.

Below companies like Ericsson and Nokia, I would see players like Sony and NTT DoCoMo, yet they presumably own more relevant patents than a number of companies listed ahead of them.

Maybe IPlytics did its best and it's not good enough (yet). So what are the alternatives?

The first alternative in a context like this is simply the Socratic approach. In his Apology, Greek philosopher Plato praised the key quality in Socrates not to think he knows what he doesn't know. "I know that I know nothing."

It would be terrific to have a set of numbers that would enable us to get an idea of what the licensing costs for the full stack might be. That would enable top-down royalty determinations, which are so very popular. But we may have to live with the fact that, at least at this stage, we just don't have the data at hand for that. And when data is unreliable, it's better to just accept that fact. Things get worse--not better--if we act in defiance of that realization.

There are bogus medications for incurable diseases. They raise false hopes and have adverse effects--as do unreliable rankings, even those produced with the best intentions.

I wouldn't underestimate the ability of the market to figure out solutions and royalty rates, especially in narrowband IoT, where different standards are competing with each other for "design wins."

And I would strongly recommend to use common sense. While one can't assume that companies' contributions to a standard-setting process always correlate to a given player's portfolio strength, we should at least look at who really participated in standardization and take that into account, as we all know that those who sit at the standard-setting table will also ensure that some of their technologies are included and will strategically file patents so they read on the relevant standard.

Is more transparency needed in the narrowband IoT context? Absolutely. It should be a priority for the industry to come up with something better, ideally in 2023.

To be clear, I am not taking a position here on any other IPlytics report than the one I specifically mentioned, nor on their raw data or anything else they offer.

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Sisvel announces cellular patent pool for narrowband IoT devices (LTE-M, NB-IoT) with great diversity of initial licensors ranging from NPEs to chipmakers and network operators; focus on market development

Last year, patent pool firm Sisvel was on a roll in terms of settling infringement actions and, generally, striking license deals with major implementers. This year, Sisvel is primarily making news with new pool initiatives. In the summer, Sisvel launched a WiFi 6 pool, the most notable contributor to which was Huawei, and a formula for the computation of license fees that encourages early adoption called Licensing Incentive Framework for Technologies (LIFT).

Just this morning by European time, Sisvel announced "the launch of its Cellular IoT (C-IoT) Patent Pool consisting of 20 patent owners."

The initial licensors are a large and diverse group:

• mobile telecommunications pioneer and infrastructure maker Ericsson is particularly powerful (and on the winning track against Apple in Mannheim, as I reported yesterday);

• like Ericsson, Datang builds mobile networks;

• network operators like KDDI, NTT DoCoMo, Orange, and Telefónica;

• ETRI and Langbo are examples of renowned research institutes;

• non-practicing entities (NPEs) like the Unwired Planet/Optis Wireless/Optis Cellular group; and

• MediaTek and Sony Group Corporation (through its subsidiary Altair Semiconductor) supply chipsets to (not only, but also) IoT implementers, which makes them particularly interesting contributors to a pool that licenses at the end-product level: they obviously understand the IoT supply chain and have determined that licensing at the end-product level is workable, at least when patent pools provide transactional efficiencies.

The standards covered are LTE-M and Narrowband IoT (NB-IoT)--the same two standards with respect to which Huawei granted a license to chipmaker Nordic Semiconductor in the spring. A simplified way to explain the typical fields of use for those standards is that LTE-M has the benefit of being compatible with existing LTE network infrastructure, while NB-IoT requires hardware capable of DSSS modulation. On the bottom line, LTE-M is more powerful than NB-IoT, a fact that is also reflected by the respective royalty rates: for any NB-IoT product, the rate is $0.66 per unit for LTE-M, a distinction is made between asset trackers ($1.33 per unit) and smart meters ($2 per unit).

The relevant applications are characterized by low power usage--they may even come with batteries that last ten years--because they transmit small amounts of data and only sporadically, such as once per day or week, or maybe just on an "as needed" basis. Another characteristic is that data must travel over longer distances than the ones that could be cost-effectively covered with a WiFi network. For instance, if cattle needs to be tracked on a large farm, one would have to set up a huge number of WiFi access points, each of which would need access to the power grid. In that case, it makes a lot more sense to use the 4G cellular standard and transmit data via existing base stations.

There are many small companies, especially startups, that serve those needs with highly specialized (vertical) products. Bilateral licensing between dozens of standard-essential patent (SEP) holders and a large and growing number of mostly rather small companies would come with relatively high transaction costs. That's precisely the pattern that favors the creation and operation of patent pools: instead of countless one-to-one deals, pools enable many-to-many transactions.

As I already noted above when discussing the initial group of licensors, it is very meaningful that companies like MediaTek and Sony have concluded that a pool licensing at the end-product level (as opposed to the component level) is the way to go. While Ericsson is a far bigger cellular patent holder than Sony and MediaTek, it has a long-standing policy of licensing only at the end-product level, so no surprise there. When a consensus is built around a licensing structure and the parties who agree to it have such a diversity of perspectives on the IoT business, and even chipmakers participate, it suggests to me that the market may very well able to work out IoT SEP licensing.

When LG joined the Avanci automotive SEP pool earlier this year, the fact that LG is a supplier to the automotive industry made its accession particularly interesting. And now that we're appproaching the end of the year, there isn't even room for debate: the Avanci model (through which Sisvel actually licenses its own patents to car makers) has been universally accepted. Even a tireless tire maker named Continental has given up opposing that which the market has accepted to do. What LG is to Avanci (a licensor situated higher up in the relevant supply chiain), MediaTek and Sony (because of Altair) are to Sisvel's narrowband cellular IoT patent pool--and from Day One.

Today's announcement further reduces to absurdity the way in which Apple and its notorious astroturfers try to leverage the question of IoT SEP licensing only to devalue SEPs in general, particularly with a view to smartphones. At this stage, we are not seeing widespread IoT patent litigation; in fact, one would be hard-pressed to find even one lawsuit targeting an IoT startup. This is not the time for regulatory intervention as market dynamics may take care of the problem. As I'll discuss further below, this new pool is about boosting adoption.

There is a major difference between this pool and most other SEP pools (such as Avanci, which I just mentioned): this is an emerging market. Car makers had adopted 4G when Avanci started; it took years to solve the licensing question, but the demand was there, except that some though that hold-out would be profitable. Sisvel's president, Mattia Fogliacco, is quoted in today's press release as follows:

"The IoT market has been in development for about a decade, however only now we see clear early signs of widespread roll-out. The LTE-M and NB-IoT technologies are an obvious pick to connect products and services, and with this pool, available already in an early phase of technology adoption, we will remove a lot of questions and concerns by giving easy, transparent and reasonable access to the patents that the creators of the technology hold." (emphases added)

So this is a pool that is even more about market development at this stage than just monetization, though the latter could--all going well--reach a very interesting scale over the years. In the same vein, the pool's program manager, Sven Törringer, said:

"[W]e are convinced that the offer we bring to the market will not only reduce friction and concerns, but rather boost the interest in the adoption of the LTE-M and NB-IoT standards in IoT products, allowing for swift investments in this sense."

Sisvel's press release mentions competing standards: "LoRaWAN, Sigfox, WiFi, MIOTY, Bluetooth, various mesh network technologies, etc, and combinations thereof." When implementers choose between standards, patent licensing plays a major role in addition to technical considerations. This new pool needs design wins (decisions by implementers to use those standards) while many other pools are all about courtroom wins from the get-go (if the relevant standards are already in widespread use and rampant infringement needs to be remedied).

Of course, as we've seen in such contexts as automotive (where Avanci is now a one-stop shop) and video codec patents (where things worked out better in the beginning than they have more recently), standards typically benefit from a single pool bringing everyone together. I'll keep an eye on who else will join this one.

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Huawei grants IoT chipmaker Nordic Semiconductor component-level patent license covering low-power cellular (LTE-M, NB-IoT) products: industry players finding solutions

IAM was first to report (paywalled) on an announcement I've now found on Nordic Semiconductor's website, according to which Huawei has extended to Nordic Semiconductor a component-level license to Huawei's standard-essential patents (SEPs) on what both companies consider fair, reasonably, and non-discriminatory (FRAND) terms. As a result, Nordic's customers are covered ("automatically licensed and protected" according to the announcement).

Just last week, the breadth and depth of Huawei's patent portfolio was on full display at a corporate event with distinguished guest speakers. Huawei clearly positioned itself not only as an innovation powerhouse but also as a company with a very balanced perspective, knowing the perspective of licensors as well as what it's like when the shoe is on the other foot.

In today's Huawei-Nordic announcement, the first sentence of the first quote is instructive:

"'Huawei owns a leading portfolio of LPWA SEPs for LTE-M and NB-IoT, a subset of the 4G standard, which creates great value for IoT,' says Huawei’s Head of European IPR Department, Zhang Xiaowu."

LPWA means low-power wide area cellular technology. They're not talking about baseband chips for smartphones or telematics control units (TCUs) built into cars. Note in the quote above that this is merely "a subset of the 4G standard." Obviously the royalty rates are lower in such scenarios, though the announcement doesn't state any specific amounts. It would be discriminatory to apply equal terms to unequal conditions, meaning that products making use of only a subset of a cellular standard--and making limited use even of that subset, such as by sending only small quantities of data--had to pay the same license fees as, for example, Apple.

About five months ago, Nordic announced another SEP-related agreement with Nokia. This makes Nordic a bit of a pioneer--perhaps even thought leader--in its market segment. While the terms of either deal weren't disclosed other than what one can deduce from the announcements, it's clear that Nordic's agreements with Huawei and Nokia couldn't structurally be more different:

• The headline of the announcement on Nordic's website specifically talks about "component-level licensing." Nordic itself is the licensee; its customers are indirect beneficiaries. There is no indication of any need on the part of Nordic's customers to reach out to Huawei in order to obtain those benefits.

• The Nokia deal essentially makes Nordic an intermediary that obtained from Nokia an offer that Nordic's customers can elect to take. If they don't take it, they have to seek a bilateral license, and if they did neither, they'd obviously expose themselves to potential infringement litigation.

So there's a diversity of licensing models, and Nordic's two publicly-known deals with major cellular SEP holders are heterogeneous. That's why I'm not buying the part of their headline where they call this "a big step towards industry-wide component-level licensing." The accurate way to assess the situation is that some SEP holders--here, Huawei--are prepared to grant component-level SEP licenses, but others--such as Nokia--are not. The announcement notes that "Huawei and Nordic were able to conclude the agreement through a transparent and amicable discussion within a short period of time." If anyone ever were to claim that Nordic was an unwilling licensee, or that Huawei wasn't a constructive licensor, this would be one of the transactions they could point to as an example of their willingness to make things work. That said, Nordic has validated not only one licensing model--but two different ones. It has a clear preference for the one it announced today, but the Nokia deal is and remains in full force and effect. If they persuaded Nokia to switch from end-product licensing to component-level licensing, then they would be in a stronger position to claim that the industry was going in that direction.

Where I definitely agree with Marianne Frydenlund--Nordic's senior vice president Legal & Compliance--is that "[l]icensing in cellular IoT is a comparably new practice in the industry, calling for flexible solutions." Flexibility, of course, is never a one-way street.

Talking about flexibility, the aforementioned two models--Huawei/Nordic and Nokia/Nordic--are not the only ones. For example, last year Huawei announced a license agreement with a Volkswagen supplier (in that case, about all of Huawei's 4G SEPs, not just a subset of the standard) under which the supplier is licensed, but specifically with respect to Volkswagen cars--while Nordic today announced that all of its customers, not just one, are licensed.

Then there are license agreements that involve "have-made" rights. That is a way for end-product makers to provide a certain degree of legal protection to their suppliers. While patent exhaustion works in the other direction, a similar effect can be achieved contractually.

I'm a pluralist: if it works, it works.

The IoT licensing landscape is in its infancy--but, as we see, it's evolving pretty fast. That's why now is not the time for massive regulatory or legislative intervention. It's all too easy to see that some (particularly Apple and its traditional allies, as well as Continental, which prefers litigation that is going nowhere, and combative speeches at conferences, over pragmatic licensing-focused solutions) would like to use IoT for a pretext to urge governments to put a thumb on the scales of SEP licensing. The U.S. government ultimately decided not to support those organizations' SEP devaluation campaign.

In light of today's announcement, I recommend the following:

• Policy-makers and regulators should give the market a breathing space to work things out. There is progress, and as Conti's own submission to the EU Commission notes, there's virtually no SEP infringement litigation at this stage targeting IoT end products. "If it ain't broke, don't fix it." IAM's Joff Wild wrote on LinkedIn this morning (in the specific context of this license agreement) that "others in [Nordic's] position may well be able to secure similarly interesting opportunities, without any threat of litigation hanging over negotiations. That, in turn, may be something that European regulators could reflect on as they ponder the future of SEP licensing on the continent."

• Licensors should keep it that way and refrain from litigation unless they really encounter an intolerably unwilling licensee. Otherwise there could be unintended consequences, such as regulatory action or legislative measures.

• Implementers should follow the example of Nordic's agreements with Nokia and Huawei, and act constructively. SEP holders can't wait forever to get paid: they need licensing income to finance the next innovations.

Today's announcement is a very important one, and hopefully the IoT industry won't have to wait another five months until the next one of this kind.

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