The Internet of Things (IoT) is an ever-expanding web of diverse, interconnected devices ranging from simple consumer appliances to complex industrial systems. 5G technology promises to accelerate IoT deployment by providing accessible high-speed, high-capacity communication networks. This deployment, however, will undoubtedly lead to disputes over standard-essential patents (SEPs) covering the 5G Standard. These disputes are likely to involve parties from industries that have not previously competed against one another. The potential for friction will be especially high because industries often have diverse, individualized practices for valuation and licensing. Fairly resolving 5G IoT SEP disputes—for patent owners and licensees alike—will require creative approaches.
This article will explore ways parties can utilize two conventional SEP valuation methodologies to address problems related to 5G licensing for IoT products. These methodologies, generally used in fair, reasonable, and non-discriminatory (FRAND) disputes, are commonly known as the “bottom-up” and “top-down” approaches. In applying these methodologies to 5G and IoT, an exemplary case study will help illustrate particular problems that might emerge and explore how parties might consider approaching these inevitable SEP disputes.