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LG & Qualcomm Lead in 4G LTE Patents – Next Big Thing

December 16th, 2013

LTE patent Portfolio ComparisonIt is difficult to estimate the LTE patent portfolios of major players in the wireless space as their are over tens and thousands of patents. Additionally, the ETSI library contains patents and pending patent applications that are self-submitted by ETSI members. There is no governing body that screens the essentiality of the patents submitted, and instead the members submit patents and applications that they believe are essential or will be essential.

Industry experts performed a proprietary analysis comparing each company’s patents to the LTE standards and determined their essentiality [Read on What is a LTE Essential Patent here] Then they analyzed Nortel’s portfolio and estimated how much of the purchase price was likely for the LTE patents. Nortel’s patents were in five categories, but we believe about half of the value was in the wireless patents, and that a majority of the wireless value was in the LTE patents. In our LTE patent valuation analysis we assume 30% of the $4.5B acquisition price was for the LTE patents.

Cross-licensing agreements between patent portfolio holders provide useful information on which patents will be “essential” in the future since each company identifies their competitor’s patents that are valuable. While identifying “essential” patents through this process is accurate from a commercial standpoint, it is still difficult to put a dollar value on the patent since specific royalty rates are not spelled out and instead both companies just agree to not sue each other in the future.

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