Qualcomm, Ericsson and a handful of other technology firms have joined a new patent licensing clearinghouse that aims to make it easier for Internet of Things manufacturers to embed cellular technology in their gadgets. The clearinghouse, called Avanci, sprung out of Ericsson and is the first patent licensing marketplace aimed at the Internet of Things – where millions of devices are getting connected to the Internet. Some of these connected devices will use Wi-Fi, Bluetooth or other non-cellular technologies that won’t need a cellular license. But for gadgets that require reliable networks links nearly everywhere, cellular is likely to be the technology of choice. Industry research firm Ovum forecasts that cellular machine-to-machine connections will hit 733 million worldwide in five years. “There are licensing obligations that occur in the cellular industry,” said Alex Rogers, president of Qualcomm Technology Licensing. “There are companies out there that want to create a robot with connectivity or a drone with connectivity. They want to know where they can get a license to these essential patents. Avanci creates a simple, efficient, one-stop shop that I think is good for both (patent holders) like Qualcomm and licensees.” Founded in April, Avanci is focusing on two sectors initially – automobiles and smart meters. It expects to add other sectors later. Besides Qualcomm and Ericsson, other cellular patent holders that have signed up so far include ZTE, InterDigital and KPN. Other intellectual property firms also can join. Avanci will offer a single license to device makers that covers 2G, 3G and 4G patents owned by Qualcomm, Ericsson, ZTE and the other companies signed up to the platform. “With Avanci, something that would require time and resources to negotiate with many technology holders can now be done in one place, with one license,” said Kasim Alfalahi, founder of Avanci. For Qualcomm, the Internet of Things is an emerging market. It makes most of its money selling chips and licensing cellular technology to smartphone makers. While the San Diego company has talked about how the Internet of Things will boost chip sales, it has been less clear on how its lucrative licensing arm would benefit. With Avanci, Qualcomm, Ericsson and others appear to be laying the foundation for patent licensing in this market while still encouraging the nascent industry to grow. “We are certainly hopeful this will be successful,” said Rogers. “We think this fits a particular need in the Internet of Things space at this point in time.” Avanci isn’t talking about what a license will cost car makers, smart meter providers and other Internet of Things manufacturers -- though it expects to later. For now, it is saying there will be a flat rate based on the value of having cellular in each device. That’s different from Qualcomm’s smartphone licensing business, where phone makers pay royalties based on a percentage of the wholesale selling price of each handset. Why take a different approach with the Internet of Things? Qualcomm said cellular connections are essential to what makes smartphones valuable to consumers. Cars, on the other hand, exist to transport people. So while cellular connectivity adds value, it is not as important in the car as it is in a smartphone. “The idea is to set up a reasonable licensing program that is not a percentage per device but a dollars per device,” said Rogers. “Dollars per unit is designed to reflect the value of mobile connectivity to that device.” The companies announced the launch of Avanci Wednesday shortly after markets opened. Qualcomm’s shares were up 48 cents at $61.77 in midday trading on the Nasdaq. mike.freeman@sduniontribune.com; Twitter:@TechDiego 760-529-4973
Qualcomm and Ericsson are among a group of tech companies to join a newly-established patent licensing clearinghouse called Avanci. The new company will be based in San Jose, California, with the goal of helping technology firms secure patents for their products by providing them access to an online database that includes more than 1 million patents. Analysts predict that cellular connections between machines will grow to 733 million globally within five years, highlighting the importance of a marketplace for IoT patent licensing solutions.