NFC Joint Patent Program Ends; No Disruption to Licensing, Say Chip Makers
A joint NFC patent licensing program set up more than five years ago to make key NFC technology available to device makers has been discontinued.
The pool, run by U.S.-based Via Licensing, had included patents from NFC chip makers NXP Semiconductors and Inside Secure, along with handset maker Motorola and France Telecom Orange. That program ended quietly this month.
Inside announced Thursday it will be licensing its patents through French science and technology patent aggregator France Brevets.
Inside CEO Rémy de Tonnac told NFC Times he doesn’t think the break up of the Via patent pool will restrict access to NFC technology or raise prices for smartphone makers or other manufacturers to incorporate NFC technology in their devices.
“It is clearly not our intention to block the industry,” he said. “We want to be recognized for our contribution here. (But) Inside is not an IP company making money from patents. We are a respectful and responsible technology player.”
De Tonnac said Inside made the decision to withdrawal from the pool several months ago. Both Inside and NXP indicated they were not seeing many results from being a part of it so decided not to renew their participation when the program was due to expire this month and to take back full control of their intellectual property.
“Reviewing the results, NXP has seen that the patent pool did not have any measurable impact on the development of the NFC ecosystem,” NXP told NFC Times in a statement. The chip maker, which has supplied the NFC technology for all NFC enabled Android phones to date, said it is “currently pursuing alternative strategic options about which it will soon inform the industry.
“NXP will remain the trusted partner of the NFC ecosystem and will continue to license its patents,” NXP said in the statement.
France Telecom-Orange’s NFC patents are believed to have expired. It’s not clear what Motorola Mobility, now part of Google, will do with its NFC patents. Motorola’s inclusion in the pool in 2009 had been somewhat of a coup, since it often doesn’t join patent pools.
The intellectual property that was pooled by Via is mainly technology that has been standardized by such organizations as the NFC Forum, ISO/IEC and the European Telecommunications Standards Institute, or ETSI, and is considered essential, said Hélène Jay, who headed the NFC patent pool for Via. A complex standardization environment like that surrounding NFC benefits from having a single place for obtaining licenses on key patents, she added.
But she said that leading up to the expiration of the first term of the program this month, all of the parties by “mutual decision” decided not to go forward with it any longer.
Via launched the joint-licensing program in June of 2007, at a time when it was thought NFC technology would soon take off. But the subsequent rollout came much later, with device makers only starting to adopt NFC last year.
“Clearly, what happened to us, we had a pool much before the technology was available,” Jay told NFC Times. “We had the program ahead of the NFC development curve.”
John Ehler, director of wireless programs at Via, which has pooled patents for such other mobile technologies as LTE, said patent pools help avoid the kinds of disputes that are now playing out among major smartphone makers. With the key NFC technology suppliers involved in the Via pool, device makers could not only access the technology they need in one place but would have the knowledge they are “paying the exact same price for licenses as their competitors are.”
That will no longer be the case. Inside said France Brevets would license technology for both its NFC chip MicroRead and its SecuRead NFC chip stacked with a secure element. Makers of smartphones, tablets, laptops, TVs, smart meters and other devices won’t have to sign a separate licensing agreement when they purchase the chips, as they had to do with Via, said Inside. Paris-based France Brevets, which formed a little more than two years ago, bills itself as the first investment fund “fully dedicated to patent promotion and monetization in Europe.”
De Tonnac, said Inside has IP on NFC dating back to 1999 and believes the revenue it can earn from its patents is not insignificant. He noted that NFC technology is still maturing and rolling out.
But he insisted the announcement of the new licensing program Thursday had nothing to do with Inside’s slumping share price, which has fallen sharply since its initial public offering in February. The price had topped €9 but now is below €3 (US$3.77).
The share price took a hit late last month after Inside issued a profit warning, telling investors it would not meet its projected target of breaking even by the end of 2012 because of lower handset shipment volumes by the main customer for its NFC chips, Research In Motion. Inside also suggested the slowdown in revenue involved lower shipment volumes from Nokia. The latter is using Inside's technology for an NFC-enabled smartphone based on the current version of the Windows Phone operating system.
Inside held to its mid-term goals of $400 million in revenue and gross margin above 40%, however.
De Tonnac said Inside had planned to exit Via and move to its own licensing program even before its IPO in February.
“There is no link between share price and this initiative,” he told NFC Times. “We have been looking at options to make sure this IP question is being addressed in the industry. We have now full control of our IP, and we want to play our role; we want to play a responsible role.”
Even if it wasn’t intended to boost the share price, Inside’s announcement of its new NFC patent licensing program had that effect, with the vendor’s shares finishing up nearly 5% on Thursday.