10 November 2017
Reporter: Jenna Lomax

Use-based pricing would lead to arbitrarily higher royalties, says ACT

The use-based pricing concept for standard essential patents (SEPs) would essentially give a standard holder the ability to arbitrarily dictate higher royalties, according to the App Association (ACT).

Senior policy counsel at ACT, Brian Scarpelli, stated that these higher royalties would come from contributions from other innovators and the innovations of downstream companies.

Scarpelli’s comments come after research and development organisation, IP Europe, announced its push for an SEP code of conduct for 5G and the internet of things.

IP Europe said this “will help technology contributors and users in the internet of things ecosystem find fair, reasonable and non-discrimatory (FRAND) outcomes to licensing negotiations, and avoid the further spread of litigation.”

ACT has vehemently opposed such a code of conduct.

Morgan Reed, executive director at ACT, explained how bringing in use-based pricing will be a deterrent for people to innovate because of fear of unforeseen costs.

He explained: “The consequences will be less choice, higher prices and less innovation, and ultimately that will affect the consumer and the development of the internet of things in Europe.”

Scapelli affirmed that the European Commission should “reward innovation”, not quash it.

He added: “Standard-setting systems were not created to be a business model for SEP holders; they were created to promote competition and interoperability.”

Subscribe or free to the next issue of IPPro Patents, published on 15 November, to read this article in full.

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