On Friday, the Financial Times published a letter from ACT president Morgan Reed on the escalating debate over standards essential patents and the internet of things (IoT) in Europe. The letter is behind the paywall here, but you can read the full text below.
Upstream Players in the Internet of Things Seek to Double Dip
Sir, Ed Crooks’ article “Industrial futures” (June 28) touched on an issue vital to companies and regulators in Europe: who are the Internet of Things (IoT) innovators, and how can they best tap the benefits of this latest technological development?
The debate centres on some of the essential technologies underpinning the growth of IoT.
On one side are businesses such as Qualcomm, Ericsson, and Nokia, that patent and licence technology that connects ‘things’ to the Internet.
On the other are imaginative people inventing the ‘things’ – for example, a French tech entrepreneur developed a train-‐mounted camera that films the rail tracks and reports any hazards in real time via the Internet. A small US firm invented a bath mat that detects diabetic foot ulcers before they are visible, avoiding amputations that would result without early detection.
This is merely the tip of the IoT iceberg. European policymakers are currently drafting policies and patenting guidelines designed to spur European businesses to unlock its vast hidden potential.
The problem is that European Commission staff appears to be drafting the rules in favour of the patent holders who sit upstream of the ‘things’. These upstream players seek to double dip – not only do they want to be compensated for the use of their patented technology, they also seek to tax the new value IoT innovators are creating as well.
It’s like a farmer demanding a percentage of the bill a restaurant charges its customers after its chef turns the farmer’s vegetables, bought at a fair market price, into a gastronomic delight.
Yet, these patent-‐holders are working hard to persuade EC policy-‐makers to back this argument, regardless of its damaging consequences.
Not only would downstream innovators be forced to share the rewards of their inventiveness with the ‘vegetable sellers’, they would not have any idea what the final bill for the vegetables might be when they begin. It’s a prospect to deter even the hardiest investors.
Qualcomm and Co. are successfully leading the upstream charge, casting themselves as noble Davids versus the Goliaths of Silicon Valley – a familiar bogeyman for Brussels to rail against. It’s smart politics, but competition agencies around the world have determined many of the practices of Qualcomm to be anticompetitive and have taken steps to rein them in.
If these faux-Davids win over the European Commission, they stand to make a lot of money from licensing their communications patents and chips at the expense of the new wave of European inventors – like those making our railways safer – while people like you may miss out on the wider benefits of Europe being in the vanguard of IoT.
So the Commission needs to look beyond the self-serving arguments of Qualcomm and its upstream allies and recognise who are the true innovators of Europe’s emerging Internet of Things sector.
Unless it finds a better way to balance upstream and downstream interests, the Commission risks thwarting the development of the IoT in Europe and strangling potentially transformative European innovations in the cradle.