Semiconductor companies have long recognized the potential for the Internet of Things (IoT). Intel offers its QuarkTM chips, providing ultra-low power solutions for embedded and wearable applications. Qualcomm sells its SnapdragonTM chip family for IoT applications. Both led the formation of IoT standards bodies: the Intel-backed Open Interconnect Consortium (OIC) and the Qualcomm-led Allseen Alliance—each devoted to developing its own platform for device discovery and connectivity.
The two ostensibly joined forces in early 2016 when Qualcomm became a member of the OIC, causing it to relaunch as the Open Connectivity Forum (OCF). Wise people knew that a common platform would make it easier to achieve the IoT dream of connecting 25 billion devices around the world.
As Intel, Qualcomm, and other long-time competitors start collaborating to build out the IoT ecosystem, many experts predict greater convergence in the near term. But lurking in the background are numerous potential intellectual property (IP) issues because once the IoT industry reaches critical mass, incentives to compete and fight for market share will increase; increasing the likelihood of IP litigation.
IP Challenges
One challenge the semiconductor industry faces is the diversity of IoT applications, which may lead the industry to produce specialized chips for different applications. All major business sectors—from agriculture to consumer electronics to healthcare—are expected to adopt IoT in some form over the next ten years. Each sector has its own unique requirements and use cases, whether they be super-low cost sensors for soil measurements or feature-rich processors for smartwatch applications.
In response, the industry has evolved and changed its design practices to lower development costs. Many developers have adapted or retrofitted their existing product lines for IoT applications.
For example, wireless SoC (System on Chip) companies often offer repurposed wireless processors and chip sets for IoT. A chip developer may procure hardware components—in the form of IP, like circuit designs and architecture—from the outside and integrate the IP with an existing product such as a low-power processor to create a new IoT product offering. The new offering can be a single-die SoC or an SiP (System in a Package) with multiple dies in one package.
These approaches are efficient, but can increase exposure to third-party IP. The inbound IP may comply with a standard and be covered by standard essential patent (SEP), which is necessarily practiced by everyone using the standard.
The patent owner may be obligated to license the patent under “fair, reasonable and nondiscriminatory” (FRAND) royalty rates. If not, the chip developer may be in a difficult position because the patent owner may be able to ask a court to issue an injunction precluding the chip developer from making, selling, or importing the patent-infringing product in the United States.
U.S. courts do not usually grant injunctions for infringement of SEPs. But, if the chip developer modifies a product to include features that infringe a patent essential for one standard, and the infringing features are actually used for a different standard, it is less clear whether courts would consider the patent as “essential” to the second standard. If the patent is deemed not “essential” for the second standard, the Court may be more willing to grant an injunction instead of allowing the infringement based on a FRAND rate.
Other Standards Organizations
What technology and IP the semiconductor industry ultimately adopts is still an open question. In addition to the OCF and the AllSeen Alliance mentioned above, various other organizations are working on IoT standards at every layer of the IoT ecosystem. Google is promoting its networking protocol called Thread, which aims to create a communication standard for connected household IoT devices.
The Industrial Internet Consortium (IIC) is developing standards and best practices specifically for industrial IoT use. The International Society of Automation (ISA) is working on establishing the ISA100 Wireless standard to provide an industrial network protocol compatible with IoT.
The IEEE Standards Association (IEEE-SA) has several standards and projects directly relating to the IoT, such as the IEEE P2413, which is a draft standard defining an IoT architectural framework. oneM2M—a global initiative launched in 2012—is developing technical specifications for a shared machine-to-machine (M2M) network layer, to globally connect a wide range of IoT devices using application servers.
Conclusion
As the IoT semiconductor industry evolves and converging standards emerge, collaboration will inevitably turn to competition leading to IP disputes. Diligence in continuously evaluating these IP risks is key.
Author Bios:
Dori Hines leads the electrical and computer practice group at the law firm of Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, which focuses on intellectual property law. Kenie Ho leads the IoT Working Group at Finnegan and has litigated over 50 patents in U.S. courts on electrical and consumer electronics technology. Ming Choy is a patent attorney at Finnegan and handles patent applications in the electronics and software area.
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