Licensing Experience of Intellectual Property Lawyers in the Internet of Things Standard Essential Patent Licensing Negotiations
Internet of Things (IoT) technologies are increasingly embedded in everyday products, services, and industrial systems. These devices rely on standardized connectivity technologies such as 4G, 5G, and Wi-Fi to operate and interoperate. For IoT companies, compliance with these standards requires licensing of standard essential patents (SEPs).
Although SEP licensing is governed by fair, reasonable, and non-discriminatory (FRAND) principles,the licensing market remains characterized by uncertainty. Information about essentiality, royalty rates, and comparable licenses is rarely publicly available. For many IoT firms, the first licensing request or demand letter marks the beginning of a learning curve, a process often shaped by information asymmetries, resource constraints, and legal uncertainty.
This research examines how IoT companies navigate this environment. It explores the extent to which IoT companies possess in-licensing negotiation capabilities and the role that Intellectual Property (IP) lawyers play in supporting them during SEP licensing negotiations.
Prior research suggests that many IoT companies lack the internal capabilities required to assess SEP portfolios, evaluate infringement risks, or negotiate royalty terms. These challenges are exacerbatedby fragmented SEP ownership and the widespread use of confidentiality in licensing agreements, which limits companies’ ability to benchmark offers or anticipate cumulative royalty burdens. As a result, bargaining power often favors large and experienced players, while smaller firms may feel pressured to accept unfavorable terms to avoid disputes.
IP lawyers act as negotiators and strategic advisors in a market characterized by uncertainty and complexity. Drawing on attorney capability theory, this research examines how accumulated negotiation experience, specialized technical expertise, and international exposure enable IP lawyers to improve licensing outcomes for their clients. These capabilities are particularly critical in SEP licensing, where legal, technical, and commercial considerations are tightly intertwined.
The project is based on interviews with experienced IP lawyers in Finland and the United Kingdom. Finland offers insights from a small open economy with a strong telecommunications heritage and an innovation ecosystem in which SMEs and start-ups play a central role. The United Kingdom provides a complementary perspective as a global hub for IP services and SEP-related litigation, with extensive experience in cross-border licensing negotiations. Together, these contexts enable a comparative view of how legal intermediaries support IoT companies under different institutional conditions.
By linking firm behavior and legal practice, the research offers insights relevant to current SEP licensing policy debates. As policymakers increasingly emphasize the need for greater transparency and predictability in SEP licensing, this research examines how information asymmetries affect firm behavior and how legal intermediaries help mitigate them. The findings offer actionable insights for policymakers, firms, and practitioners navigating standardized technology markets.