Patent Battles Slow Smartphone Innovation, Inflate Consumer Costs

Released: 10/18/2012 9:30 AM EDT
Source Newsroom: Cornell University
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Newswise — “The royalty cost for patents held by equipment companies such as Nokia, Motorola Mobility and Qualcomm is estimated to form about 13 percent of the price of a 3G wireless handset. It is thus very costly to consumers, and forms a high barrier to entry for startup innovators. With the current trend in the legal environment toward gigantic damage awards from patent litigation, the total intellectual property cost to consumers and innovators is likely to keep climbing.

“There is some consensus among analysts that an agreed level of maximum royalties would be beneficial for consumers and the industry as a whole. It would shift incentives away from intellectual property creation and royalty extortion and toward product innovation and commercialization.

“However, because certain intellectual property holders benefit from the current situation, the industry will not be able to agree on this by itself. This might present a fruitful opportunity for governments and international organizations to provide some ground rules for the licensing negotiations regarding standard-essential patents.”

--Aija Leiponen, an expert on the impacts of technological change on the economy and associate professor of technology and innovation strategy in Cornell University’s Dyson School of Applied Economics and Management.


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