Luke McLeroy is vice president and head of business development for the Dallas-based licensing platform Avanci. Prior to this he led Ericsson's North American patent licensing business. He speaks to Leaders League about how Avanci is seeking to accelerate development of the internet of things.
Leaders League. What were the reasons behind the establishment of Avanci? Were you aiming to fill a particular gap in the market?
Luke McLeroy. Avanci is focused on simplifying wireless essential patent licensing in the internet of things (IoT). We saw the need for a new patent licensing solution for the IoT, different from what has been done before in other industries because of the size of the IoT, which, by most estimates is going to have four times the number of subscribers as traditional wireless devices, such as smartphones. On top of that, the IoT will be filled with many companies with limited knowledge in wireless technology or in licensing standard-essential patents. As an example, before we started Avanci, we were discussing standard-essential patent licensing with some of the car companies that were adding wireless connectivity to their products. Through multiple meetings we were able to explain to them what standard-essential patents actually are and what it means to license them under reasonable and non-discriminatory terms. After these meetings, the companies understood they needed to take licenses, but they weren’t sure about fair prices for them or even which firms they should reach out to in order to obtain the licenses. Their question to us was: “Can’t you put together all those patents into a license for us?”
So that is where Avanci comes from. There was an industry-driven need for someone to gather all of the essential patents, set up a fair price and then divide this price fairly amongst the different patent owners. This was truly the gap we were aiming to fill: to have a simpler, more predictable patent licensing solution for the IoT.
You previously led the North American patent licensing business for Ericsson. What did you learn from your time there and what key challenges did you face?
The biggest thing I learned was that you need to be solution-driven to succeed in patent license negotiations. It is very important to listen to the other company you are negotiating with, understand their concerns and requirements and find a solution for everyone involved in the deal. Being solution-driven is now a core value at Avanci as we look to find common ground, a licensing solution that will work between not just companies in the wireless industry but also companies in the automobile industry, the utility industry - wherever the IoT extends to next. These are all industries with very different traditions in terms of how they handle patents and other IP issues and we must be solution-driven to find licensing solutions that work for both patent owners and licensees.
How do you feel Avanci will aid the progression of and/or directly benefit the development of the IoT?
There are a couple of key ways in which we feel Avanci will aid the progression of the IoT. First, we provide a licensing solution for licensees that is transparent, predictable and fair to all competitors in the industry, regardless of their size or sophistication in terms of wireless technology and IP. From the patent-owners point of view, we provide the opportunity to receive a fair return on investments and incentivize them to do the research and development that will result in new standards that will advance the IoT in the future. Putting these two things together ensures that patent licensing and other IP issues are not going to be a reason to delay adding connectivity to products or slow the progression of the IoT - instead it will provide an easy way to handle all IP concerns and let companies focus on innovation for the IoT.
Some of your recent work has been concentrated on the automobile industry. Can carmakers avoid the ‘patent wars’ synonymous with Silicon Valley?
We have focused on the automobile industry because that industry has been early to adopt connectivity and the IoT for their products. We signed our first license agreement with BMW, at the end of last year. We have noticed a real interest in the auto industry to proactively get patent licenses in place, rather than just sitting back and waiting for a dispute to arise if they’re selling unlicensed technology in their products. There are two main reasons for this interest. Firstly, they recognize the need to pay a fair price for the technology they are using and secondly they are aware of the risk of selling unlicensed technology in their cars as it could lead to a legal dispute which would interrupt delivery of their products.
Interview by Eloise Lake