1. Licensing Issues Research In Motion Limited ETSI IPRR#01 meeting January 2006

2. There is a problem with Licensing The telecom industry is heading towards troubled times –The industry has developed way beyond the original mobile telephone – around which much of the current process was designed –Uncertainty about costs of services, handsets and infrastructure – delays deployment as well as recovery of already committed funds We need to collectively discuss, understand and recommend possible solutions –none of which are easy to implement but necessary to move the industry forward

3. Licensing Issues (1) Cumulative Royalty Costs –Large number of IPR asserters (patent filing / exploitation process is being systematized) –Stacking of patents applying to services, devices and infrastructure –Unreasonable value assigned to patents / portfolios by some companies –Unrealistic assessment of essentiality (both technically or commercially) and numbers of essential patents –Royalty commonly charged on ASP (average selling price) of complete unit rather than to a specific portion of device (e.g. radio or phone)

4. Licensing Issues (2) FRAND –No consistency in evaluation of patent portfolios from different patent holders –Cross licensing valuation considerations –No industry benchmark for royalty negotiation (transparency) –No benchmark on ASP on which royalties are based –Lack of clarity and openness regarding sublicensing rights for third party IPR –No reasonable / efficient means for license negotiation / dispute resolution

5. Industry Impact (1) Barrier to entry for new entrants –Cumulative royalty cost burden –Cost of defending against unjust/unreasonable licensing demands Barrier to innovation and path to market –Forces new companies to focus mainly on emerging niche areas –Failed companies will want return for their patents

6. Industry Impact (2) Raises costs for industry Lack of predictability in deploying newer technologies Public interest impact –Increases cost of handsets –Slower adoption of new services and technologies Added burden on different regulatory, patent and judicial systems in different geographies –To settle licensing disputes

7. Characteristics of solution space (1) The issues are bigger than any standards body can solve within its current scope Solution needs to work in different jurisdictions with help from more central standards body (e.g. ETSI) –Guidance on business as well as Technical aspects –Impartial institutional experts to help in Deciding essentiality of claims Benchmarks for royalty negotiations Assistance for license negotiations

8. Characteristics of solution space (2) Patent pooling –With some kind of cap on disbursement per company for their portfolio of essential patents Keeping the pool / standard viable in the marketplace Balancing number of IPR holders with return for their IPR and keeping standard viable Publishing benchmarks for return on patents – discouraging Troll behaviour Open questions –# pools required –How to distribute funds collected by the pool –How to define essentiality of patents –How do we incentivize companies to join the pool –Use of pool for defensive purposes against companies outside of pool

9. Possible way forward It is wise to work in better defining the context of the solution and only then work on specific changes required to processes of a standards body like ETSI While the longer term solution is being developed some actions can improve the current status e.g –Institutional experts helping define Benchmarks for ASP Reasonable royalty rates Transparency to assist in license negotiations Essentiality of claims

10. Possible way forward: Recommendation Identify potential solution spaces – besides the ones mentioned (providing the context) Add more clarity / features for the context (e.g. institutional expert structure, patent pool rules) Work on specific changes to standards body policy and process within this overall context (e.g. ex- ante, disclosure timing, openness)