Standard Essential Patent Privateer Report

Standard Essential Patent Privateer Report

This report discusses the impact of cellular Standard Essential Patent (SEP) privateers on the aggregate royalty burden (ARB) of smartphones.

January 30, 2023

Technology companies routinely strive to monetize the results of internal R&D efforts – protected through intellectual property rights – while at the same time maintaining a competitive advantage, focusing on business growth, and avoiding costly legal actions. One way of monetizing IP rights at a relatively low cost, while at the same time exposing competitors to lengthy infringement battles with no direct exposure to the company itself, is to transfer patents to an IP privateer.

IP privateers are non-practicing entities (“NPEs”) that have acquired patents and are licensing – including litigating – in lieu of the operating companies (“OpCos”) that originated the patents. IP privateering has been around for decades.1 Over the last decade, there were more than 100 transactions where an OpCo transferred standard essential patents (“SEPs”) to a privateer. Generally, holders of patents declared essential standards (e.g., cellular standards) are required to license on a fair, reasonable, and non-discriminatory (“FRAND”) basis.2 This report aims to investigate and discuss the impact of cellular SEP privateers on the aggregate royalty burden (“ARB”) of smartphones.3

Stout’s research shows that there are many privateers actively purchasing and litigating cellular SEPs. However, the top 20 privateers hold only 1.1% of all declared 3G-5G patent families. In total, Stout identified 64 cellular SEP privateers.

Of the 5G SEP ask rates that are publicly available, the median implied per patent family royalty rates for privateers are approximately 15 times the median implied per patent family rates for non-privateers. To compare the median implied per patent family royalty rates based on published ask rates to the litigated ARB from TCL v. Ericsson, Stout first computed implied ARBs using the median implied per patent family royalty rates for non-privateers and privateers, separately. The implied non-privateer 5G multimode cellular ARB was calculated to be 11.08% compared to the privateer 5G multimode cellular ARB of 164.07%. The implied non-privateer cellular ARB falls slightly outside the 6%-10% range from the TCL v. Ericsson case. The privateer cellular ARB falls far outside the range determined by TCL v. Ericsson. We note that our privateer analysis is based on the median of four published ask rates, as the vast majority of privateers do not publish their ask rates. Given the lack of royalty rate transparency across the vast majority of SEP privateers, we cannot rule out that some SEP privateers might have royalty ask rates that, similar to Harfang IP, VoiceAge EVS, and Crystal Clear, are not in alignment with the litigated ARB from TCL v. Ericsson, while others may be in alignment. The dearth of published rates may be viewed as a call for transparency by both SEP licensors and licensees to promote efficient and fair licensing of SEPs.

This report was produced as part of a paid engagement.


Tom Ewing, “Introducing the Patent Privateers,” IAM Magazine Jan/Feb 2011.

ETSI Intellectual Property Rights Policy,” European Telecommunication and Standardization Institute, 1 December 2021

All citations and footnotes that include webpage links in this white paper were last accessed on August 30, 2022.