Royalty Stacking


Unless the product / service of interest is extremely simple it is unlikely that it will be covered by a single standard. Most modern products implement multiple technologies, and most standards are not self-contained – ie they refer out to other standards, or embedded other standards. This means that most standards represent a part of a larger “stack”, which may be one stack in a multi-stack device.

Royalty stacking is the related concept for product implementing multiple standards, or multiple technical standards in a stack, may be exposed to royalties payable individually for each technology in the stack(s): building into a “stack” of cumulative royalty.

  • Cellular standards typically dominate connected products
  • Additional technologies such as GPS, MP3, AAC, H.264 and 802.11 all require their own licenses
  • Operating Systems, software and apps may require further licensing

While the industry and regulators focus on cellular standards, the implication is clear – in terms of royalty exposure it is important to understand the full set of technologies and rates that apply across the entire product in order to work out the impact on the Bill of Materials (BoM).

It’s also important to understand where technical standards sit in the overall stack of the product. Patents asserted against a relatively small technical standard may appear important to that standard, but when considered in the complete context of technologies may be a small contribution.