The Smartphone Royalty Stack: Surveying Royalty Demands for the Components Within Modern Smartphones

Ann K. Armstrong, Intel Corporation, Joseph J. Mueller, WilmerHale LLC, and Tim Syrett, WilmerHale LLC

8/26/2015
(Original Publish Date: 5/29/2014)

The smartphone industry has experienced a high number of patent cases over the past few years. These cases have highlighted the interplay among patent law, competition law, and the marketplace itself. This paper addresses the informational gap in the ongoing debate among courts, litigants, regulators, standard-setting organizations, and academics about the "royalty stack" for smartphones and the legal and policy implications that follow from the magnitude of such royalties. Using publicly-available data, the paper details U.S. patent royalty costs across smartphone components from wireless technologies to operating systems to user interfaces to outer-product design, addressing royalties on both product-differentiating technologies and standardized functions subject to commitments to license on fair, reasonable and non-discriminatory ("FRAND") terms. Where specific royalty information is not publicly available for a particular component, the article provides an overview of the amount of litigation relating to the component as a proxy for the likelihood of royalties.