Introduction: From Dormant IP to Strategic Revenue
There are a few companies that actively monetise Standard Essential Patents (SEPs). For many companies, these assets remain underutilized. However, SEPs may hold immense potential for companies that invest heavily in research and development (R&D) and patent filings. Over time, companies may have developed products and services in relevant technical fields, creating patent portfolios that include SEPs. The key to building value on this potential lies in a well-crafted monetisation strategy.
Global SEP licensing revenues already exceed billions annually in industries such as telecom, automotive, and IoT. Yet, many companies leave value on the table by not activating their portfolios.
SEP licensing encompasses a vast array of topics that one blog cannot cover. This blog aims to outline a simplified, practical, high-level roadmap to help you move from theory to execution. Whether you're just beginning or refining your approach, these steps will help you plan your SEP monetisation and turn your IP into a revenue-generating engine. However, it is advisable to consult with experts regarding your SEP strategy.
1. Define Your Business Objectives
Every successful strategy starts with clarity. Before you license a single patent, ask: Why are we doing this?
Is your goal to generate revenue, offset R&D costs, gain leverage in negotiations, or strengthen your influence in standardisation bodies? These objectives aren't mutually exclusive—but understanding your priorities will shape every decision that follows.
Once your goals are clear, the next step is to make foundational choices about how you'll approach licensing.
Framing these goals in business terms (e.g., projected ROI, shareholder value impact, or market influence) will facilitate gaining executive buy-in.
2. Understand the Strength of Your SEP Portfolio
Licensing starts with an understanding of the portfolio. Not all patents are created equal. Declarations to a standards development organization (SDO) are not determinations of essentiality. To build credibility, assess:
- Are the patents actually essential to mandatory parts of the standard?
- Can essentiality be demonstrated with robust claim charts and evidence of use?
- Are the patents valid, enforceable, and geographically aligned with target markets?
- What does the expiry and renewal curve look like?
This is where claim charting, essentiality audits, and third-party reviews transform assumptions into evidence. It is also where invalidity resilience matters: priority dates, enablement, and family breadth influence both leverage and pricing power.
Tip: Build a SEP “data room” with claim charts, essentiality reports, expiry schedules, geographic coverage maps, and evidence of use through reverse-engineering where applicable. This becomes the backbone of your licensing playbook.
But even the strongest portfolio needs context. That’s where market research comes in.
3. Conduct Market Research to Ground Your Strategy
SEP value is tied to the market adoption of the standard. The SEP value is directly tied to the adoption of the standard. To understand the commercial context:
- Which products implement the standard?
- What is the adoption rate across regions and jurisdictions?
- Who are the key players in the value chain?
- What is the commercial value of the standard to the product?
- What is the incremental commercial value your SEPs deliver?
Tip: Track attach rates and usage intensity metrics, not just adoption. For example, 5G adoption in the automotive industry, Wi-Fi in consumer electronics, or MPEG in streaming—all demonstrate how market penetration directly correlates with royalty streams.
Additionally, consider the “royalty stacking” context: if your rate is part of a larger licensing stack, you need to position your ask relative to comparable licensors.
4. Make Strategic Licensing Choices Early
Your licensing model is a strategic lever. Will you license directly, join a patent pool, or work through a third party? Will you build internal capabilities or outsource? And critically, are you prepared to enforce your patents if needed? Decide whether to:
- License directly
- Join a patent pool
- Work with a licensing agent
- Use a hybrid approach
Also ask: Will you build internal licensing capability or outsource execution? And critically, are you prepared to enforce patents if needed?
The willingness to enforce, even if rarely used, is what makes offers credible. Most SEP licenses are concluded amicably, but without a viable enforcement pathway, implementers may not take engagement seriously.
Tip: Define governance—who authorises rate deviations, who clears NDAs, and when outside counsel is engaged.
5. Consider Patent Pools as a Strategic Option
For licensors, patent pools offer efficiency, scale, and professional licensing execution, often with essentiality review and FRAND compliance built in. They reduce upfront cost but involve trade-offs:
- Less pricing power (rates often fixed at pool formation)
- Less control over licensing terms
- Revenue shares based on formulas that may not fully reflect portfolio quality
Decision framework – When pools make sense:
- Portfolio is medium-sized, but valuable
- The market is fragmented, making direct licensing inefficient
- Internal resources for licensing are limited
- Time-to-cash is critical
If your portfolio is extensive and of very high value, or if strategic control of licensing terms is a priority, direct or hybrid licensing may be a better option.
6. Segment and Prioritise Your Licensing Program with FRAND in Mind
If you choose direct licensing, use your market insights to segment targets by product type, geography, and usage intensity. Prioritise markets based on:
- Size
- Strategic relevance
- Portfolio coverage
FRAND: What compliance means in practice
- Offers must be consistent across similarly situated licensees
- Royalty methodology must be justifiable
- Non-discrimination must be documented
- Confidentiality (e.g., through NDAs) protects both parties’ data while enabling efficient negotiations
Tip: Document each decision to demonstrate FRAND consistency.
7. Build or Source the Right Capabilities
Effective SEP licensing requires a mix of skills and tools:
- Legal and FRAND licensing expertise
- Technical SEP analysis and claim charting
- Commercial licensing negotiation skills
- CRM and royalty tracking systems
Tip: Decide whether to build in-house or partner with an external provider. Outsourcing to experts accelerates execution, reduces risk, and signals seriousness to counterparties. You could read more about the partnership approach in my previous blog: What a Global Telco Learned About SEP Value
With your team and tools in place, it’s time to design your licensing program.
8. Design a Scalable Licensing Program
Consider this your go-to-market plan for licensing. Define:
- Outreach and negotiation processes
- Written FRAND licensing policy
- Royalty architecture (rate, cap, tiering, discounts)
- Contract lifecycle management
- Royalty audits and compliance tracking
Tip: Keep an audit trail of communications to demonstrate “willing licensor” behaviour and automate contract and royalty reporting wherever possible for scalability.
But even the best-laid plans need a backup—especially when negotiations stall.
9. Prepare for Enforcement and Disputes
The majority of SEP licenses are concluded amicably, but enforcement remains essential as a credible last resort.
Key considerations:
- Venue strategy needs to be carefully crafted (Germany, the US, the UK, and increasingly China)
- Costs of enforcement vs expected returns
- Alternative dispute resolution (ADR) mechanisms: mediation, arbitration, expert determination
- Prepare your internal team and leadership
Tip: Maintain a willingness to—all dated offers, meeting notes, and cooperation records. These become critical if a court or regulator scrutinises behaviour.
If enforcement isn’t viable for financial or strategic reasons, patent pools may be a better fit for your licensing. However, you’re pursuing bilateral licensing, and the willingness to enforce is non-negotiable.
10. Monitor, Measure, and Adapt
SEP monetisation is a continuous process. Track:
- Revenue and ROI
- Licensee count and market coverage
- Average time-to-deal
- Dispute-to-deal conversion rate
- Audit yield
Use these metrics to refine your approach and investment strategy. Regular portfolio pruning and renewal decisions keep your asset base aligned with market needs.
Establish feedback loops. Refine your approach. And continuously invest in your team’s skills and market understanding.
Final Thoughts: Awareness Is the First Step
Many companies sit on valuable IP without realising it. If your leadership asks whether the patent budget delivers ROI, or if unused assets are piling up in the portfolio, it is time to act.
SEP monetisation requires expertise, resources, and persistence. If building a complete licensing program is not feasible, patent pools remain a viable path.
A well-executed SEP monetization strategy not only generates revenue but also creates strategic clarity, strengthens market position, and converts IP into a tangible business asset. Companies that act early transform dormant patents into predictable revenue streams; those that delay risk leaving millions untapped—or losing leverage in global negotiations.
