In Standard Essential Patent (SEP) licensing negotiations, implementers (licensees) have long harbored a core frustration: “Faced with a massive patent pool—a consortium of rights holders wielding tens of thousands of patents—is it fundamentally asymmetric for an individual implementer to negotiate one-on-one, given the severe imbalance in information symmetry and resources?”
To bridge this gap in information and bargaining power, implementers are increasingly looking to a new defensive shield: the Licensing Negotiation Group (LNG).
This article explores why LNGs cannot achieve “commonplace” adoption compared to their counterpart, the patent pool, and analyzes the deep regulatory rifts shaking the IP and antitrust landscape in 2026.
1. LNGs and Patent Pools: A Mirror-Image Structure
To understand the friction, it is helpful to contrast these two mechanisms:
- Patent Pools (Supply-Side Aggregation): A consortium where multiple rights holders aggregate their SEPs to create a single point of contact, offering a comprehensive, portfolio-wide license to implementers (e.g., Avanci, Access Advance).
- LNGs (Demand-Side Aggregation): A coalition where multiple implementers (product manufacturers) join forces to collectively negotiate license terms and royalty rates with a specific patent owner or patent pool.
Essentially, where a patent pool is a “seller cartel” of sorts, an LNG is a “buyer cartel.” Just as patent pools streamlined licensing by consolidating negotiations, LNGs have emerged under the banner of reducing transaction costs and balancing the scales for implementers.
2. Why LNGs Struggle to Proliferate: The “Buyer Cartel” Hurdle
While competition authorities globally generally permit or encourage patent pools—provided they aggregate complementary technologies—to foster efficiency and technology dissemination, LNGs face an inherent, fatal legal obstacle: antitrust and competition law violations.
When direct market competitors (e.g., Automakers A, B, and C) quietly assemble to pre-agree on input costs—such as patent royalty rates—or coordinate a collective refusal to license (“collective hold-out”) if their terms are not met, the behavior is highly likely to be scrutinized as an unlawful buyer cartel. Such coordination suppresses the legitimate value of technology and distorts free market competition.
Under traditional antitrust principles, a buyer cartel organised to depress prices is viewed with the same severity as a seller cartel fixing prices. Because of this legal boomerang, most enterprises have remained extremely cautious about forming or joining an LNG.
3. The Push for Collective Defense: Arming for the IoT Era
Despite these severe antitrust risks, automakers and IoT device manufacturers are actively trying to establish LNGs. This momentum is driven by two market realities: the sheer scale of modern wireless patent pools and the entrenchment of the Entire Market Value (EMV) approach.
With the rise of mega-pools like Avanci, uniform royalty rates—such as $32 per 5G connected vehicle—have become the de facto industry standard. Individual OEMs simply lack the legal, technical, and financial resources to independently vet whether tens of thousands of patents in a pool are truly essential, or if specific assets are vulnerable to invalidation. Consequently, manufacturers have been forced into a binary choice: accept the dictated rate as-is or face crippling litigation risks.
In response, implementers are attempting to use LNGs to deploy the following defensive strategies:
- Breaking the Wall of Non-Disclosure Agreements (NDAs): Licensors routinely use strict bilateral NDAs to prevent implementers from discovering what peers are paying. LNGs aim to bypass this opacity, pursuing industry-wide transparency and establishing a benchmark safe harbour for reasonable rates.
- Joint Essentiality Checks: Since mega-pools can inadvertently include weak or non-essential patents, competing implementers seek to pool their resources to conduct collective technical auditing (patent counting), preventing the artificial inflation of royalty bases.
4. Current Trends: The Decisive Transatlantic Rift and Japan’s Stance
The future viability of LNGs rests on a stark divergence in legal interpretation among major global regulators.
① The European Commission (EC): Conditional Harmony and Strict Safe Harbours
Seeking to preserve the global competitiveness of Europe’s cornerstone automotive sector, the EC has shown a conciliatory attitude toward LNGs. In July 2025, the EC issued an informal guidance letter (comfort letter) to a prominent automotive joint negotiation group (ALNG), signaling that the arrangement did not trigger immediate competition law concerns.
However, this is not a blank check. To prevent cartelisation, the EC imposed incredibly stringent firewall and information-blocking requirements: participating companies are strictly forbidden from exchanging any commercially sensitive data outside of the narrow scope of royalty rates, and they are expressly barred from engaging in coordinated bad-faith boycotts to stall negotiations.
② The U.S. Department of Justice (DOJ): Fierce Antitrust Pushback
In sharp contrast, U.S. antitrust authorities have rejected the European approach. Senior antitrust officials at the DOJ publicly lambasted the EC’s comfort letter, characterising it as a “concerning and unusual” measure incompatible with sound competition principles and labelling the shift an “unfortunate development.”
The U.S. position remains unyielding: LNGs risk creating an unlawful monopsony (buyer monopoly) that exerts artificial downward pressure on prices. The DOJ argues this fundamentally erodes the economic incentives required to fund R&D and invest in next-generation standards like 6G and AI.
③ Compliance Risks in the Japanese Market
In Japan, while the Japan Patent Office (JPO) “Guide to Licensing Negotiations Involving SEPs” and the Ministry of Economy, Trade and Industry (METI) “Guidelines for Good Faith Negotiations” emphasise negotiation efficiency and good-faith dialogue, they do not immunise collective action. The Japan Fair Trade Commission (JFTC) guidelines provide no clear guarantee that competitors collectively negotiating rates against a patent pool are safe from antitrust liability under the Antimonopoly Act (prohibition of unreasonable restraint of trade). For Japanese companies operating globally, localised legal risks remain high.
5. Conclusion
For manufacturers navigating the realities of connected products and autonomous driving, an LNG represents a powerful defensive shield capable of upending historical negotiation asymmetries. However, if managed poorly, a single misstep in data sharing or collective stalling can turn this shield into an antitrust boomerang, exposing participants to catastrophic cartel fines.
Faced with the consolidated supply-side leverage of modern patent pools, the demand side must find a way to rebalance the scales. Implementing or participating in an LNG requires far more than tactical bargaining power; it demands a sophisticated IP strategy capable of navigating the real-time, high-stakes friction between IP protection and antitrust enforcement across the U.S., Europe, and Asia.
Reference List
The analysis in this article is informed by the following official sources and professional legal commentaries:
- European Commission (EC) DG COMP: Case AT.40979, Informal Guidance Letter – Automotive LNG (July 2025). The official document outlining the EC’s antitrust evaluation and strict safe harbour conditions for the joint negotiation group established by BMW, Mercedes-Benz, Volkswagen, and Thyssenkrupp.
- U.S. Department of Justice (DOJ) Antitrust Division: Executive Statements and Official Speeches (October 2025). Detailed reporting and legal analysis of the speech delivered by senior DOJ antitrust official Dina Kallay, outlining why the EC’s acceptance of LNGs risks legalising buyer cartels.
- Skadden, Arps, Slate, Meagher & Flom LLP: Intellectual Property Alert: “EU Proposes Safe Harbour on Patent Licensing Negotiation Groups.” A practical legal analysis by the international law firm examining the EC’s proposed safe harbour guidelines for LNGs within the revision framework of the Technology Transfer Block Exemption Regulation (TTBER).
- UK Government (GOV.UK) Public Portal: CMA TTBER Consultation – Avanci Response. Public record containing formal legal submissions from patent pool administrators (such as Avanci) warning UK competition authorities about the anti-competitive risks of collective boycotts and coordinated hold-outs driven by LNGs.
This text was translated by a large language model (LLM).