Automotive Patent Licensing: 6 Smart 2026 Decisions

Every connected vehicle on the road implements cellular standards — 4G, 5G, C-V2X — covered by thousands of patents held by dozens of companies. An automaker cannot ship a car without a licence to those standard-essential patents, and tracking them down one owner at a time is nearly impossible. That is why automotive patent licensing now runs largely through patent pools, and why a 2026 UK Supreme Court decision over the Avanci platform has the whole industry rethinking the pool-versus-direct choice.

Automotive Patent Licensing in the Connectivity Era

A standard-essential patent (SEP) is one you cannot avoid infringing if you build a product that complies with a technical standard. Cellular connectivity is defined by exactly that kind of standard, so a car with a modem for emergency calling, over-the-air updates or telematics necessarily uses hundreds of SEPs owned across the industry.

SEP owners who contribute their patents to a standard agree to license them on fair, reasonable and non-discriminatory (FRAND) terms. That promise is the backbone of the system — and the source of most of its litigation. For a deeper primer, see our guide to standard-essential patents and FRAND.

Patent Pool vs Direct Licensing: The Core Trade-off

There are two ways to clear the SEP thicket, and the choice drives cost, risk and administrative load:

• Direct (bilateral) licensing — you negotiate a separate deal with each SEP owner. You control the terms of each, but at the scale of cellular SEPs this means dozens of simultaneous negotiations, dozens of potential disputes, and no guarantee the rates add up to something reasonable.
• Pool (platform) licensing — a single licence from a pool operator covers the patents of many owners at a published flat rate. One signature, predictable cost, no per-owner haggling. The trade-off is that you take the pool’s rate largely as offered and pay for the whole portfolio, including patents you might have challenged individually.

In practice, bilateral licensing at the scale of automotive connectivity is close to unworkable — and courts have started to say so openly. That is what has pushed most of the industry toward pools.

How the Avanci Model Works

Avanci is the dominant automotive SEP pool, and its structure shows why pools took over. It offers one-time, per-vehicle licences that last for the life of the car:

• 4G Vehicle program — $20 per connected vehicle, paid once, covering 2G, 3G and 4G (launched 2016).
• 5G Vehicle program — $32 per vehicle, or $29 for early adopters who sign before their first 5G vehicle sale, covering 2G through 5G plus C-V2X (launched 2023).
• eCall-only — $3 per vehicle for emergency-calling implementations.

According to Avanci’s own program terms, its licensors hold roughly 90% of the 4G and 5G cellular SEPs worldwide, and more than 150 automotive brands now take at least one of its vehicle licences. For an automaker, that converts an unbounded licensing problem into a single, predictable line item of a few dollars per car.

The FRAND Backstop: Tesla v InterDigital and Avanci

On 27 July 2026, the UK Supreme Court handed down a landmark decision in Tesla’s dispute with InterDigital and Avanci (UKSC/2025/0058/A). The ruling did not blow up the pool model, but it reshaped the leverage around it.

The court held that the FRAND obligation a SEP owner takes on does not disappear when that owner licenses jointly through a pool or platform — joining Avanci does not release InterDigital from its own FRAND promise. It also confirmed that English courts have jurisdiction to determine FRAND terms for a pool licence, not just for bilateral deals, and that Tesla had a real prospect of showing the only FRAND licence for the relevant SEPs was a global platform licence at a FRAND rate.

Crucially, the court did not decide whether Avanci’s $32 rate is actually FRAND, nor that a pool licence will always be the only FRAND option. That question goes back to the High Court. The takeaway for implementers: a pool rate is now challengeable in court as a FRAND matter, which gives licensees a real negotiating backstop they did not clearly have before.

When a Pool Makes Sense, and When to License Directly

The decision rule we give clients comes down to scale, leverage and the strength of the portfolio you would otherwise challenge:

• Take the pool when you ship at volume, cannot absorb dozens of parallel negotiations, and value certainty and freedom-to-operate over squeezing the last dollar out of the rate. For most automakers, this is the default.
• License directly when a single owner holds a disproportionate share of the value, when you have a credible invalidity or essentiality challenge to specific patents, or when your product only touches a narrow slice of the standard and the flat pool rate overcharges you.
• Do both — many implementers take the pool for coverage while negotiating or litigating with the one or two owners whose rates they believe are excessive.

Essentiality matters here: pools are not audited patent-by-patent, so part of due diligence is understanding whether the patents you are paying for are genuinely essential. Our work on FRAND royalty rates and who owns 5G patents is a useful starting point.

Beyond Cars: Why the V2X Thicket Is Growing

The connectivity problem is not standing still. Vehicle-to-everything (V2X) communication, advanced driver-assistance features, infotainment codecs and Wi-Fi are each layered on top of cellular, and each carries its own set of standard-essential patents. Avanci has already extended its model with programs for additional technologies, and other pools cover video and audio codecs that modern infotainment systems rely on.

For a product-planning team, the lesson from telecom is that SEP exposure compounds as you add connected features. A car that once needed only an emergency-call modem may now implement five or six separate licensable standards. Mapping that exposure early — before a model ships — is far cheaper than discovering it in a demand letter. This is where a structured patent landscape and essentiality review pays for itself, because it tells you which pools you genuinely need and which demands you can push back on.

What This Means for Automakers and Suppliers

The licensing point in the automotive supply chain has been contested for years — should the SEP licence sit with the Tier-1 modem supplier or the carmaker? The industry has largely settled on licensing at the vehicle level, which is why Avanci’s rates are per car rather than per chip. If you are a supplier, check your indemnity clauses: you may be carrying SEP risk your contract never priced in.

For a carmaker, the practical agenda for 2026 is straightforward. Budget the per-vehicle pool cost into each connected model, use the Tesla ruling as leverage if a specific owner’s bilateral demand looks unreasonable, and treat essentiality and portfolio analysis as a cost-control exercise rather than a legal afterthought. Licensing well is now a margin question, not just a compliance one.

How PerspireIP Can Help

PerspireIP helps technology and automotive clients value SEP portfolios, test essentiality, and build the evidence behind a FRAND position — whether you are deciding between a pool and a direct licence or challenging a rate. See our guide to patent pools or contact us to scope a licensing or landscape analysis for your connected-vehicle program.

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