How Legal Trends Are Shaping IP Licensing in 2025

We’ve seen quite a few of the major tech players in the headlines over the past twelve months for Intellectual Property (IP) licensing controversies. PanOptis, an IP holding company in the telecommunications industry, recently launched a campaign to highlight what it sees as exploitative practices from Apple regarding their research and development in the telecom industry and associated IP.  As another example, Acer ended an IP licensing dispute with a wifi-tech development company in August 2024 in a more conventional way, through licensing. Currently, there are a number of ongoing disputes among and against the companies that have developed generative AI, relating to where these companies acquired the training data. Clearly, access to IP rights remains actively contentious. 

We’re going to dig into some trends we’re seeing in the IP licensing sphere to help you understand how changes in the legal landscape might affect your IP strategy for 2025. 

Trends in Adjudicating Patent Troll Disputes 

A patent troll, also known as a Patent Assertion Entity (PAE), is a company that acquires patents to enforce patent rights through aggressive litigation or licensing demands rather than to develop products. These entities often sue first and talk later, with a view towards obtaining settlements or licensing fees from larger tech companies. They seek to profit from tech companies who make the commercial decision that it’s cheaper to settle than to litigate.  

Some courts, however, are showing an increased willingness to scrutinize the proffered licensing terms and whether they align with fair, reasonable, and non-discriminatory (FRAND) principles. One example was Cloudflare’s victory in court over the patent troll Sable, which resulted in Sable (the plaintiff) paying Cloudflare (the defendant) $225,000.  Although far less than Cloudflare’s cost of litigation, this decision demonstrated that an operating company can fight a patent troll and win. You can read more about this case here. 

What This Means for Startups 

Startups are especially vulnerable to patent trolls, because they are often resource-constrained and are thus more likely to give in to the troll’s unreasonable demands. However, the legal environment is shifting, with  judges becoming more willing to evaluate the substance of licensing agreements, rather than simply enforcing rigid contract terms. This can work in a start-up’s favor if you are prepared: 

• Expect stronger judicial scrutiny of aggressive IP enforcement actions. 

• Ensure licensing agreements reflect FRAND principles to minimize litigation risks. 

• Consider proactive licensing strategies that balance protection with industry collaboration. 

AI and Data Licensing: A Hot Topic in IP Disputes 

Generative AI has introduced a host of novel legal challenges having to do with the rights of the AI companies to use third-party data to train AI models. These legal challenges center around whether access to training data had been authorized by the data owner, or whether instead the AI companies infringed on the third-party IP by using that data to build their large-language models. 

Since the legal issues are new and the technology is complex, final court decisions have not yet emerged that can guide AI companies’ future decision-making.  Right now, it’s a grey area, without judicial or legislative guidance. In an ideal world, one could hope that  intervention from lawmakers would provide greater clarity, but this may not be in the cards for 2025.  In fact, we would predict that a regulatory framework to guide the use of third-party IP for AI is unlikely to emerge in the foreseeable future.   

What This Means for Startups 

In this murky legal environment, start-ups in the AI space should proceed cautiously. For example, if courts impose stricter requirements on sourcing data for AI training, startups may need to reevaluate their data acquisition strategies and licensing agreements to ensure compliance. Startups should also: 

• Carefully vet AI training data sources to identify and proactively avoid future IP conflicts. 

• Monitor ongoing litigation and regulatory guidance to adapt licensing practices accordingly. 

• Work with legal counsel to draft AI licensing agreements that account for emerging risks. 

Acquisitions and Design-arounds As A Strategy For Resolving Licensing Disputes 

While acquiring IP outright can be an effective way to resolve disputes, it is not always the best or most cost-effective solution. As an additional tactic, a company should consider whether a design-around exists that avoids third-party IP being asserted against it in litigation. If design-arounds fail, early consideration of business opportunities such as joint ventures or licenses may lead to more favorable terms for both parties. 

What This Means for Startups 

Technical alternatives may be better solutions to IP disputes than legal or business resolutions. In fact, it may be possible to survey the IP landscape before committing to a technology design to see whether IP problems might exist that can be avoided by revising the product design.  A licensing strategy could be initiated early in the commercialization process, before IP-related litigation commences. Startups may find it more beneficial to negotiate long-term licensing agreements or form joint ventures early on, instead of negotiating in the face of litigation. When IP issues are unavoidable, acquisition-based resolutions should be weighed carefully against licensing alternatives.  

• Proactively investigate the IP landscape as your company designs its commercial product so that potential design-arounds can be considered. 

• If third-party IP can’t be avoided, consider early negotiation of licenses or joint ventures to obtain more favorable terms than would be available during litigation.  

• Explore licensing partnerships that allow for shared IP benefits without the costs of acquisition. 

• Recognize the availability of acquisition, but assess its short-term costs and long-term impact on the company’s innovation strategy  and market positioning. 

Navigating IP Trends in 2025: How Your IP Attorney Can Help  

Be aware that these are uncertain times in the legal environment for IP licensing. As a judicial and/or regulatory framework for IP licensing continues to emerge, we suggest that you proceed carefully to protect your company against the expense and nuisance of litigation. There are ways in which a business-oriented IP attorney can help. 

• Scan the horizon for potential third-party IP problems early on, so that you can take steps to prevent a dispute from arising later. Technical solutions to avoid infringement altogether might be feasible.  

• Licenses or joint ventures established before disputes arise may be more attractive to both parties than an acquisition(and more affordable to a young company). Also, licenses that are negotiated during the normal course of business may well be more favorable to the licensee than those licenses that are imposed as a result of litigation. 

• Your IP licensing agreements are business documents that offer essential legal protection. Your infringement, indemnification and dispute resolution clauses in particular should be regularly reviewed to ensure that your protections align with current trends in IP disputes.  

• The costs of litigating IP disputes and negotiating licenses during litigation are significant and expected to grow throughout 2025 and beyond. You should consider alternative dispute resolution strategies before resorting to litigation, including writing pre-litigation mediation clauses into your licensing agreements. 

• Companies in the AI space should be especially vigilant, since the law is unsettled for this technical field. Whether you’re collecting training data or using generative AI, your company should have clear policies to reduce the risk of disputes relating to the use of AI training data. This may include managing sourcing and licensing to mitigate risk. 

If you need assistance managing your company’s IP assets and agreements, reach out. Our team of intellectual property attorneys is ready to work with you.  

• Intellectual Property