Putting trust back in IP licensing: DLT smart licenses for the internet of things

Our proposal aims to help solving a trust problem between licensors and licensees that occurs during the active life of license agreements. We particularly focus on licensing of proprietary intellectual property (IP) that is embedded in Internet of Things (IoT) devices and services (e.g. patented technologies). To achieve this we propose to encode the logic of license agreements into smart licenses (SL). We define a SL as a 'digital twin' of a licensing contract, i.e. one or more smart contracts that represent the full or relevant parts of a licensing agreement in machine readable and executable code. As SL are self enforcing, the royalty computation and execution of payments can be fully automated in a tamper free and trustworthy way. This of course, requires to employ a Distributed Ledger Technology (DLT). Such an Automated Licensing Payment System (ALPS) can thus automate an established business process and solve a longstanding trust issue in licensing markets. It renders traditional costly audits obsolete, lowers entry barriers for those who want to participate in licensing markets, and enables novel business models too complex with traditional approaches.