In response to concerns that inefficiencies in standard essential patent (SEP) licensing may have a negative impact on the development of emerging 5G and Internet of Things (IoT) markets, the European Commission (EC) convened an Expert Group on Licensing and Valuation of Standards Essential Patents (SEP Expert Group) which produced a report including 79 proposals aimed at improving the SEP licensing market. A proposal formulated by an individual member of the SEP Expert Group regarding Licensing Negotiation Groups (LNGs) has recently generated a renewed interest in the topic in the context of IoT, where a large increase in the amount of SEP licensing activity is predicted as connectivity becomes ubiquitous across most industries. While LNGs have been previously promoted to solve the perceived problem of patent holdup, we propose that LNGs should be used to solve patent holdout, which is aggravated by a collective action problem among similarly situated IoT implementers. Applying legal, economic, and management principles and norms, the resulting LNG design seeks to significantly reduce transaction costs and patent holdout while curtailing potential antitrust risks, especially regarding SEP implementers situated in the “long tail” of new IoT markets.