back to article Sorry, Qualcomm, Apple – your patents don't scare us

Patent royalties make up a higher proportion of cellular device costs than in most other markets, so the IPR game has been a hard-fought and sometimes vicious one. At the start of 2015, various developments suggest that the playground bullies of the past will lose a lot of their power. Qualcomm is on the defensive in China, …

  1. Ashton Black
    Joke

    I do wonder, sometimes...

    If all the patent lawyers in the world were laid end to end across the Atlantic... then how much happier I would be?

    1. Anonymous Coward
      Joke

      Re: I do wonder, sometimes...

      I don't know. Do you own a roadroller?

      1. PNGuinn
        Coat

        Re: I do wonder, sometimes...

        you mean a searoller???

  2. ratfox

    Anything that can diminish the power of patents counts as a good thing in my book. The system is not working as intended, and is now an obstacle to innovation. At least in the IT world.

    1. big_D Silver badge

      At least many countries and regions have seen sense and declared that you cannot patent software, it is already covered by copyright.

      1. Chris Fox

        Not so safe after all

        "At least many countries and regions have seen sense and declared that you cannot patent software, it is already covered by copyright."

        Unfortunately things are not so simple as that. In many jurisdictions where "software as such" (i.e. the program text that you can copyright) is supposedly not patentable (as in, e.g., UK patent law and Article 52 of the EPC), it turns out that you *can* effectively patent software provided that you talk about (e.g.) the "technical effect" of executing the software.

        In the UK and other European countries in which software is not supposed to be patentable there have been court rulings that uphold a bizarre interpretation of "software" and a "computer" where software ceases to be software when it is running, so is no longer excluded subject matter, and where, furthermore, a computer running a piece of software ceases to be a computer, but is instead a new technical artefact, which can be the subject matter of a patent.

        As in the US, sophistry and reinterpretation often allow patents on software (and other abstract notions) in all but name, despite what at first appear to be clear and unambiguous prohibitions.

  3. GavinL

    Patents

    I really don't get the patent argument for technologies embedded inside the chips sometimes.

    If I buy a computer with an AMD cpu that contains IBM or Intel patents, I expect that AMD are responsible for any license payments, not the manufacturer of the computer system. Therefore then the manufacturer of a modem chip that implements the 4G signal (whether that is a stand alone chip or part of a SoC) should be responsible for payment based on the price of the chip, not the company that puts that chip in a phone.

    If I build a small IoT sensor that uses chips that include patented technologies, how would I know if any relevant licenses had been paid? and should I be liable if they were not, having bought the chip in good faith?

    1. Will Godfrey Silver badge
      Coat

      Re: Patents

      You really should stop being rational - it won't get you anywhere.

    2. thames

      Re: Patents

      If has to do with the history of the mobile phone industry versus the history of the PC industry. In the PC industry, the device manufacturers just buy off the shelf bits and bobs, slap them together, and sell them as cheaply as possible. The patents which matter are held by upstream suppliers, many of which are monopolies, or near monopolies and few of which are in the PC manufacturing business.

      In the mobile phone industry, the dominant device makers themselves conduct major R&D efforts into the fundamental technology of mobile communications (Apple being a notable exception). Nokia, Motorola, Samsung, LG, etc. all have loads of patents which are at the core of all mobile phone technology. They also hold many patents which were relevant to areas outside of the mobile industry as well.

      The result of this is that these big companies would cross-license their patents to each other in blanket cross-licensing deals which tended to more or less cancel each other out. Companies which did little tin the way of R&D would however have to pay full price to each of the patent holders.

      The FRAND terms for these patents simply means that the patent holders agree as part of participating in the standards process to offer to license them to all comers at the same rates. Of course that doesn't preclude negotiating a better deal (generally in return for use of the other party's patents), it's just that the opening offer must be the same for everyone, and the opening offer must be "reasonable" with reasonable being defined as being in line with other similar patents. You can't simply say "no I don't like you, so I'm not going to license this standards essential patent to you". However, these companies aren't running a charity, and they expect to get paid for the use of their patents and to make a profit on their R&D efforts. If you've got nothing to offer in return, expect to pay full price for the use of those patents.

      However, most of the patent holders (other than Samsung) weren't major chip manufactures. They would have to buy the chips incorporating the technology, even for ones using their own patents. This meant that if the price of the patents were always incorporated into the price of the chips, the major device manufacturers would end up paying twice for the same patent (once via the cross-licence deal and once to buy the chip), while the companies which did no R&D paid only once.

      As a result of this, there were typically two ways to buy chips. One is to buy it with the patent price included. That's what you would go for if you didn't have a licensing deal directly with the patent holder. The other way is without a patent license, for when you didn't need one (because it was your patent anyway), or if it was covered under your existing direct license agreements. Sometimes option one (the fee is built into the price) isn't available because of market conditions.

      Chips sans licenses of course are cheaper, which means that companies which don't have any patents but wish to cut their BOM costs are tempted to buy those and fight it out in court with the patent holders.

      This sort of mare's nest is of course the reason why everyone involved in software who isn't a patent weasel wants to keep patents out of the software business.

  4. DropBear
    Mushroom

    Kill them with fire...

    Patents were always operating on a severely misguided premise: that facilitating a new discovery be made public by offering it protection would help others make use of that discovery. That premise in turn is based on the thoroughly false assumption that said discovery is a rare, precious thing that warrants being shared even under restrictive conditions. Utter bullshit. Today we know those "earth-shattering discoveries" are a dime a dozen, limited only by your R&D budget - it's the difference between the delusional assumption the we still wouldn't have phones if Bell failed to invent them versus the reality that they were actually re-invented simultaneously five minutes later.

    And that means that instead of helping the inventor sharing his wondrous new discovery with the rest of the world, patents actually punish and prevent the rest of the world from making use of that discovery when everyone and their uncle inevitably comes up with the same solution to the same problem right on the heels of the first guy. Patents effectively say that I need to rent my own ideas just because some bozo happened to come up with them last week. In my book, if I can come up with an idea, I should be free to use it. If you think yours is invaluably unique, lock it up and/or shove it somewhere the sun don't shine, right next to the one about rectangles with rounded corners, where it belongs. Now, kindly hand over those blast goggles please, I wanna see what this big red button does ->

    1. Ashton Black

      Re: Kill them with fire...

      That's quite the interpretation.

      The problem is, it was never about "sharing the wondrous new discovery" for most inventors/companies it was about "making the most money from the wondrous new discovery."

      Additionally, how do we know that you actually HAD the same idea? May I suggest it's significantly quicker and cheaper to reverse engineer an item, than it is to complete, potentially years of R&D?

    2. Steve Knox
      Boffin

      Re: Kill them with fire...

      Today we know those "earth-shattering discoveries" are a dime a dozen, limited only by your R&D budget...

      Any R&D department held to a 12-discovery per $0.10 spent standard would fold within a year.

      Let's look at some real-life R&D budgets:

      IBM: In 2013*, they had the most (utility) patents granted by the USPTO, at 6,788. Your valuation would imply that they spent $56.57 on R&D in 2013. In actuality they spent $6.5 billion on R&D in 2013. Cost per dozen: ~11.5 million.

      Samsung: had 4,652 patents, worth (apparently) $38.77. Actual 2013 R&D spending: $4.3 billion. Cost per dozen: ~11 million.

      So it's a closer approximation to say that these "earth-shattering discoveries" are approximately $11,000,000 per dozen. I'm sure someone with more time to research or better sources could come up with a more accurate figure.

      In fact, just to pay the wages (not including benefits, facilities, etc) of a single minimum-wage full-time US worker, an R&D department would, based on your standard, have to develop 1,809,600 ideas to patent-eligible status per year. That's 6.5x the number of US patents granted in 2013 (277,835), and nearly half of all US Patents granted in the past 25 years (3,803,188).

      * Based on most recent USPTO statistics, available here.

      1. Flocke Kroes Silver badge

        First mover advantage

        IAVO. So old in fact that I pre-date software patents. Back in that stone age programmers could profit from there software without any 'protection' from the patent mob. If someone wrote something equivalent to your software, by the time they got it to market you would have version 2 ready.

        Later when the patent office started accepting patents for 'computer implemented inventions', some companies had sufficient stupidity to patent their software. Patents take years and money to obtain, then even more years to sue someone into paying a license fee. The companies that focused on patents rather than products went bankrupt and sold their portfolios for a pittance to trolls. The trolls had a horrible time monetizing their patents until they stopped aiming at programmers and hit the merchant bankers instead. The breakthrough 'invention' was pastel bars on graphs to guide the reader's eyes from the scales to the wiggly line. The bankers caved in without a fight at gave the trolls the money they needed to file enough niucanse litigation to get regular pay days.

        The idea of patents was to reward inventors for publishing their invention with a 'time limited' (20 year!) monopoly. Nobody reads patents anymore - unless they get sued. In part that is to avoid tripple damages for knowingly infringing. The other reason is that the vast majority of patents would be obvious to a crushed worm if they were not written in obfuscated patent language. Now that inventors do not read patents if they can possibly avoid it, the value of publication has gone, and the monopoly reward should vanish with it.

        Although setting fire to patent lawyers sounds very gratifying, I would rather just fine them for racketeering.

        1. Charles 9 Silver badge

          Re: First mover advantage

          The main problem now isn't the exclusivity but the length. When the length was first used, industries were usually about durable things that last decades. But software cycles quickly. You can fix the patent problem by specifying different lengths for different industries: say a max 3 years for software and 5 for hardware.

        2. Charles 9 Silver badge

          Re: First mover advantage

          "If someone wrote something equivalent to your software, by the time they got it to market you would have version 2 ready."

          Thing is, copycatting also makes it easier to leapfrog. Since all the effort of the v1's already done, they can think of ways to one-up you. So by the time you come up with a version 2, they may have not only anticipated but also gotten ahead of you, coming up with the equivalent of your version 3 at the same time. Suddenly you're in the uncomfortable position known as "First is Worst."

          If you can be so easily leapfrogged with no recourse, why bother trying? As a result, we could end up back in the days of the Renaissance when most works were reserved for commissions from the wealthy and powerful. Note that most of the revered works of art were just that: commissions only revealed to the public long after it was originally made and therefore useless in a contemporary sense. How would you like it if the most useful software (and by that you can include the stuff needed to make other software: compilers and the like) was instead kept under the lock and key of ultra-conglomerates a la Gibson's Sprawl?

  5. DerekCurrie
    Unhappy

    Inventing the IP ≠ Being The Bully

    Inventing the IP ≠ Being The Bully.

    Inventing the IP = You own it. You protect it.

    What exactly are Android devices if not a ripoff of Apple invented IP?

    Why exactly is ripped off Apple invented IP called 'competition' against Apple? It's plagiarism.

    Copycats are the bullies. They stole your IP, no lunch for you.

    https://lh4.googleusercontent.com/-jh_l9yvNbzU/TWm2ejjkjSI/AAAAAAAAATA/qWUp-_gJzmw/s640/copycat.jpg

    "COPY CAT SAYS:

    when you copy

    you stop creating

    when you stop creating

    you stop imagining

    when you stop imagining

    you become ordinary

    when you become ordinary

    you need to copy...

    see the problem?"

    [ShopJustLovelyThings.com]

    1. Anonymous Coward
      Anonymous Coward

      Re: Inventing the IP ≠ Being The Bully

      Uh, no.

      Inventing the IP ≠ Granted the patent.

      Until you understand that the owner of the patent is not necessarily the inventor (or the employer of the inventor) you've got nothing to say.

    2. NumptyScrub

      Re: Inventing the IP ≠ Being The Bully

      What exactly are Android devices if not a ripoff of Apple invented IP?

      Why exactly is ripped off Apple invented IP called 'competition' against Apple? It's plagiarism.

      Apple did not invent icons (that was Xerox PARC)

      Apple did not invent touch screens (that was E. A. Johnson)

      Apple did not invent touchscreen phones (that would be the IBM Simon)

      Apple apparently did not invent the first "rounded corners" rectangular phone where the touchscreen was the main interface (that might be the LG Prada)

      So please, enlighten me with exactly which "Apple invented IP" that Android ripped off? From here it looks like Android "copied" exactly the same other people's IP that Apple copied used to make the iPhone, but I'm willing to be corrected. :)

      1. Charles 9 Silver badge

        Re: Inventing the IP ≠ Being The Bully

        But who was the first to put ALL of them together into a whole greater than the sum of its parts? Gestalt effect.

  6. Anonymous Coward
    Anonymous Coward

    Basing licensing costs on price of the device rather than the chip is ludicrous

    I doubt GM holds any 3G/LTE standards essential patents. When they include a cellular chip to implement OnStar, should Ericsson be entitled to a percentage of the dealer invoice price of an Escalade?

    There is no history in the cellular market of charging this way, but companies that are failing in the marketplace seem to seize on this as a way of increasing their revenue from those who are succeeding. It is no one's fault but their own that Ericsson couldn't cut it in the smartphone age, or that Motorola couldn't keep their early Droid momentum going once Samsung jumped into the Android market and ate their lunch.

    So both seized on the idea of increasing licensing revenue 10x or more by basing it on the sales price of the phone rather than the cellular SoC. Companies at the end of their rope always reach for the patent lifeboat before going under (which Motorola already has, effectively, as Google bought them and parted them out)

  7. Andy 31

    "destructive to mobile device innovation as the Apple-Android wars." What a joke of an article. Mobile phones have undergone the most sustained period of innovation in their history since Apple stepped in and showed them how to do it.

    You discount the merit of innovative engineering to just an asset that these corporations trade amongst themselves. Companies purchasing large volumes of patents to protect themselves against claims made by other companies who actually *make new things* is not just strategic manouvering, it's a shitfull practice and part of the reason the patent system is so screwed up.

    The idea that the chinese players who rampantly steal and copy should have equal footing in Western markets fundamentally stupid. Your facination with the game seems to have obscured any rational thinking on what is actually right and wrong.

  8. PNGuinn

    Interesting times....

    Do I detect the first death throws of the current patent system?

    An excellent idea in principle, which should in particular protect the work of the little man - but abused to the hilt by big greedy corps and trolls and their slimier lawers. To say nothing of patent offices incompetent to the point of corruption.

    So now increasingly disfunctional. How much further can it co before we get to the extreme point where everyone decides we would be better off without patents at all? If enough of the big boys begin to think so - and their cages are beginning to be rattled - things might change quite quickly.

    Forget the little man - he's counted for nowt in this game for many a long year.

    WON'T ANYONE THINK OF THE LAWYERS?

  9. mark 177
    Headmaster

    Time for Pedantry

    "Google neutrality pacts has shifted the balance"

    What has happened to the pedants today? Still asleep?

    Oh well, I'll have to do it then - plural subject requires plural verb, El Reg!

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