So... is obligatory patent licensing subject to patent exhaustion? If so, what prevents a 3rd party factory from building chips and licensing tech, then selling chips and becoming the only party to pay royalties, and only on the cost of the chips, rather than on the final product? Is there some kind of legal differentiation of patent exhaustion based on who the purchaser is?
Only if that's part of the standard compulsory license agreement, and if any such agreement somehow gets around patent exhaustion. Which is more or less what I was curious about.
That would have definitely improved the state of things for the likes of BluRay software playback... Not to mention most electronics where software is a huge part of interaction.
I'm hoping we see some serious reduction in patents in the next few years, including compulsory licensing models for several sectors (namely medical/pharma).
I'm not sure I see how it would have much to do with BluRay at all, at least for playback of encrypted content, as I think that's all about licensing non-patent IP and agreeing to non-patent-related contractual terms.
If the licensing were done at the component level, than any software could be used with a BR Drive... no patent royalties on top of the existing implementations in hardware... though, who knows.
It's the Patent IP that is the problem... you don't license non-patent IP.
In Apple's case, the iPhone maker pays Qualcomm's licensing fee through its manufacturers. Apple doesn't have a direct license of its own. The fee is based on the total value of the device ($650 in the case of the iPhone) versus the value of the chip (closer to $20), but it's capped at a certain level. Neither company has disclosed the limit, but it's lower than the actual $650 price of the iPhone.
Are you saying that if Apple wins, we are going to pay less for iPhones? ;)
Apple's manufacturer Foxconn pays Qualcomm on their manufacturing costs (selling price to Apple), or $250-$300? Qualcomm's baseband is sold separately. Of course, Qualcomm would love to charge based on Apple's retail price $600+.
Given how important standards are in the realm of computers, I think the degree of protection patents provide is ludicrous. Patents ostensibly exist to benefit society while allowing the inventor to benefit from their invention. I feel like in the digital world the balance has tipped too far in favor of the inventor.
If we look to the industrial revolution for example, we have the conversion of linear motion to reciprocating motion. This is an incredibly important development for getting useful work out of steam engines. The most common solution is the crank and flywheel, but when James Watt was designing his steam engines he found that the crank was patented by James Pickard. Rather than license the crank, he invented the Sun and Planet gear[1]. The Sun and Planet gear was less efficient than the crank, but it was a suitable workaround which allowed Watt's engines to be competitive.
When it comes to computers, you either have the ability to interact or you don't. If you don't have the right radio, you cannot build a cell phone. If you don't have the right codec, you cannot build a web browser. Functionally, these patents are effectively more like patenting the concept of changing linear motion into rotational motion than patenting a particular mechanism for doing so.
I'm glad Apple is forcing Qualcomm's hand on this one.
so when apple uses its patents to sue samsung or get import ban it is alright but when the company that invented the tech before apple even sold phones asks for royalties it's theft?
>Functionally, these patents are effectively more like patenting the concept of changing linear motion into rotational motion than patenting a particular mechanism for doing so.
And one thing is clear: if the industrial revolution had started 20 years later due to some over-broad patent on a whole class of devices, then today we would be lawless cavepeople without electricity.
I mean just think it through! Surely whatever incentives the patent system created - including for Watt, or, for that matter, the wright brothers, pales in comparison to the fact that as a species we came this close >< to losing it all. There was a race against time and we won that race.
If the hundred thousand year old history of science had been delayed by just twenty years, surely we would have lost it all. The fact that the industrial revolution happened under a broad patent system that produced Watt, the wright brothers, and others, is the purest coincidence.
If the patent regime had been even slightly broader, the twentieth century would have been one very long, very boring appendix to Archemedes' screw.
Thank God that it happened to be just right! And alas, that nothing has been invented in the digital domain since 1997, since, alas, this system simply does not work there. :( :( :(
Can you imagine if things had been invented since 1997?
Imagine if people could communicate or innovate without patents coming and beating them up like a school bully.
one can dream. . .
(Sorry for dripping with sarcasm, you're just so wrong I cannot express it in any other way. who cares if a few patents are granted which are too broad -- big deal. literally a twenty year wait solves that problem forever. the contract with society works.)
Well it's entirely possible that if overly broad patents had killed the initial market for steam engines the industrial revolution could have been delayed far longer than 20 years, or perhaps not have even happened at all.
For instance, the Romans had toys that used steam, but the technology never made the leap to a productive use in the form of steam engines. One theory is that the vast use of slave labor in Rome meant that there was no economic impetus for the discovery of labor saving technologies. By the time the market was right for labor saving technology the basic technology used in the toy had largely been forgotten.
Another example is metallurgy in pre-Columbian America. To our knowledge, the Native Americans in North America never developed the technology to melt, smelt, cast or alloy metals. This was despite the fact that bronze alloys had been in use in the old world for over 6000 years by the time Columbus landed on the New World, and iron smelting had been in use for nearly 2500 years.
Innovation and invention do not exist in a vacuum. They are closely tied to the time and place where they occurred. So, yes, it would be entirely possible that electricity never would have existed if patent law was different 200+ years ago.
>Well it's entirely possible that if overly broad patents had killed the initial market for steam engines
yep, it's entirely possible that overly broad patents would have completely killed all innovation in the 20th century and we would not have electricity, internal combustion, patent medicines, flight, and in fact we would probably be flinging feces at each other. We would have probably forgotten how to read and write, under too broad of a patent regime.
(Sorry I'm dripping with sarcasm again, the statement I quoted you making is just so ridiculously wrong.)
By the way as wrong as you are, don't you think you should expand on your wrongness by at least trying to apply a wrong analysis of patent law to Roman times? Can't you at least speculate that somehow your wrong ideas are what kept the Romans from having an industrial revolution of their own?
I know they didn't have a patent law but for the sake of the narrative can't you lie and say they had very broad patents which completely stifled innovation? It would help your comment hang together better than your historical example from societies that did not have the benefit of patent law.
Just make the argument, somehow, that patents are what led firstly to the Roman civilization never developing internal combustion, electricity, modern metallurgy, or a host of modern inventions, and, secondly, maybe you could somehow expand the lie to show that the patent regime is what caused their downfall as a civilization. I know you could work it in there. you're already so wrong, it really is within your reach. just try your best.
Thank you for standing up for innovation. I think we can all agree that lying and being wrong about truth and history is a small price to pay in exchange for preventing our grandchildren from growing up in an illiterate world without electricity and where they have to eck out a living scrawling modern art out of feces. clearly this is where broad patents lead, and the fact that history has never shown this to be the case is just a coincidence.
Is the fact that something has never happened a good reason to believe that it doesn't happen inevitably, and all the time?
No, it just means that as a society we've been incredibly lucky. Like astronomically. It's all been one lottery win after another after another - the whole industrial revolution and all of the twentieth century. It can't go on forever.
We need to take a stand against (broad) patents. They lead to the exact opposite of what they have been shown to lead to in every society that has ever had them. What happens is NOT descriptive of what happens.
Only a fool would study history to see how things happen. Much better would be to write some lies about patent law in Roman times. I look forward to reading it.
(sorry about my tone - you're just so wrong, I can't reply in any other way.)
Suppose that patents had prevented 90% of useful inventions and overall progress over the last century. That is, imagine that for every 10 inventions you can list from the 1900s, 9 had been prevented. Do you agree that would have been a negative outcome?
Now ask yourself whether that outcome would have changed your conclusion today. If not--that is, if you can imagine finding enough material in the remaining 10% (without knowing about the missing 90%) to point out as proof that patents didn't limit innovation--then try extrapolating that out to imagine the difference between the dribble of inventions we saw in the 20th century vs. what could have been.
Firstly, I take your present comment very seriously because you write with great rigor. You direct me to run a thought experiment ("Suppose that patents had prevented 90% of useful inventions"). This is good. Presently, we will both be right: because either you are wrong and will change your mind or I am wrong and I will change [edit:my] mind. We have simply calculated different results and because you are willing to direct thought experiments, we will soon see which result is correct.
However, since you directed me to run a thought experiment I must point out that you did not complete the task I just assigned you. I told you to make up a lie that a broad and powerful patent regime is the reason that 1) the ancient Romans did not have an industrial revolution and 2) led to their downfall. I directed you to blame a broad patent system on this, however you did not do so.
Let me set this aside and look at the task you assigned.
You directed me to imagine that in the past century 90% of useful inventions and overall progress were prevented by patents. That is, you directed me to run a thought experiment where the patent system does not exist from the twentieth century, and you directed me to interpret the conclusion that under such a scenario as of 2017 there are 10n useful inventions, or the overall level of innovation or utility is 10n, where the current level is only n.
Okay, let me write this state of affairs descriptively:
-> From the Enlightenment onward, science and rational study took a front row in society. The Monarchy instituted a system of patents meant in part to support inventors and inventions. Progress accelerated until 1900. This saw the creation of the steam engine, industrial combustion, electricity, and many important inventions. Before we changed history to abolish all patents, the Wright brothers around this time were bicycle mechanics who relied on patents to justify their investment in mechanics. Prior to rewriting history, here is a description of the Wright brothers (how things actually happened):
"The brothers' fundamental breakthrough was their invention of three-axis control, which enabled the pilot to steer the aircraft effectively and to maintain its equilibrium.[4][5][6][7] This method became and remains standard on fixed-wing aircraft of all kinds.[8][9] From the beginning of their aeronautical work, the Wright brothers focused on developing a reliable method of pilot control as the key to solving 'the flying problem'. This approach differed significantly from other experimenters of the time who put more emphasis on developing powerful engines.[10] Using a small homebuilt wind tunnel, the Wrights also collected more accurate data than any before, enabling them to design and build wings and propellers that were more efficient than any before.[11][12] Their first U.S. patent, 821,393, did not claim invention of a flying machine, but rather, the invention of a system of aerodynamic control that manipulated a flying machine's surfaces"
As you can see, they invested huge amounts of time and equipment into a literal wind tunnel. Why? Because they were attempting to bring patentable inventions to a broad audience.
You ask me to imagine that this is n. But now we abolish all patents in 1900. We must now imagine that the Wright brothers contribute 10n to the development, instead of n, in the total absence of all patent laws, which was a primary motivation for their research.
How can we explain that they invest resources when we know that a primary actual reason for this huge investment of resources, was the patent regime?
Why didn't the ancient Romans build wind tunnels? Why weren't wind tunnels built in parts of the world that did not have a strong patent regime?
You ask me to imagine that for every n that was invented under the present regime, if we had abolished it, 10n would have been invented.
But we have very strong historical evidence to the contrary: namely the fact that this was NOT being done.
I think the weakest point of your argument -- which also has some strong points -- is when you point to specific inventions and ask why other societies didn't invent them or didn't pursue them, like the wind tunnels.
The Wright brothers were bicycle mechanics and had access to an enormous range of vehicle and propulsion-related technology which was mostly developed over the century prior to their invention of the airplane. Notably, they also had access to gasoline-powered internal combustion engines.
While it's plausible to argue that maybe the Wright brothers (or other important inventors) couldn't have afforded to dedicate the resources that they did to their invention and engineering efforts without the possibility of rewards from a patent's exclusivity, it's implausible to suggest that this is the most salient difference between inventors in different millennia. For example, the inventors in Leonardo's time or in ancient Rome didn't have internal combustion engines, or many other things that would actually make flying machines (or wind tunnels!) function usefully.
Indeed, a lot of the discussion we hear nowadays about the ability to build new kinds of flying machines, like flying cars or electric planes, relates to the problem of energy density in different kinds of fuels and power systems. These have seen a lot of improvement. You can perhaps credit the patent system for much of that improvement because it helped people raise money to spend on experimentation. But in any case, people in earlier millennia couldn't have just skipped over the need to have all of these other technologies available in order to make flying machines work.
(In fact, Leonardo devised some ideas for flying machines with people in recent times have gotten to work, but power and energy density, not aerodynamics, are still the obstacles to making these machines fly high and long.)
I'm not actually speculating about some invisible hand directing the Wright brothers, though. They were bicycle mechanics who had relied on patented work. As it began to dry up, they explored new things they could patent.
They literally explored flight purely because it was patentable. Period. If it hadn't been, they would not have played in that field.
Regarding the rest of your response, okay, I will grant you that asking for cross-cultural comparisons across millennia is problematic. So you simply must think through very rigorously even the thought experiments you suggested. Thanks for the discussion.
The lazer was patented after several products had hit the market. So, each single patent might block 20 years, but it's easy for a cluster of bad patents to block progress indefinitely.
great example! It's probably why the Laser was never commercialized and is not used anywhere in anything. Good example.
(/s - sorry. your example is a great example of patents working exactly and precisely like they should. I have a cheap and perfect laser in my mouse next to me right now, that's perfect and great and cost its manufacturer pennies. couldn't have picked a worse example.)
"Finally, in 1987, Patlex won its first decisive enforcement victory, against Control Laser corporation, a manufacturer of lasers.[29] Rather than be bankrupted by the damages and the lack of a license to the technology, the board of Control Laser turned ownership of the company over to Patlex in a settlement deal"
I am not sure that's working as intended in any way shape or form, considering the invention was "Gould's name for the device was first introduced to the public in a conference presentation in 1959"
>it's easy for a cluster of bad patents to block progress indefinitely
you meant like from 1959 to 1987. Sure is indefinitely. Imagine, if the world had ENDED in 1988 or 1989, then the world never would have gotten a patent-free laser.
/s - nothing else to reply to you. get some perspective before throwing words like indefinitely around. I remember when I was 12 I thought like 4 years ago was an eternity ago, I poo-poo'd books published more than 2 or at the most 3 years ago and I thought everything was instantly out of date.
turns out societies actually operate on a different timescale from 12 year-olds.
but otherwise everything you wrote makes sense. and if the world were to end in the next 24 months, then a lot of patent-encumbered technologies simply will NEVER be brought to market by certain companies, due to patents and patents alone.
I absolutely do believe that. The only thing is that I plan on the world existing longer than this time-frame - but if not, you're totally right and a lot of technology is being held back. only time will tell which of us is right.
Gould was issued U.S. Patent 4,161,436 in 1979, covering a variety of laser applications including heating and vaporizing materials, welding, drilling, cutting, measuring distance, communication systems, television, laser photocopiers and other photochemical applications, and laser fusion.[25]
So 1979 + 20 = 1999 - 1959 = 40 years which is twice the nominal 20 year patent terms.
Critically the original patent was overturned based on a private notebook from 1957. So, the public gained NOTHING from these patents because someone else had already published and others where actually creating the product and bringing it to market, but no based on a notebook which nobody saw suddenly the world changes.
What did you gain? Remember the chain of people leading to your mouse had nothing to do with this guy as he did not disclose his idea before people started making lasers.
I gained the laser. There are lots of ideas in notebooks all over the world that I have zero access to. Their inventors don't know about or use the patent system. They have no incentive to prototype, research, and publish their findings, license them to manufacturing partners, or go through the tens of thousands of steps that the laser went through to become a component that costs pennies, available to everyone in a variety of applications.
Sketches in notebooks don't help me. Inventors going through the patent process do.
But the guy who got the patent was the guy with the notebook who never showed it to anyone. Then when someone else got it to market he showed the patent office his notebook and then got a lot of money.
Note: We changed to a first to file in part to avoid this issue. But, now someone else can publish or even sell something, then after reading it you can submit a patent using their idea which is arguably far worse.
But note the law has changed, in fact been flipped on its head, now. It's first to the patent office now, regardless of who created the invention; and defensive publication is almost impossible thanks to a recent decision that most practioners have to be aware of an invention for it to be prior general art.
I've come to the same conclusion you have re: software patents. And it is the courts' fault. The use of functional language in patent claims is allowed without applying means-plus-funtion case law.
If you say "engine means for creating torque" in your patent claim, when you try to enforce your claim the court will look at the actual engine you disclosed in your patent's specification. You can't disclose a crank and flywheel and then assert it against sun and planet.
But if you call it an "engine module configured to provide torque" courts will let you assert that claim against pretty much anything vaguely like an engine that provides torque.
This phenomenon, where the need to license a patent is driven primarily by the need to comply with standard, rather than the advantages of the invention relative to alternatives, is accounted for in recent changes in the law of patent damages. See https://scholar.google.com/scholar_case?case=175128776687856....
Under this 2015 case, the patent owner gets less money if people just use their patent to comply with the standard, and not because it's a better way of doing something.
These are all FRAND patents that the dispute is over. In short, Apple is claiming that they aren't priced reasonably, which is a reasonable claim to make.
Why should Apple pay Qualcomm more for a radio in a 128GB iPhone than a 32GB iPhone?
because the royalties are proportional to the profit. since the patent claim is the profits wouldnt exist without the original work. it's just like tax works. a judge cannot declare that illegal without criticizing all of tax law.
What is reasonable and non discriminatory is a question of interpretation.
At the heart is the argument that only part of the iPhone value is wireless and putting a tax on the whole is not reasonable. Imagine the iPhone software and chip embedded into a car. Would it be reasonable for the car manufacturer to pay the same percentage to Qualcomm as Apple? Where do you draw the line?
There is a huge amount of innovation in the iPhone: Mechanical engineering, materials, sensors, camera, screen and software. None have anything to do with Qualcomm.
The value Qualcomm adds is equivalent to a very fast portable, wireless hotspot. A great thing to have and worth paying for.
These patents aren't cheap to develop or obvious. Of all the tech patents that are out there, high bandwidth and low latency communication is the hardest to develop. Apple is sitting on a mountain of cash, Qualcomm is absolutely in their right to charge them at the threshold it would take to develop an alternative.
In terms of "good to society" it's hard to say what expiration date is the optimal one at maximizing innovation over all possible futures. I think it's probably greater then 0, but below 100 years.
> There is pretty much no way that Qualcomm could ever get an injunction to stop sales of iPhones... Qualcomm is planning to ask the federal government to ban imports of iPhones. This is the technology equivalent of a Hail Mary pass.
It was unclear from the article why this is a Hail Mary, so I looked it up. It initially seemed to me that if Qualcomm offers Apple a licensing agreement, Apple agrees to it, and later decides not to adhere to the agreement, they should be able to seek injunctive relief. The relevant precedent is probably eBay Inc. v. MercExchange [1], which SCOTUS used to establish a four-factor test. Among the four are "that [the party seeking injunction] has suffered an irreparable injury;" and "that the public interest would not be disserved by a permanent injunction." Public can't live without that sweet new iPhone stuff ;) and QCOM can always get paid later.
Apple doesn't receive a license from Qualcomm. They pay their third party manufacturers which pass it on to Qualcomm (and until recently, Apple was receiving a rebate for some of it in exchange for exclusivity).
Also I doubt anyone is going to ban the iPhone over SEPs.
If Apple manufactured in the US, they could rely on eBay vs. MercExchange. But Apple imports from China. The rules for imports are tougher. That's handled by the International Trade Commission.[1] ITC cases take about a year, and if Qualcomm wins, iPhone imports will be seized at Customs. ITC rules favor American manufacturers fighting illegal imports. Qualcomm could win this.
To bring an ITC case, you have to be manufacturing the thing in the US, which Qualcomm does; they make and sell cellular radio ICs. ITC proceedings are thus not available to "patent trolls". This deals with most of the usual complaints about patents.
ITC actions are entirely about blocking imports. There's no issue of what's a "reasonable royalty". Qualcomm can just say "no imports". The Trump administration might view this as a win, as it would force Apple to manufacture in the US.
But wouldn't a decision to support the ITC injunction just bring Apple back to the negotiating table? Seems hard to believe that Qualcomm would go scorched earth on a customer like that. Especially one from whom it's getting big royalties from.
Cisco has done that to Arista in the past. Apple has done that to Samsung. Samsung tried to do it to Apple, but Obama overruled that. (The President can block ITC injunctions.)
Usually what happens is a very fast settlement by the infringing party.
I'm a bit biased, having followed Apple's legal misadventures last few years. Apple believes that their frivolous patents (eg, slide-to-unlock) are worth $7-$8 per device, while everyone else's patents, especially when it comes to SEP, are $0.000000x. It's not surprising that Apple is doing what they are doing now.
First, this Bloomberg article is somewhat misleading. IEEE and their recent policy statement on SSPUS has very little to do with what's at dispute here. ETSI regulates most wireless 3G, LTE patents and ETSI doesn't want to dictate how licensees and licensors come to FRAND rates or what they ought to be. IEEE is the first and the only one so far to have clarified their stance on SEP licensing, but most SSO, standard setting organization, don't want to meddle with licensing practices because they don't want to cross path with regulators (ie, anti-trust/competitive) or discourage potential contributing members from declaring their patents SEP.
Second, Apple has never directly licensed Qualcomm's patents. Apple's contract manufacturer Foxconn has long been a legit licensee of Qualcomm wireless patents (even before Apple iPhone was released back in 2007) and pays royalty based on their manufacturing cost, not on the retail price ($600 or more). Apple pays nowhere close to what many people believe they are paying.
Third, Apple technically breached the contract with Qualcomm by cooperating with KTC, Korean Fair Trade Commission, last year. Qualcomm essentially had a gag order on their contract forbidding their licensees from speaking out. While this is not uncommon -- Apple is notorious for doing the same to their suppliers (eg, GT Advanced?) and is much worse in many respects -- there are clearly some elements in Qualcomm's licensing practices that are quite troubling as well.
Forth, SCOTUS's recent eBay's decision doesn't too much bearing on Qualcomm's ITC case. While SCOTUS opinions' are the supreme laws of the land, USITC is a quasi judicial agency that operates on different level. Their decision doesn't set legal precedence. They are not in the business of calculating damages, or determining royalty rates or basis -- their only power is to issue ITC import ban when infringement or breach of contract is found. Companies do prefer USITC because ITC cases move a lot faster and ITC is not encumbered by the same high standards that lower courts must consider.
Your "second" item is probably wrong (brings doubt to your other 3 items...).
From cbanek: "The fee is based on the total value of the device" and "the royalty is about $15 per phone" versus the "value of the chip (closer to $20)".
Not sure what you mean. It's pretty much the industry standard to use entire device as the royalty basis. Further, many companies like Qualcomm, Nokia, Ericsson, do publish their per-device rates publicly.
Apple in their quest to penny-pinch challenged the entire-device royalty basis theory in another ITC case involving Samsung back in 2012 and lost.
As for your doubt on my point #3, Qualcomm translated KFTC's decision last year. Apple also explains quite clearly why Qualcomm stopped paying Apple "rebates." (see "Nature of Action" in Apple's complaint)
I'm an Apple fan and agree with their position here... but isn't this close to Apple's claim against Android or Samsung? That Apple's patents around touch screens are so important that they should get a cut of the full phone?
I think Apple's position against Android or Samsung was much stronger than Qualcomm's against Apple... but I see a sneaky similarity and they appear to be switching sides.
doesn't really matter. SEP/FRAND doesn't mean cheap, as Apple seems to believe. Apple can't demand Samsung to pay the moon only because their patents aren't SEP either. While there are no firm rules, most courts look at value the patented features creates (market driver) as the basis of reasonable rates.
Not to hijack this thread (ok, maybe to hijack this thread), does anyone know how Qualcomm is doing? It always seemed to me that their processors never really caught up to Apple's tech (with almost all benchmarks), and I was wondering if it had to do with the company just not doing so well nowadays (people leaving, etc.)
Obviously they're not making many friends with their legal strategy. The chips are still selling, so the bottom line is sound at the moment. But other companies are developing ARM chips too: https://www.fool.com/investing/2017/03/06/should-qualcomm-in... And there are a ton of lawsuits. So it wouldn't be surprising if Qualcomm suddenly went out of business due to a court judgement, or gradually had to scale down.
Morale is pretty low. Boston consulting group is there now presumably working on restructuring and layoffs. After Jacobs left and Mollenkopf took over a lot was cut, they even closed the Library which peeved a lot of people off. The little things... There is also a company-wide sentiment that they are abusing the H1B program...
> If Apple loses, patent licensing practices will continue to throw sand in the wheels of commerce -- and cost consumers money.
This metaphor is a bit weird. I know that throwing sand to the wheels of a train is helpful (generates traction). Prettymuch all freight trains throw sand in the wheels deliberately. Maybe they got it the wrong way around.
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[ 6.3 ms ] story [ 111 ms ] threadQuallcom. they could dictate the licensing agreement such that the phone maker also has to license it.
I'm hoping we see some serious reduction in patents in the next few years, including compulsory licensing models for several sectors (namely medical/pharma).
It's the Patent IP that is the problem... you don't license non-patent IP.
Have to give it to them on mentioning 5G posturing though, which I think is what this is.
From another recent article (https://www.cnet.com/news/qualcomm-apple-iphone-patents-roya...):
In Apple's case, the iPhone maker pays Qualcomm's licensing fee through its manufacturers. Apple doesn't have a direct license of its own. The fee is based on the total value of the device ($650 in the case of the iPhone) versus the value of the chip (closer to $20), but it's capped at a certain level. Neither company has disclosed the limit, but it's lower than the actual $650 price of the iPhone.
http://fortune.com/2017/01/23/qualcomm-royalty-apple-under-s...
Apple's manufacturer Foxconn pays Qualcomm on their manufacturing costs (selling price to Apple), or $250-$300? Qualcomm's baseband is sold separately. Of course, Qualcomm would love to charge based on Apple's retail price $600+.
If we look to the industrial revolution for example, we have the conversion of linear motion to reciprocating motion. This is an incredibly important development for getting useful work out of steam engines. The most common solution is the crank and flywheel, but when James Watt was designing his steam engines he found that the crank was patented by James Pickard. Rather than license the crank, he invented the Sun and Planet gear[1]. The Sun and Planet gear was less efficient than the crank, but it was a suitable workaround which allowed Watt's engines to be competitive.
When it comes to computers, you either have the ability to interact or you don't. If you don't have the right radio, you cannot build a cell phone. If you don't have the right codec, you cannot build a web browser. Functionally, these patents are effectively more like patenting the concept of changing linear motion into rotational motion than patenting a particular mechanism for doing so.
I'm glad Apple is forcing Qualcomm's hand on this one.
[1] https://en.wikipedia.org/wiki/Sun_and_planet_gear
And one thing is clear: if the industrial revolution had started 20 years later due to some over-broad patent on a whole class of devices, then today we would be lawless cavepeople without electricity.
I mean just think it through! Surely whatever incentives the patent system created - including for Watt, or, for that matter, the wright brothers, pales in comparison to the fact that as a species we came this close >< to losing it all. There was a race against time and we won that race.
If the hundred thousand year old history of science had been delayed by just twenty years, surely we would have lost it all. The fact that the industrial revolution happened under a broad patent system that produced Watt, the wright brothers, and others, is the purest coincidence.
If the patent regime had been even slightly broader, the twentieth century would have been one very long, very boring appendix to Archemedes' screw.
Thank God that it happened to be just right! And alas, that nothing has been invented in the digital domain since 1997, since, alas, this system simply does not work there. :( :( :(
Can you imagine if things had been invented since 1997?
Imagine if people could communicate or innovate without patents coming and beating them up like a school bully.
one can dream. . .
(Sorry for dripping with sarcasm, you're just so wrong I cannot express it in any other way. who cares if a few patents are granted which are too broad -- big deal. literally a twenty year wait solves that problem forever. the contract with society works.)
For instance, the Romans had toys that used steam, but the technology never made the leap to a productive use in the form of steam engines. One theory is that the vast use of slave labor in Rome meant that there was no economic impetus for the discovery of labor saving technologies. By the time the market was right for labor saving technology the basic technology used in the toy had largely been forgotten.
Another example is metallurgy in pre-Columbian America. To our knowledge, the Native Americans in North America never developed the technology to melt, smelt, cast or alloy metals. This was despite the fact that bronze alloys had been in use in the old world for over 6000 years by the time Columbus landed on the New World, and iron smelting had been in use for nearly 2500 years.
Innovation and invention do not exist in a vacuum. They are closely tied to the time and place where they occurred. So, yes, it would be entirely possible that electricity never would have existed if patent law was different 200+ years ago.
yep, it's entirely possible that overly broad patents would have completely killed all innovation in the 20th century and we would not have electricity, internal combustion, patent medicines, flight, and in fact we would probably be flinging feces at each other. We would have probably forgotten how to read and write, under too broad of a patent regime.
(Sorry I'm dripping with sarcasm again, the statement I quoted you making is just so ridiculously wrong.)
By the way as wrong as you are, don't you think you should expand on your wrongness by at least trying to apply a wrong analysis of patent law to Roman times? Can't you at least speculate that somehow your wrong ideas are what kept the Romans from having an industrial revolution of their own?
I know they didn't have a patent law but for the sake of the narrative can't you lie and say they had very broad patents which completely stifled innovation? It would help your comment hang together better than your historical example from societies that did not have the benefit of patent law.
Just make the argument, somehow, that patents are what led firstly to the Roman civilization never developing internal combustion, electricity, modern metallurgy, or a host of modern inventions, and, secondly, maybe you could somehow expand the lie to show that the patent regime is what caused their downfall as a civilization. I know you could work it in there. you're already so wrong, it really is within your reach. just try your best.
Thank you for standing up for innovation. I think we can all agree that lying and being wrong about truth and history is a small price to pay in exchange for preventing our grandchildren from growing up in an illiterate world without electricity and where they have to eck out a living scrawling modern art out of feces. clearly this is where broad patents lead, and the fact that history has never shown this to be the case is just a coincidence.
Is the fact that something has never happened a good reason to believe that it doesn't happen inevitably, and all the time?
No, it just means that as a society we've been incredibly lucky. Like astronomically. It's all been one lottery win after another after another - the whole industrial revolution and all of the twentieth century. It can't go on forever.
We need to take a stand against (broad) patents. They lead to the exact opposite of what they have been shown to lead to in every society that has ever had them. What happens is NOT descriptive of what happens.
Only a fool would study history to see how things happen. Much better would be to write some lies about patent law in Roman times. I look forward to reading it.
(sorry about my tone - you're just so wrong, I can't reply in any other way.)
Now ask yourself whether that outcome would have changed your conclusion today. If not--that is, if you can imagine finding enough material in the remaining 10% (without knowing about the missing 90%) to point out as proof that patents didn't limit innovation--then try extrapolating that out to imagine the difference between the dribble of inventions we saw in the 20th century vs. what could have been.
http://www.econlib.org/library/Bastiat/basEss1.html
However, since you directed me to run a thought experiment I must point out that you did not complete the task I just assigned you. I told you to make up a lie that a broad and powerful patent regime is the reason that 1) the ancient Romans did not have an industrial revolution and 2) led to their downfall. I directed you to blame a broad patent system on this, however you did not do so.
Let me set this aside and look at the task you assigned.
You directed me to imagine that in the past century 90% of useful inventions and overall progress were prevented by patents. That is, you directed me to run a thought experiment where the patent system does not exist from the twentieth century, and you directed me to interpret the conclusion that under such a scenario as of 2017 there are 10n useful inventions, or the overall level of innovation or utility is 10n, where the current level is only n.
Okay, let me write this state of affairs descriptively:
-> From the Enlightenment onward, science and rational study took a front row in society. The Monarchy instituted a system of patents meant in part to support inventors and inventions. Progress accelerated until 1900. This saw the creation of the steam engine, industrial combustion, electricity, and many important inventions. Before we changed history to abolish all patents, the Wright brothers around this time were bicycle mechanics who relied on patents to justify their investment in mechanics. Prior to rewriting history, here is a description of the Wright brothers (how things actually happened):
"The brothers' fundamental breakthrough was their invention of three-axis control, which enabled the pilot to steer the aircraft effectively and to maintain its equilibrium.[4][5][6][7] This method became and remains standard on fixed-wing aircraft of all kinds.[8][9] From the beginning of their aeronautical work, the Wright brothers focused on developing a reliable method of pilot control as the key to solving 'the flying problem'. This approach differed significantly from other experimenters of the time who put more emphasis on developing powerful engines.[10] Using a small homebuilt wind tunnel, the Wrights also collected more accurate data than any before, enabling them to design and build wings and propellers that were more efficient than any before.[11][12] Their first U.S. patent, 821,393, did not claim invention of a flying machine, but rather, the invention of a system of aerodynamic control that manipulated a flying machine's surfaces"
As you can see, they invested huge amounts of time and equipment into a literal wind tunnel. Why? Because they were attempting to bring patentable inventions to a broad audience.
You ask me to imagine that this is n. But now we abolish all patents in 1900. We must now imagine that the Wright brothers contribute 10n to the development, instead of n, in the total absence of all patent laws, which was a primary motivation for their research.
How can we explain that they invest resources when we know that a primary actual reason for this huge investment of resources, was the patent regime?
Why didn't the ancient Romans build wind tunnels? Why weren't wind tunnels built in parts of the world that did not have a strong patent regime?
You ask me to imagine that for every n that was invented under the present regime, if we had abolished it, 10n would have been invented.
But we have very strong historical evidence to the contrary: namely the fact that this was NOT being done.
...
The Wright brothers were bicycle mechanics and had access to an enormous range of vehicle and propulsion-related technology which was mostly developed over the century prior to their invention of the airplane. Notably, they also had access to gasoline-powered internal combustion engines.
While it's plausible to argue that maybe the Wright brothers (or other important inventors) couldn't have afforded to dedicate the resources that they did to their invention and engineering efforts without the possibility of rewards from a patent's exclusivity, it's implausible to suggest that this is the most salient difference between inventors in different millennia. For example, the inventors in Leonardo's time or in ancient Rome didn't have internal combustion engines, or many other things that would actually make flying machines (or wind tunnels!) function usefully.
Indeed, a lot of the discussion we hear nowadays about the ability to build new kinds of flying machines, like flying cars or electric planes, relates to the problem of energy density in different kinds of fuels and power systems. These have seen a lot of improvement. You can perhaps credit the patent system for much of that improvement because it helped people raise money to spend on experimentation. But in any case, people in earlier millennia couldn't have just skipped over the need to have all of these other technologies available in order to make flying machines work.
(In fact, Leonardo devised some ideas for flying machines with people in recent times have gotten to work, but power and energy density, not aerodynamics, are still the obstacles to making these machines fly high and long.)
They literally explored flight purely because it was patentable. Period. If it hadn't been, they would not have played in that field.
see this thread - https://news.ycombinator.com/item?id=7613119
Regarding the rest of your response, okay, I will grant you that asking for cross-cultural comparisons across millennia is problematic. So you simply must think through very rigorously even the thought experiments you suggested. Thanks for the discussion.
(/s - sorry. your example is a great example of patents working exactly and precisely like they should. I have a cheap and perfect laser in my mouse next to me right now, that's perfect and great and cost its manufacturer pennies. couldn't have picked a worse example.)
I am not sure that's working as intended in any way shape or form, considering the invention was "Gould's name for the device was first introduced to the public in a conference presentation in 1959"
>it's easy for a cluster of bad patents to block progress indefinitely
you meant like from 1959 to 1987. Sure is indefinitely. Imagine, if the world had ENDED in 1988 or 1989, then the world never would have gotten a patent-free laser.
/s - nothing else to reply to you. get some perspective before throwing words like indefinitely around. I remember when I was 12 I thought like 4 years ago was an eternity ago, I poo-poo'd books published more than 2 or at the most 3 years ago and I thought everything was instantly out of date.
turns out societies actually operate on a different timescale from 12 year-olds.
but otherwise everything you wrote makes sense. and if the world were to end in the next 24 months, then a lot of patent-encumbered technologies simply will NEVER be brought to market by certain companies, due to patents and patents alone.
I absolutely do believe that. The only thing is that I plan on the world existing longer than this time-frame - but if not, you're totally right and a lot of technology is being held back. only time will tell which of us is right.
So 1979 + 20 = 1999 - 1959 = 40 years which is twice the nominal 20 year patent terms.
Critically the original patent was overturned based on a private notebook from 1957. So, the public gained NOTHING from these patents because someone else had already published and others where actually creating the product and bringing it to market, but no based on a notebook which nobody saw suddenly the world changes.
I do benefit from having a precision component in my mouse that cost its manufacturer pennies. Which is the end game of the patent process.
So it's just not a great example. Overturned or not, the public has come out very strongly ahead.
Sketches in notebooks don't help me. Inventors going through the patent process do.
It's that simple.
Note: We changed to a first to file in part to avoid this issue. But, now someone else can publish or even sell something, then after reading it you can submit a patent using their idea which is arguably far worse.
If you say "engine means for creating torque" in your patent claim, when you try to enforce your claim the court will look at the actual engine you disclosed in your patent's specification. You can't disclose a crank and flywheel and then assert it against sun and planet.
But if you call it an "engine module configured to provide torque" courts will let you assert that claim against pretty much anything vaguely like an engine that provides torque.
Under this 2015 case, the patent owner gets less money if people just use their patent to comply with the standard, and not because it's a better way of doing something.
the article convenietly leaves out the pricing rules being disputed.
remember that there is already regulations for std patents to be priced reasonably and non discrimatory.
what apple is hunting here, is a discount. nothing else.
Why should Apple pay Qualcomm more for a radio in a 128GB iPhone than a 32GB iPhone?
At the heart is the argument that only part of the iPhone value is wireless and putting a tax on the whole is not reasonable. Imagine the iPhone software and chip embedded into a car. Would it be reasonable for the car manufacturer to pay the same percentage to Qualcomm as Apple? Where do you draw the line?
There is a huge amount of innovation in the iPhone: Mechanical engineering, materials, sensors, camera, screen and software. None have anything to do with Qualcomm.
The value Qualcomm adds is equivalent to a very fast portable, wireless hotspot. A great thing to have and worth paying for.
In terms of "good to society" it's hard to say what expiration date is the optimal one at maximizing innovation over all possible futures. I think it's probably greater then 0, but below 100 years.
It was unclear from the article why this is a Hail Mary, so I looked it up. It initially seemed to me that if Qualcomm offers Apple a licensing agreement, Apple agrees to it, and later decides not to adhere to the agreement, they should be able to seek injunctive relief. The relevant precedent is probably eBay Inc. v. MercExchange [1], which SCOTUS used to establish a four-factor test. Among the four are "that [the party seeking injunction] has suffered an irreparable injury;" and "that the public interest would not be disserved by a permanent injunction." Public can't live without that sweet new iPhone stuff ;) and QCOM can always get paid later.
[1] https://en.wikipedia.org/wiki/EBay_Inc._v._MercExchange,_L.L....
[2] https://www.scribd.com/document/337216142/1-Apple-v-Qualcomm...
Also I doubt anyone is going to ban the iPhone over SEPs.
To bring an ITC case, you have to be manufacturing the thing in the US, which Qualcomm does; they make and sell cellular radio ICs. ITC proceedings are thus not available to "patent trolls". This deals with most of the usual complaints about patents.
ITC actions are entirely about blocking imports. There's no issue of what's a "reasonable royalty". Qualcomm can just say "no imports". The Trump administration might view this as a win, as it would force Apple to manufacture in the US.
[1] https://apps.americanbar.org/litigation/committees/intellect...
But wouldn't a decision to support the ITC injunction just bring Apple back to the negotiating table? Seems hard to believe that Qualcomm would go scorched earth on a customer like that. Especially one from whom it's getting big royalties from.
Usually what happens is a very fast settlement by the infringing party.
Apple says "For many years Qualcomm has unfairly insisted on charging royalties for technologies they have nothing to do with."
Qualcomm says similar things.
First, this Bloomberg article is somewhat misleading. IEEE and their recent policy statement on SSPUS has very little to do with what's at dispute here. ETSI regulates most wireless 3G, LTE patents and ETSI doesn't want to dictate how licensees and licensors come to FRAND rates or what they ought to be. IEEE is the first and the only one so far to have clarified their stance on SEP licensing, but most SSO, standard setting organization, don't want to meddle with licensing practices because they don't want to cross path with regulators (ie, anti-trust/competitive) or discourage potential contributing members from declaring their patents SEP.
Second, Apple has never directly licensed Qualcomm's patents. Apple's contract manufacturer Foxconn has long been a legit licensee of Qualcomm wireless patents (even before Apple iPhone was released back in 2007) and pays royalty based on their manufacturing cost, not on the retail price ($600 or more). Apple pays nowhere close to what many people believe they are paying.
Third, Apple technically breached the contract with Qualcomm by cooperating with KTC, Korean Fair Trade Commission, last year. Qualcomm essentially had a gag order on their contract forbidding their licensees from speaking out. While this is not uncommon -- Apple is notorious for doing the same to their suppliers (eg, GT Advanced?) and is much worse in many respects -- there are clearly some elements in Qualcomm's licensing practices that are quite troubling as well.
Forth, SCOTUS's recent eBay's decision doesn't too much bearing on Qualcomm's ITC case. While SCOTUS opinions' are the supreme laws of the land, USITC is a quasi judicial agency that operates on different level. Their decision doesn't set legal precedence. They are not in the business of calculating damages, or determining royalty rates or basis -- their only power is to issue ITC import ban when infringement or breach of contract is found. Companies do prefer USITC because ITC cases move a lot faster and ITC is not encumbered by the same high standards that lower courts must consider.
From cbanek: "The fee is based on the total value of the device" and "the royalty is about $15 per phone" versus the "value of the chip (closer to $20)".
see cbaneks comments for links to articles https://news.ycombinator.com/item?id=14302939
Maybe Apple has direct contracts with Qualcomm?
http://www.investorvillage.com/uploads/82827/files/LESI-Roya...
Apple in their quest to penny-pinch challenged the entire-device royalty basis theory in another ITC case involving Samsung back in 2012 and lost.
As for your doubt on my point #3, Qualcomm translated KFTC's decision last year. Apple also explains quite clearly why Qualcomm stopped paying Apple "rebates." (see "Nature of Action" in Apple's complaint)
Either theft of intellectual property, or legal theft of money they didn't earn by not executing.
I think Apple's position against Android or Samsung was much stronger than Qualcomm's against Apple... but I see a sneaky similarity and they appear to be switching sides.
They're still doing random R&D products, so not too much fiscal pressure I guess, although if they keep paying out huge settlements that could change: https://www.technologyreview.com/s/603964/qualcomm-wants-you...
Software-wise their code and maintenance strategy in general seems to suck, they throw the code over a wall and start over when doing the next project: https://news.ycombinator.com/item?id=13685273 Some guys from Google wrote yet another CPU scheduler, apparently it does better than Qualcomm's: http://linuxplumbersconf.com/2016/ocw//system/presentations/...
Obviously they're not making many friends with their legal strategy. The chips are still selling, so the bottom line is sound at the moment. But other companies are developing ARM chips too: https://www.fool.com/investing/2017/03/06/should-qualcomm-in... And there are a ton of lawsuits. So it wouldn't be surprising if Qualcomm suddenly went out of business due to a court judgement, or gradually had to scale down.
This metaphor is a bit weird. I know that throwing sand to the wheels of a train is helpful (generates traction). Prettymuch all freight trains throw sand in the wheels deliberately. Maybe they got it the wrong way around.