5 ms·

The article doesn't really mention the argument that Apple is making in court. They are seeking a judgement based on the legal concept of patent exhaustion. h

The article doesn't really mention the argument that Apple is making in court. They are seeking a judgement based on the legal concept of patent exhaustion. https://www.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S._law https://www.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S... If Apple buys a cellular modem from Intel, for instance, and Intel has already paid Qualcomm to use their standards essential parents to manufacture those cell phone modems, then patent exhaustion holds that Qualcomm cannot force Intel's customers to pay to license those patents all over again. Until a judge rules on this, you really can't say that Apple owes Qualcomm anywhere near that figure. There is more information on the FOSS patent blog: http://www.fosspatents.com/2018/10/patent-exhaustion-keeps-qualcomm-on-run.html http://www.fosspatents.com/2018/10/patent-exhaustion-keeps-q... Edit: I think this FOSS patent blog entry from last month does a better job of laying out the basic issues. http://www.fosspatents.com/2018/09/apple-foxconn-et-al-want-to-end.html http://www.fosspatents.com/2018/09/apple-foxconn-et-al-want-...

ngngngng 8y ago
I'm really losing faith in bloomberg. That's a huge detail to leave out of a story like this.
- akvadrako 8y ago
  Bloomberg reporters have a incentives model¹ which encourages incorrect stories. This isn't the only example; they still haven't retracted the supermicro hardware hack story even though there is no evidence and it's denied by all the parties. [1] https://www.businessinsider.com/bloomberg-reporters-compensation-2013-12/?IR=T https://www.businessinsider.com/bloomberg-reporters-compensa...
  - siruncledrew 8y ago
    Jeez. This type of false narrative creation (especially impacting financial markets) seems like it should be illegal. With journalistic integrity out the window for the sake of attracting an audience, I could imagine why some group of traders would want to intentionally feed Bloomberg false information or "nudge" them to publish a story knowing they could significantly profit from the resulting reaction.
  - sverhagen 8y ago
    This is bad, but come on! Any reporting has an interest in being exciting and juicy. If it's not for markets it'd be for ratings. And while one can argue that inflated ratings don't cost you your investment money in the way the effect on the markets does, it can still have big impact on the debate and the discourse in the US, where we're all feeling the pain at least as hard, in this age.
  - vectorEQ 8y ago
    welcome to media :D they are all in it to make money!
  - simias 8y ago
    They may or may not have stopped this practice: https://news.ycombinator.com/item?id=18164117 https://news.ycombinator.com/item?id=18164117 The businessinsider article dates from 2013 and I can't find a source discussing their current practices.
floatingatoll 8y ago
To quote Qualcomm's FY2018Q3 earnings release with respect to Apple: http://files.shareholder.com/downloads/QCOM/6406790406x0x982849/44B30309-24B6-4141-8786-5A1A80339FAB/FY_2018_3rd_Quarter_Earnings_Release.pdf http://files.shareholder.com/downloads/QCOM/6406790406x0x982... Beginning in the third quarter of fiscal 2017, GAAP and Non-GAAP results have been negatively impacted by our dispute with Apple and its contract manufacturers (who are Qualcomm licensees). We did not record any QTL revenues in the first nine months of fiscal 2018 or the third or fourth quarter of fiscal 2017 for royalties due on sales of Apple’s products. We expect the actions taken by these companies will continue until these disputes are resolved. QTL revenues in the third quarter of fiscal 2018 included $500 million paid under an interim agreement with the other licensee in dispute (which dispute was previously disclosed). This represents a partial payment for royalties due after the second quarter of fiscal 2017 by that other licensee while negotiations continue. This payment does not reflect the full amount of royalties due under the underlying license agreement. We did not record any revenues from the third quarter of fiscal 2017 through the second quarter of fiscal 2018 for royalties due on the sales of the other licensee’s products. If we do not reach a final agreement with the other licensee, it may not make any other payments or may not make full payments under the underlying license agreement, which may result in increased legal costs and will negatively impact our GAAP and Non-GAAP results.
- pdpi 8y ago
  “Contract manufacturers” seems like a very particular choice of words to describe intel here. If Intel is manufacturing an Apple design as a contractor, Intel’s licenses don’t matter and it’s Apple who’s on the hook to pay royalties. If Apple is buying an off-the-shelf Intel product, it’s Intel’s licence terms that matter.
  - ksec 8y ago
    Contract manufacturers here means Foxconn and Winstron alike.
gpm 8y ago
I wouldn't trust FOSS patents and the author Florian Mueller as far as I could throw him. He has a long history of being a paid shill, lying about it, and being flat out wrong. (Paid by oracle) http://www.groklaw.net/article.php?story=20120419070127103 http://www.groklaw.net/article.php?story=20120419070127103 (Paid by microsoft) http://techrights.org/2012/08/18/vile-lobbyist/ http://techrights.org/2012/08/18/vile-lobbyist/ (Paid by apple? I can't find other/primary sources to back up this claim though it does seem likely.) https://mrpogson.com/2012/08/21/apples-paid-shillconsultant-caught-out/ https://mrpogson.com/2012/08/21/apples-paid-shillconsultant-... (More examples of him being wrong) http://www.groklaw.net/article.php?story=20120820111527257 http://www.groklaw.net/article.php?story=20120820111527257 Refuting legal arguments takes time and expertise I don't have. He's good at his job, and I have no knowledge about this case. So while I put no faith whatsoever in his analysis I can't tell you how it is wrong, and yes this is an ad hominem.
- csdreamer7 8y ago
  Reading the techrights post right now. Thankyou for posting this.
- belltaco 8y ago
  You're sourcing Techrights to denounce someone else? And Groklaw was run by a completely anonymous person who was suspected of being paid by IBM and Google.
  - gpm 8y ago
    Groklaw was not paid by google, court filing by Google: http://www.groklaw.net/pdf3/OraclevGoogle-1237.pdf http://www.groklaw.net/pdf3/OraclevGoogle-1237.pdf Groklaw was not paid by IBM, court filing by IBM: http://www.groklaw.net/pdf/IBM-621-E19.pdf http://www.groklaw.net/pdf/IBM-621-E19.pdf Groklaw was run by Pamela Jones, a paralegal. This can be verified by checking the footer on every page on Groklaw, or alternatively the above IBM court filing. You will have to be more specific about your techrights complaints. I'm not aware of any issues with the site, but I admit that unlike Groklaw I do not have much knowledge about their integrity. You can find many alternative sources saying that Mueller was paid by Microsoft (and also that Mueller was paid by Oracle), here is one: https://gigaom.com/2011/10/18/419-is-patent-expertblogger-florian-mueller-getting-too-cozy-with-microsoft/ https://gigaom.com/2011/10/18/419-is-patent-expertblogger-fl...
DannyBee 8y ago
So, what you say about exhaustion is a correct explanation of the doctrine. However, unless my searching capabilities are failing (sorry, it's 170 pages), they nowhere claim that intel is paying qualcomm. Instead, the only viable claim for exhaustion they really make is around exhaustion of patents in qualcomm chipsets bought by apple. That is probably right. But not a significant amount of this money (if any, i didn't look what qualcomm claimed hard enough. I wouldn't put it past them but it would be stupid of them) The majority of money is precisely about modems they buy from intel. If intel was paying qualcomm, it would definitely appear in the response as an exhaustion argument I can't find it. This is probably why bloomberg doesn't cite it - the exhaustion issues they do cite are a complete sideshow.
jimmydef 8y ago
I'm no patent lawyer, but from a layman perspective, how is this reasonable at all? This seems equivalent to buyers of second hand books being forced to pay royalties to the original author.
- eponeponepon 8y ago
  I'm also no lawyer, but it's worth pointing out that there are plenty of publishers (and not a few authors) who will argue that corner - they certainly think it reasonable.
- indeed30 8y ago
  Cases similar to that certainly exist. In the UK you can owe royalties up to 4% when buying a piece of art on the secondary market, for example.
onetimemanytime 8y ago
Thank YOU, explains the context: "Apple challenged the patents for validity and non-infringement, but its key contention is that Qualcomm is illegally charging smartphone makers twice for its intellectual property– once when it licenses its cellular patents and a second time when it sells modem chips used in smartphones. The legal concept is called patent exhaustion. http://www.sandiegouniontribune.com/business/technology/sd-fi-qualcomm-applehearing-20181029-story.html http://www.sandiegouniontribune.com/business/technology/sd-f... Otherwise would be like paying a sales tax at each transaction through the chain.
tooltalk 8y ago
No, no, no. Intel doesn't have a license with Qualcomm. In recent decisions made by regulators in the EU, South Korea, Taiwan, etc, Qualcomm was accused and fined precisely for their unwillingness to license their IPs to competing baseband makers (ie, Intel). The USFTC is looking to punish Qualcomm for the same offenses and enable Qualcomm's competitors to take license from Qualcomm (see http://www.fosspatents.com/2018/09/federal-trade-commission-may-open-up.html http://www.fosspatents.com/2018/09/federal-trade-commission-...). Wrt Intel modems, the exhaustion doctrine likewise doesn't apply.

ngngngng 8y ago

I'm really losing faith in bloomberg. That's a huge detail to leave out of a story like this.

akvadrako 8y ago
Bloomberg reporters have a incentives model¹ which encourages incorrect stories. This isn't the only example; they still haven't retracted the supermicro hardware hack story even though there is no evidence and it's denied by all the parties. [1] https://www.businessinsider.com/bloomberg-reporters-compensation-2013-12/?IR=T https://www.businessinsider.com/bloomberg-reporters-compensa...
- siruncledrew 8y ago
  Jeez. This type of false narrative creation (especially impacting financial markets) seems like it should be illegal. With journalistic integrity out the window for the sake of attracting an audience, I could imagine why some group of traders would want to intentionally feed Bloomberg false information or "nudge" them to publish a story knowing they could significantly profit from the resulting reaction.
- sverhagen 8y ago
  This is bad, but come on! Any reporting has an interest in being exciting and juicy. If it's not for markets it'd be for ratings. And while one can argue that inflated ratings don't cost you your investment money in the way the effect on the markets does, it can still have big impact on the debate and the discourse in the US, where we're all feeling the pain at least as hard, in this age.
- vectorEQ 8y ago
  welcome to media :D they are all in it to make money!
- simias 8y ago
  They may or may not have stopped this practice: https://news.ycombinator.com/item?id=18164117 https://news.ycombinator.com/item?id=18164117 The businessinsider article dates from 2013 and I can't find a source discussing their current practices.

floatingatoll 8y ago

To quote Qualcomm's FY2018Q3 earnings release with respect to Apple: http://files.shareholder.com/downloads/QCOM/6406790406x0x982849/44B30309-24B6-4141-8786-5A1A80339FAB/FY_2018_3rd_Quarter_Earnings_Release.pdf http://files.shareholder.com/downloads/QCOM/6406790406x0x982... Beginning in the third quarter of fiscal 2017, GAAP and Non-GAAP results have been negatively impacted by our dispute with Apple and its contract manufacturers (who are Qualcomm licensees). We did not record any QTL revenues in the first nine months of fiscal 2018 or the third or fourth quarter of fiscal 2017 for royalties due on sales of Apple’s products. We expect the actions taken by these companies will continue until these disputes are resolved. QTL revenues in the third quarter of fiscal 2018 included $500 million paid under an interim agreement with the other licensee in dispute (which dispute was previously disclosed). This represents a partial payment for royalties due after the second quarter of fiscal 2017 by that other licensee while negotiations continue. This payment does not reflect the full amount of royalties due under the underlying license agreement. We did not record any revenues from the third quarter of fiscal 2017 through the second quarter of fiscal 2018 for royalties due on the sales of the other licensee’s products. If we do not reach a final agreement with the other licensee, it may not make any other payments or may not make full payments under the underlying license agreement, which may result in increased legal costs and will negatively impact our GAAP and Non-GAAP results.

pdpi 8y ago
“Contract manufacturers” seems like a very particular choice of words to describe intel here. If Intel is manufacturing an Apple design as a contractor, Intel’s licenses don’t matter and it’s Apple who’s on the hook to pay royalties. If Apple is buying an off-the-shelf Intel product, it’s Intel’s licence terms that matter.
- ksec 8y ago
  Contract manufacturers here means Foxconn and Winstron alike.

gpm 8y ago

I wouldn't trust FOSS patents and the author Florian Mueller as far as I could throw him. He has a long history of being a paid shill, lying about it, and being flat out wrong. (Paid by oracle) http://www.groklaw.net/article.php?story=20120419070127103 http://www.groklaw.net/article.php?story=20120419070127103 (Paid by microsoft) http://techrights.org/2012/08/18/vile-lobbyist/ http://techrights.org/2012/08/18/vile-lobbyist/ (Paid by apple? I can't find other/primary sources to back up this claim though it does seem likely.) https://mrpogson.com/2012/08/21/apples-paid-shillconsultant-caught-out/ https://mrpogson.com/2012/08/21/apples-paid-shillconsultant-... (More examples of him being wrong) http://www.groklaw.net/article.php?story=20120820111527257 http://www.groklaw.net/article.php?story=20120820111527257 Refuting legal arguments takes time and expertise I don't have. He's good at his job, and I have no knowledge about this case. So while I put no faith whatsoever in his analysis I can't tell you how it is wrong, and yes this is an ad hominem.

csdreamer7 8y ago
Reading the techrights post right now. Thankyou for posting this.
belltaco 8y ago
You're sourcing Techrights to denounce someone else? And Groklaw was run by a completely anonymous person who was suspected of being paid by IBM and Google.
- gpm 8y ago
  Groklaw was not paid by google, court filing by Google: http://www.groklaw.net/pdf3/OraclevGoogle-1237.pdf http://www.groklaw.net/pdf3/OraclevGoogle-1237.pdf Groklaw was not paid by IBM, court filing by IBM: http://www.groklaw.net/pdf/IBM-621-E19.pdf http://www.groklaw.net/pdf/IBM-621-E19.pdf Groklaw was run by Pamela Jones, a paralegal. This can be verified by checking the footer on every page on Groklaw, or alternatively the above IBM court filing. You will have to be more specific about your techrights complaints. I'm not aware of any issues with the site, but I admit that unlike Groklaw I do not have much knowledge about their integrity. You can find many alternative sources saying that Mueller was paid by Microsoft (and also that Mueller was paid by Oracle), here is one: https://gigaom.com/2011/10/18/419-is-patent-expertblogger-florian-mueller-getting-too-cozy-with-microsoft/ https://gigaom.com/2011/10/18/419-is-patent-expertblogger-fl...

DannyBee 8y ago

So, what you say about exhaustion is a correct explanation of the doctrine. However, unless my searching capabilities are failing (sorry, it's 170 pages), they nowhere claim that intel is paying qualcomm. Instead, the only viable claim for exhaustion they really make is around exhaustion of patents in qualcomm chipsets bought by apple. That is probably right. But not a significant amount of this money (if any, i didn't look what qualcomm claimed hard enough. I wouldn't put it past them but it would be stupid of them) The majority of money is precisely about modems they buy from intel. If intel was paying qualcomm, it would definitely appear in the response as an exhaustion argument I can't find it. This is probably why bloomberg doesn't cite it - the exhaustion issues they do cite are a complete sideshow.

jimmydef 8y ago

I'm no patent lawyer, but from a layman perspective, how is this reasonable at all? This seems equivalent to buyers of second hand books being forced to pay royalties to the original author.

eponeponepon 8y ago
I'm also no lawyer, but it's worth pointing out that there are plenty of publishers (and not a few authors) who will argue that corner - they certainly think it reasonable.
indeed30 8y ago
Cases similar to that certainly exist. In the UK you can owe royalties up to 4% when buying a piece of art on the secondary market, for example.

onetimemanytime 8y ago

Thank YOU, explains the context: "Apple challenged the patents for validity and non-infringement, but its key contention is that Qualcomm is illegally charging smartphone makers twice for its intellectual property– once when it licenses its cellular patents and a second time when it sells modem chips used in smartphones. The legal concept is called patent exhaustion. http://www.sandiegouniontribune.com/business/technology/sd-fi-qualcomm-applehearing-20181029-story.html http://www.sandiegouniontribune.com/business/technology/sd-f... Otherwise would be like paying a sales tax at each transaction through the chain.

tooltalk 8y ago

No, no, no. Intel doesn't have a license with Qualcomm. In recent decisions made by regulators in the EU, South Korea, Taiwan, etc, Qualcomm was accused and fined precisely for their unwillingness to license their IPs to competing baseband makers (ie, Intel). The USFTC is looking to punish Qualcomm for the same offenses and enable Qualcomm's competitors to take license from Qualcomm (see http://www.fosspatents.com/2018/09/federal-trade-commission-may-open-up.html http://www.fosspatents.com/2018/09/federal-trade-commission-...). Wrt Intel modems, the exhaustion doctrine likewise doesn't apply.