4 ms·

"Qualcomm’s business model, which is either ingenious or diabolical depending on whom you talk to, is to allow any chip company to use its technology royalty-fr

by gvb 8y ago

"Qualcomm’s business model, which is either ingenious or diabolical depending on whom you talk to, is to allow any chip company to use its technology royalty-free. Phone manufacturers can choose to buy chips from Qualcomm or one of the other five companies that make modems using Qualcomm’s technology. Either way, they (the phone manufacturers) still have to pay Qualcomm its 5 percent." Ref: https://www.bloomberg.com/news/features/2017-10-04/apple-and-qualcomm-s-billion-dollar-war-over-an-18-part https://www.bloomberg.com/news/features/2017-10-04/apple-and...

ksec 8y ago
And yet someone claimed that Qualcomm cannot receive patent license fees from manufacturers who use Qualcomm chips. “First up are the Return Program cartridges that Lexmark sold in the United States. We conclude that Lexmark exhausted its patent rights in these cartridges the moment it sold them. The single-use/no-resale restrictions in Lexmark's contracts with customers may have been clear and enforceable under contract law, but they do not entitle Lexmark to retain patent rights in an item that it has elected to sell.” Impression Products, Inc. v. Lexmark Int'l, Inc., 137 S.Ct. 1523, 1531 (2017) “First, Univis held that ‘the authorized sale of an article which is capable of use only in practicing the patent is a relinquishment of the patent monopoly with respect to the article sold.’ Id., at 249, 62 S.Ct. 1088. The lens blanks in Univis met this standard because they were ‘without utility until [they were] ground and polished as the finished lens of the patent.’ Ibid. Accordingly, ‘the only object of the sale [was] to enable the [finishing retailer] to grind and polish it for use as a lens by the prospective wearer.’ Ibid. Here, LGE has suggested no reasonable use for the Intel Products other than incorporating them into computer systems that practice the LGE Patents.[6] Nor can we discern one: A microprocessor or chipset cannot function until it is connected to buses and memory. And here, as in Univis, the only apparent object of Intel's sales to Quanta was to permit Quanta to incorporate the Intel Products into computers that would practice the patents.” Quanta Computer v. LG Electronics, 128 S.Ct. 2109, 2119 (2008) I am no expert in law except Qualcomm cannot receive patent license fees from manufacturers who use Qualcomm chips just sounds utter non sense to me.
- ChuckMcM 8y ago
  I am not a lawyer, so this may be all incorrect and you certainly shouldn't rely on it as legal advice! The term you are looking for is "Patent exhaustion" which is a system whereby the first person who makes the device incorporating the patent is on the hook to pay fees/royalties but then you can resell it and the person buying it doesn't have to pay the patent fees again, because they were "exhausted" in the first transaction. Imagine if you had to repay all the patent holders for stuff in a car when you bought it used. Not practical. Qualcom has created what they believe is a new system where they "forego" royalties from the person who makes the chip and instead charge the person who designs in the chip, in this case Apple. Apple continues to push the patent exhaustion angle saying they don't owe anything.
  - ksec 8y ago
    >Apple continues to push the patent exhaustion angle saying they don't owe anything. Thanks for the pointer, will look it up when I have time. But is that what they are really pushing though? I don't seems to read anything in regards to this. Apple has a dispute with pricing, and whether it should be charged a flat rate instead of % of devices. But I don't see Apple trying to argue for patent exhaustion and Intel should be paying for it.
    - Twisell 8y ago
      There is another lawsuit in which Apple and chipmakers are both plaintiffs against Qualcomm. But it’s overly complicated with cross appeal all over the place. It’ll probably end up with a settlement and this specific case should be seen as leverage for Qualcomm and nothing else. I don’t think an US iPhone ban could actually be enforced in forseable future.
      - tooltalk 8y ago
        I think you are referring to Apple and Apple's CMs (contract manufacturers) lawsuit against Qualcomm? These are really one single lawsuit orchestrated by Apple. The issue isn't overly complicated -- they are essentially refusing to pay Qualcomm licensing fees for their wireless patents on the ground that Qualcomm's licensing practice is in violation of antitrust laws. Thus, their claims rest heavily on the outcome of the FTC case.
saidajigumi 8y ago
How is Qualcomm's approach supposed to work under US patent law? That Qualcomm made no money seems immaterial – either they licensed (e.g.) Intel to use their IP, or they didn't. In the former case, patent exhaustion should apply and Qualcomm is out of luck. In the latter, it again seems that Intel is the infringer, not Apple or any other Intel-using handset maker. Put another way: I'm looking for a clear statement of what legal theory is Qualcomm using in its attempt to leapfrog the chip manufacturer and bring patent suit against handset makers?
- tooltalk 8y ago
  The common industry practice is to collect royalties at the end of the supply chain -- from smartphone OEMs. So, SEP holders, Qualcomm, Ericsson, Nokia, etc, usually don't after each other or chip makers for royalties. Now, Apple's judge, Lucy Koh, in a pretrial decision last year, declared that Qualcomm is obligated to license their SEPs to all willing licensees under ATI/TIS FRAND (Fair, Reasonable and Non-Discriminatory) terms, including baseband makers such as Intel, but this remains to be seen (will be appealed by Qualcomm). Another judge in the ED of Texas, Gilstrap however ruled in December that SEP holders aren't required to license their patents to baseband makers under ETSI FRAND. (yes, there are apparently different/conflicting competing FRAND terms) I'm not sure if patent exhaustion applies since QTL (licensing) and QTC (chip-making) are technically two separate business entities (subsidiaries). I'm assuming this is all legit, since Apple had funneled their IP and oversea profit to Irish subsidiaries to avoid taxes for years -- meaning they were treated as entirely separate businesses. Qualcomm also argued that QC's patent portfolio goes beyond chip-making and there are other wireless technologies that are not embedded in the baseband chip (hence no exhaustion). The USFTC's lawsuit against Qualcomm ended about a month ago and now we are all patiently awaiting for Koh's decision.
  - saidajigumi 8y ago
    I'm not sure if patent exhaustion applies since QTL (licensing) and QTC (chip-making) are technically two separate business entities (subsidiaries). I wasn't aware of that; that's quite interesting. But it's unclear whether it affects exhaustion, in that QTL would still have (or have not) licensed Intel (or QTC). So either (Intel or QTC) have a license and exhaustion applies, or they do not, and are the actual infringers. Now, the law being the law, "the actual infringers" is not going to be a strict legal concept, but in some areas of law and/or some jurisdictions, there are legal structures that produce similar outcomes – where a suit cannot be brought against someone one or more "jumps" away, e.g. just to find a defendant with deeper pockets. I'm absolutely out of my depth re: US patent law on this topic, except that it seems insane for a patent holder to be able to sue all the users of an infringing product. But then patent law so ¯\_(ツ)_/¯
reacweb 8y ago
IANAL but I feel this has sense. The patents focus generally on high level aspects. The chips are more and more versatile and integrates more and more features. As a result, a chip can be used in a way that does not violate patents but has the potential to be used in infringing ways. If you want to tax the chip maker, you have to take into account these potential uses. The development of versatile chips would be discouraged.
- tooltalk 8y ago
  Well, you are talking about something else. The baseband chips only handle wireless communication and these are really special purpose chips. We are not talking about Qualcomm's SOC, ie Snapdragon, GPU, AI chips, etc,.. these are not in the scope of this lawsuit (or licensing).

by gvb 8y ago

ksec 8y ago

And yet someone claimed that Qualcomm cannot receive patent license fees from manufacturers who use Qualcomm chips. “First up are the Return Program cartridges that Lexmark sold in the United States. We conclude that Lexmark exhausted its patent rights in these cartridges the moment it sold them. The single-use/no-resale restrictions in Lexmark's contracts with customers may have been clear and enforceable under contract law, but they do not entitle Lexmark to retain patent rights in an item that it has elected to sell.” Impression Products, Inc. v. Lexmark Int'l, Inc., 137 S.Ct. 1523, 1531 (2017) “First, Univis held that ‘the authorized sale of an article which is capable of use only in practicing the patent is a relinquishment of the patent monopoly with respect to the article sold.’ Id., at 249, 62 S.Ct. 1088. The lens blanks in Univis met this standard because they were ‘without utility until [they were] ground and polished as the finished lens of the patent.’ Ibid. Accordingly, ‘the only object of the sale [was] to enable the [finishing retailer] to grind and polish it for use as a lens by the prospective wearer.’ Ibid. Here, LGE has suggested no reasonable use for the Intel Products other than incorporating them into computer systems that practice the LGE Patents.[6] Nor can we discern one: A microprocessor or chipset cannot function until it is connected to buses and memory. And here, as in Univis, the only apparent object of Intel's sales to Quanta was to permit Quanta to incorporate the Intel Products into computers that would practice the patents.” Quanta Computer v. LG Electronics, 128 S.Ct. 2109, 2119 (2008) I am no expert in law except Qualcomm cannot receive patent license fees from manufacturers who use Qualcomm chips just sounds utter non sense to me.

ChuckMcM 8y ago
I am not a lawyer, so this may be all incorrect and you certainly shouldn't rely on it as legal advice! The term you are looking for is "Patent exhaustion" which is a system whereby the first person who makes the device incorporating the patent is on the hook to pay fees/royalties but then you can resell it and the person buying it doesn't have to pay the patent fees again, because they were "exhausted" in the first transaction. Imagine if you had to repay all the patent holders for stuff in a car when you bought it used. Not practical. Qualcom has created what they believe is a new system where they "forego" royalties from the person who makes the chip and instead charge the person who designs in the chip, in this case Apple. Apple continues to push the patent exhaustion angle saying they don't owe anything.
- ksec 8y ago
  >Apple continues to push the patent exhaustion angle saying they don't owe anything. Thanks for the pointer, will look it up when I have time. But is that what they are really pushing though? I don't seems to read anything in regards to this. Apple has a dispute with pricing, and whether it should be charged a flat rate instead of % of devices. But I don't see Apple trying to argue for patent exhaustion and Intel should be paying for it.
  - Twisell 8y ago
    There is another lawsuit in which Apple and chipmakers are both plaintiffs against Qualcomm. But it’s overly complicated with cross appeal all over the place. It’ll probably end up with a settlement and this specific case should be seen as leverage for Qualcomm and nothing else. I don’t think an US iPhone ban could actually be enforced in forseable future.
    - tooltalk 8y ago
      I think you are referring to Apple and Apple's CMs (contract manufacturers) lawsuit against Qualcomm? These are really one single lawsuit orchestrated by Apple. The issue isn't overly complicated -- they are essentially refusing to pay Qualcomm licensing fees for their wireless patents on the ground that Qualcomm's licensing practice is in violation of antitrust laws. Thus, their claims rest heavily on the outcome of the FTC case.

saidajigumi 8y ago

How is Qualcomm's approach supposed to work under US patent law? That Qualcomm made no money seems immaterial – either they licensed (e.g.) Intel to use their IP, or they didn't. In the former case, patent exhaustion should apply and Qualcomm is out of luck. In the latter, it again seems that Intel is the infringer, not Apple or any other Intel-using handset maker. Put another way: I'm looking for a clear statement of what legal theory is Qualcomm using in its attempt to leapfrog the chip manufacturer and bring patent suit against handset makers?

tooltalk 8y ago
The common industry practice is to collect royalties at the end of the supply chain -- from smartphone OEMs. So, SEP holders, Qualcomm, Ericsson, Nokia, etc, usually don't after each other or chip makers for royalties. Now, Apple's judge, Lucy Koh, in a pretrial decision last year, declared that Qualcomm is obligated to license their SEPs to all willing licensees under ATI/TIS FRAND (Fair, Reasonable and Non-Discriminatory) terms, including baseband makers such as Intel, but this remains to be seen (will be appealed by Qualcomm). Another judge in the ED of Texas, Gilstrap however ruled in December that SEP holders aren't required to license their patents to baseband makers under ETSI FRAND. (yes, there are apparently different/conflicting competing FRAND terms) I'm not sure if patent exhaustion applies since QTL (licensing) and QTC (chip-making) are technically two separate business entities (subsidiaries). I'm assuming this is all legit, since Apple had funneled their IP and oversea profit to Irish subsidiaries to avoid taxes for years -- meaning they were treated as entirely separate businesses. Qualcomm also argued that QC's patent portfolio goes beyond chip-making and there are other wireless technologies that are not embedded in the baseband chip (hence no exhaustion). The USFTC's lawsuit against Qualcomm ended about a month ago and now we are all patiently awaiting for Koh's decision.
- saidajigumi 8y ago
  I'm not sure if patent exhaustion applies since QTL (licensing) and QTC (chip-making) are technically two separate business entities (subsidiaries). I wasn't aware of that; that's quite interesting. But it's unclear whether it affects exhaustion, in that QTL would still have (or have not) licensed Intel (or QTC). So either (Intel or QTC) have a license and exhaustion applies, or they do not, and are the actual infringers. Now, the law being the law, "the actual infringers" is not going to be a strict legal concept, but in some areas of law and/or some jurisdictions, there are legal structures that produce similar outcomes – where a suit cannot be brought against someone one or more "jumps" away, e.g. just to find a defendant with deeper pockets. I'm absolutely out of my depth re: US patent law on this topic, except that it seems insane for a patent holder to be able to sue all the users of an infringing product. But then patent law so ¯\_(ツ)_/¯

reacweb 8y ago

IANAL but I feel this has sense. The patents focus generally on high level aspects. The chips are more and more versatile and integrates more and more features. As a result, a chip can be used in a way that does not violate patents but has the potential to be used in infringing ways. If you want to tax the chip maker, you have to take into account these potential uses. The development of versatile chips would be discouraged.

tooltalk 8y ago
Well, you are talking about something else. The baseband chips only handle wireless communication and these are really special purpose chips. We are not talking about Qualcomm's SOC, ie Snapdragon, GPU, AI chips, etc,.. these are not in the scope of this lawsuit (or licensing).