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I'm not sure I understand the rationale behind Koh's ruling. Why ought a firm be forced to license IP? The Constitution patent clause grants Congress the righ

by mises 8y ago

I'm not sure I understand the rationale behind Koh's ruling. Why ought a firm be forced to license IP? The Constitution patent clause grants Congress the right to "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Would this ruling not, under that clause, be unconstitutional? Qualcomm is making use of its exclusive right. I agree they've got some rather bad business practices, and the FTC could try to get a ruling that they had to only charge for the chip, but I don't understand the way that ruling is worded. I feel like the media model, the whole "you only buy a license" mess, is leaking into physical stuff. You now must buy not only a chip but a license? Why would a company choose that business model? To summarize, I feel that it's not the best business practice, but don't understand why Koh ruled as she did and how she could justify the ruling's constitutionality.

wbl 8y ago
Because they signed agreements as parts of the standards process to do so.
- jxdxbx 8y ago
  right. and SEPs only have value because they are included in a standard. not all of the Q patents at issue are technically SEPs though. That said, just because you have a patent, doesn’t mean you can behave anticompetitively around licensing it. it’s your car but you can’t run over pedestrians.
dev_tty01 8y ago
It is the law around "standard" essential patents. Company X develops technology and then works the standards process to make their technology the standard. Now anyone who wants to use the standard must license the technology from company X. Phones only work if everyone uses a published standard. In order to have something approved as the standard, company X has to agree beforehand that they will license the tech to everyone at reasonable rates. This was core to Apple's argument. Qualcomm was insisting on unreasonable licensing rates for standards essential patents. I don't know who was right or wrong, but that was the position.
- mises 8y ago
  They made it a standard. GSM branched off years ago for this exact reason. Phones currently work with two different ones. More importantly, point me to the clause in the Constitution that says, "unless other people really really want it". If any thing, would restriction of a standard not promote a competitor? For years, h.264 licensing was necessary. Now we have AV1.
  - deleted 8y ago
    [deleted]
  - GeekyBear 8y ago
    As part of the standards setting process, Qualcomm voluntarily entered into a binding legal agreement to license those patents that are necessary to implement the standard to any competitor who wanted a license, and to license them under FRAND (Fair, Reasonsble And Non Discriminatory) terms. Should contracts only be legally binding until you no longer like the terms you have agreed to?
    - abfan1127 8y ago
      Apple entered into a contract until it didn't like the terms, then just quit paying...
  - dodobirdlord 8y ago
    The patent clause is a pretty vague and open ended statement, and is clear that (a) it's giving Congress the ability to regulate something (b) to promote the common interest. Common standards are useful, so Congress has chosen to create patent regulation that prohibits refusing to license certain essential patents to your competitors.
  - ac29 8y ago
    > They made it a standard. Phones currently work with two different ones. Which 2? If you mean GSM and CDMA, they're effectively dead (yes, I am aware legacy 3G networks are still in use some places). LTE killed them both.
AnthonyMouse 8y ago
> The Constitution patent clause grants Congress the right to "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Would this ruling not, under that clause, be unconstitutional? The constitution allows Congress to create a patent system. It doesn't require them to issue patents at all, much less without qualifications. Moreover, promoting the progress is a trade off. Suppose various entites had two hundred standards essential patents. This is actually less than the number of patents on a device like an iPhone, which follows standards for everything from wireless to USB to TLS. Then if each of the patent holders wanted 1% of the total device price, there wouldn't be iPhones because they'd lose two dollars for every one they made. In principle that isn't in the interests of the patent holders, because if there are no iPhones then they collect no royalties, but it's basic tragedy of the commons. Every patent holder has a blocking patent, they all want the device to be profitable enough that it's produced, but they also all want the other patent holders to be the one to reduce their percentage in order to make that happen and between coordination problems and brinkmanship it can easily sink the whole endeavor. Moreover, if entities holding blocking patents could charge whatever they like, then there would be reduced incentive for anyone else to make further progress because the holders of the existing patents continuing to charge their existing rates would automatically capture the new value that should go to the new inventor when the value of the device increases. So given that "promote the progress" is a trade off, giving Qualcomm a monopoly on the whole world is clearly not a good way to optimize it.

by mises 8y ago

wbl 8y ago

Because they signed agreements as parts of the standards process to do so.

jxdxbx 8y ago
right. and SEPs only have value because they are included in a standard. not all of the Q patents at issue are technically SEPs though. That said, just because you have a patent, doesn’t mean you can behave anticompetitively around licensing it. it’s your car but you can’t run over pedestrians.

dev_tty01 8y ago

It is the law around "standard" essential patents. Company X develops technology and then works the standards process to make their technology the standard. Now anyone who wants to use the standard must license the technology from company X. Phones only work if everyone uses a published standard. In order to have something approved as the standard, company X has to agree beforehand that they will license the tech to everyone at reasonable rates. This was core to Apple's argument. Qualcomm was insisting on unreasonable licensing rates for standards essential patents. I don't know who was right or wrong, but that was the position.

mises 8y ago
They made it a standard. GSM branched off years ago for this exact reason. Phones currently work with two different ones. More importantly, point me to the clause in the Constitution that says, "unless other people really really want it". If any thing, would restriction of a standard not promote a competitor? For years, h.264 licensing was necessary. Now we have AV1.
- deleted 8y ago
  [deleted]
- GeekyBear 8y ago
  As part of the standards setting process, Qualcomm voluntarily entered into a binding legal agreement to license those patents that are necessary to implement the standard to any competitor who wanted a license, and to license them under FRAND (Fair, Reasonsble And Non Discriminatory) terms. Should contracts only be legally binding until you no longer like the terms you have agreed to?
  - abfan1127 8y ago
    Apple entered into a contract until it didn't like the terms, then just quit paying...
- dodobirdlord 8y ago
  The patent clause is a pretty vague and open ended statement, and is clear that (a) it's giving Congress the ability to regulate something (b) to promote the common interest. Common standards are useful, so Congress has chosen to create patent regulation that prohibits refusing to license certain essential patents to your competitors.
- ac29 8y ago
  > They made it a standard. Phones currently work with two different ones. Which 2? If you mean GSM and CDMA, they're effectively dead (yes, I am aware legacy 3G networks are still in use some places). LTE killed them both.

AnthonyMouse 8y ago

> The Constitution patent clause grants Congress the right to "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." Would this ruling not, under that clause, be unconstitutional? The constitution allows Congress to create a patent system. It doesn't require them to issue patents at all, much less without qualifications. Moreover, promoting the progress is a trade off. Suppose various entites had two hundred standards essential patents. This is actually less than the number of patents on a device like an iPhone, which follows standards for everything from wireless to USB to TLS. Then if each of the patent holders wanted 1% of the total device price, there wouldn't be iPhones because they'd lose two dollars for every one they made. In principle that isn't in the interests of the patent holders, because if there are no iPhones then they collect no royalties, but it's basic tragedy of the commons. Every patent holder has a blocking patent, they all want the device to be profitable enough that it's produced, but they also all want the other patent holders to be the one to reduce their percentage in order to make that happen and between coordination problems and brinkmanship it can easily sink the whole endeavor. Moreover, if entities holding blocking patents could charge whatever they like, then there would be reduced incentive for anyone else to make further progress because the holders of the existing patents continuing to charge their existing rates would automatically capture the new value that should go to the new inventor when the value of the device increases. So given that "promote the progress" is a trade off, giving Qualcomm a monopoly on the whole world is clearly not a good way to optimize it.