FTC: Qualcomm Has Unfair Monopoly In Smartphone Market

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alextheblue

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the authors of The Smartphone Royalty Stack said that the cost of patent royalties and other non-hardware expenses "may be undermining industry profitability — and, in turn, diminishing incentives to invest and compete." That's not good for consumers.
Reducing/eliminating patent royalties would absolutely reduce costs for consumers. That much is true. But patent royalties are actually a huge incentive to invest in technology. If you greatly reduce or eliminate royalties and possibly even force licensing, that would hurt the firms that are creating new technology and reduce the incentive to invest in new designs. At the same time, if the Chinese me-too chip firms can use these patents for free/cheap, they could further undercut the top chipmakers (more so than they already do), hurting industry-wide profitability in the long term as well.

Don't get me wrong, that's a somewhat separate issue from patent abuse. They need to be fair about their licensing, and there is a middle ground between "free everything, get rid of patents" and "nobody can use my patents unless I say so, and even then I rob them blind". Qualcomm has been abusive, but at the same time we need to tread carefully to avoid setting a bad legal precedent.
 

SockPuppet

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The good ol' American dream. Start a business and make a life for yourself. Unless your business gets TOO successful. Then we'll fine you billions of dollars because your competition isn't as good as you are.
 

mtcn77

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It is so ironic that the other companies that 'failed' to launch a contemporary baseband solution are NOT acknowledged anywhere on the litigation. You would think they as the benefactors of such a suggestion need be mentioned as to what Qualcomm was capable of that they weren't? Has '2w' tdp processors possible before Qualcomm?
 

falchard

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Qualcomm should be quite confident in winning this court case. They have an army of lawyers and are dealing with flimsy claims. Patent licensing has been moving the industry forward in a massive way. Do you think Microsoft is sharing its patent portfolio out of good will? Of course not, they are bankrolling on every smart phone sold even though they represent a minuscule portion of the market.
 

mtcn77

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Qualcomm leaders are free to dump uncompetUSion, too much triglycerides have harmed their core intellectual capacity beyond repair.
 

kenjitamura

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I hate a lot about the patent industry but from just 10 seconds of googling it looks like the main argument cited that "$60 of every $400 phone goes to LTE patents" shouldn't really be a consideration for a suit lodged against Qualcomm.

While Qualcomm has the highest share of royalties from LTE patents the pool has dozens of companies that get shares and many of them are competing smart phone manufacturers which kind of defeats the monopoly argument if the competition is recouping some of the money for themselves in the process.
 

gggplaya

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The patents are a little high, but I think they have a right to charge it. They have the best innovation, and the asian companies simply copy most of it with little to no innovation.

Considering Trump is a pro-american crony capitalist, he'll probably side with Qualcomm since it's an american powerhouse. He'll just make them bring manufacturing back to the U.S. then take credit for it on twitter.

I'm not taking sides, i'm just saying it like it is.
 

shrapnel_indie

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Or maybe the FTC will get its first loss right as it starts to transition from the Obama administration to the incoming administration.
Is THIS another cheap political jab?




Patent trolls definitely need to be crushed out of ownership and business. Unfortunately, with all the "updates" to the patent (and coyright) system, updates that can easily give a perpetual ownership, It defeats the very intention of the system as designed by our founding fathers. (Invent, collect royalties to recoup invention costs and some profit, allow the market to freely use it after a period of set time, not own and cash in on it for perpetually forever.) You're right though, there should be a middle-ground and unfortunately through legal manipulation of lawmakers, that middle ground is shrinking along with the original intent of the patent (and copyright) system.




What you describe is a pervasive attitude that is invading all life activities. (The other team played harder, practiced harder, etc. We can't reward them for their drive to be the best, so everyone gets the same reward: Fostering the why try when I get the exact same reward attitude that is growing.)

There shouldn't be a TOO successful penalty unless it can be proven that it was because of extortion tactics, physical threat tactics, or other underhanded and"legal" means (i.e. threats of lawsuits on those who can't afford to defend,) [ahem... Microsoft.] Unfortunately the Patent and Copyright systems are BOTH full of such tactics... and patent and copyright trolls cash in on it. (I'm not trying to say Qualcomm is a patent abuser, that has yet to be proven that they are even remotely so.) However, if you are "too successful" you better be prepared to always show it was from real work and not shady or underhanded means.
 

aldaia

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So, according to FTC,
holding 65% of the LTE baseband processor market is "unfair monopoly in the smartphone market"
but
holding more than 80% of the CPU processor market is not "unfair monopoly in the PC market"
holding 99% of the CPU processor market is not "unfair monopoly in the server market"
 

Brian_R170

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The main point of the complaint is about abusing their leading position in order to maintain market share. Qualcomm allegedly paid "rebates" to Apple to use their baseband chips exclusively. Does that not sound eerily familiar to the anti-competitive practices for which Intel was investigated and fined several years ago?
 

alextheblue

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I agree with most of what you've said but I just want to clarify that Qualcomm is most definitely NOT a patent troll.
 

mtcn77

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Qualcomm is only a single firm,but with a bevy of resources that no other company can parry. On grounds of relations, yes, but have you compared theirs with any another chipset? They have no match and technically it is not a monopoly until "someone else can make it". Patents only discredit any claim of counterfeiting. Staking the market direction is beyond the scope of proper patent law execution and into the field of authority trolling.
 

Olle P

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From what I've come to understand about (the (ab)use of) patents in general the main problems are:
1. It's fairly easy to get a very broad patent accepted, effectively closing competitors out of the market for at least two decades.
2. It's very difficult to have an existing patent revoked when it's found to be based on exisiting knowledge or prior art and shouldn't have been accepted in the first place.
3. In reality a patent is only as strong as the financial muscles of those supporting it. A "small" inventor's patent is protected by the letter of the law but not by the enforcers of said law.

I have examples showing all three Points, but think they're a bit off topic for this post.
 

mtcn77

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1. Not unless you can prove it is not a counterfeit.
2. Not unless patent judiciary bodies exercise their decree according to the law and not permit any strong-arming attempts like ^.
3. No, since Alexander Fleming held the patent for penicillin however didn't have the means to manufacture it for 20 years. See what I did there?
 

shrapnel_indie

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I probably should have stated it more myself... but I did state, replying to SockPuppet:

(I'm not trying to say Qualcomm is a patent abuser, that has yet to be proven that they are even remotely so.)
Patent Trolls are definitely abusers of worst kind.
 

Olle P

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Assuming your comments refer to my comments above I have a hard time understanding your points, not to mention the negation in point 2:

1. Example: Photocopier.
How many brands were there the first decades? One, Xerox.
How much did photocopiers (on the market) evolve during the patent period? Not much.
Once the patent was gone many more brands were available with more sophisticated machines.
Nowadays patents that cater even the most basic designs and very low "height" are accepted.

2. For some strange reason the Wright brothers were ruled to get royalties from other aircraft manufacturers that used ailerons (flaps at the trailing edge of wings used to control roll), even though a) the Wright brothers didn't use ailerons but controlled roll by skewing the whole wing, and b) ailerons had been patented in Britain a decade before Wright patented their aircraft.

3. Example: Swedish inventor Håkan Lans, just to mention one.
Many inventors in recent decades have seen their patents blatantly infringed by major corporations with no means to enforce their rights. The inventor will be forced into bankruptcy before the case is settled.
 

mtcn77

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^Hello. Read into the patent description, it does not grant you the right to a market monopoly. It has been overruled in the 16th century by King James the First of England. Nothing has changed ever since, as the concept is the same. If you betted all your luck on a single piece of paper: the market has nothing to offer you. What you own has to be physical, or you have no exception to speak of. The patent is there only to safeguard your market position, not to offer you the market as a tool for your manipulation. To each, his own.
1. Xerox DID invent it, so they could either be a licensor, or not share their patent.
2. Wright brothers did patent it in that country, so they got grants in that country.
3. Again: Alexander Fleming. You don't get to own what you don't have. Patents are a tool for an era before intellectual property. It resolves finite physical projections of that intellectual idea. It is up to you to make the best of it. If there is no exception, the patent has nothing to protect you against. You cannot claim repercussions from people you aren't affiliated with; that is patent trolling.
 

Olle P

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Which sort of is my point. It's a broad patent, so nobody was allowed to make a competing product and call it their own.
If you file a patent for something in the USA I'm not allowed to copy that patent and file it to claim rights in the EU.
In the Wright case they had a US patent for "skewed wings", not ailerons.
The British inventor of the ailerons could choose to patent them in the US as well or not do it. Since he didn't they were fair game for anybody to produce and sell in the US, and the Wrights should have no right to royalties!
Fleming' case is totally irrelevant. He did a discovery, which can't be patented.

Håkan Lans has made a couple of important inventions that he's tried to license. Some of the potential licensees have chosen not to pay any royalties, but used the technologies anyway.
There's also the case that major companies marketing competing (less functional and far more expensive) products have fought to make Lans' products "non-standard".
 

shrapnel_indie

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Seriously? King James has been dead and gone for a good long time now. (The United States wasn't even thought of as such.) The LAST King James... James the VII was deposed in 1688...

I can't speak for International Copyright, but I assume the same thing has happened there... Patent Law allows a monopoly on the patent's object, or in cases ideas and theories where a product doesn't exist (at least yet), until it es expired and not renewed for some given reason (where renewal is allowed.) The patent holder, is of course free to license it to whomever they wish, but without that license, and the patent enforced, NOBODY can produce said product/object.
 
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