Qualcomm Facing Off With FTC in Antitrust Trial That Kicks Off Today

[cmaier]

Makes sense. But what would be Qualcomm's motivation here? Pure greed? Or are they reacting to what they feel to be poor practices by those using their technology? What's their version of the story?
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Appreciate the thoughtful info and your polite delivery!

Yes, pure greed. When they charge Foxconn for a chip, and then charge Apple a license fee when Foxconn puts that chip in an Apple phone, they make a lot more money. Even though this violates the doctrine of patent exhaustion. (They would argue they aren’t doing this. They would say one Qualcomm business sells the chips, and another Qualcomm business licenses the patents, and so somehow this is legitimate. The courts will decide if you can indeed violate patent exhaustion by doing that sort of thing).

 

[shplock]

If Apple using their Technology without paying for it is what you describe as not ordering anything from them in the future then you may be right. However. We all sit up and complain when China is accused of stealing Technology and rightly so. Well guess what Apple is using someone else IP and trying to get away without paying for it.

That is not what is being discussed or what happened. Apple say that Qualcomm are wanting them to pay twice and pay through the nose. Sort of like walking into a shop and buying a chocolate bar for say $10 when it is worth $1 then you have to pay again when you leave the shop.

 

[jtaylor673]

Could someone who is knowledgeable about the disagreement provide some clarification?

A chip and a license are two different things. Doesn't Qualcomm get to charge for both?

A manufacturer would like a chip without a license? Okay. Qualcomm could reasonable do this.

You want a license but no chip? Maybe. This could be more difficult. How does Qualcomm give away their tech and allow the manufacturer to install it onto a their chip AND honestly tell you how many times it was installed so that Qualcomm can be paid correctly? Remember how many time someone could copy a Microsoft Windows or Office CD. Infinite.

You want a chip with some licenses but not others? Seems reasonable.

Is there the possibility of manufactures wanting Qualcomm's chips so that they can install (possibly illegally) portions of Qualcomm's license onto it? And then they won't pay for it? Or something?

Thanks. Jason.

 

[cmaier]

Could someone who is knowledgeable about the disagreement provide some clarification?

A chip and a license are two different things. Doesn't Qualcomm get to charge for both?

A manufacturer would like a chip without a license? Okay. Qualcomm could reasonable do this.

You want a license but no chip? Maybe. This could be more difficult. How does Qualcomm give away their tech and allow the manufacturer to install it onto a their chip AND honestly tell you how many times it was installed so that Qualcomm can be paid correctly? Remember how many time someone could copy a Microsoft Windows or Office CD. Infinite.

You want a chip with some licenses but not others? Seems reasonable.

Is there the possibility of manufactures wanting Qualcomm's chips so that they can install (possibly illegally) portions of Qualcomm's license onto it? And then they won't pay for it? Or something?

Thanks. Jason.

You can’t sell a chip which uses a patent and also charge the purchaser of the chip a patent license fee for that patent. It’s called patent exhaustion. They can charge a patent license fee if you use a chip from someone else if that someone else doesn’t have a license.

The technology at issue is already in the chip sold by Qualcomm, it’s not something you “install on a chip.”

 

[Carnegie]

Could someone who is knowledgeable about the disagreement provide some clarification?

A chip and a license are two different things. Doesn't Qualcomm get to charge for both?

A manufacturer would like a chip without a license? Okay. Qualcomm could reasonable do this.

You want a license but no chip? Maybe. This could be more difficult. How does Qualcomm give away their tech and allow the manufacturer to install it onto a their chip AND honestly tell you how many times it was installed so that Qualcomm can be paid correctly? Remember how many time someone could copy a Microsoft Windows or Office CD. Infinite.

You want a chip with some licenses but not others? Seems reasonable.

Is there the possibility of manufactures wanting Qualcomm's chips so that they can install (possibly illegally) portions of Qualcomm's license onto it? And then they won't pay for it? Or something?

Thanks. Jason.

Under U.S. law, if you sell an item which substantially embodies a patent which you own, then your patent rights with regard to that item are exhausted. That means you have no more legal right to demand license fees for the patent which is incorporated in the item. The person who bought the item can use it, or resale it, and they aren’t infringing on your patent. You chose to sell them something which used the patent. If you’re interested further in this concept, I can give you some cites to court cases.

If person A sells an item which incorporates a patent owned by person B, without getting a license to do so, then person B’s patent rights are not exhausted. Both person A and person C who bought the item can be infringers. But if person B sold the item, then no one further down the chain is infringing by using or resaling the item.

So if Qualcomm sells Foxconn a modem, then Qualcomm’s patent rights for all of the standard essential patents which are incorporated in that modem are exhausted. It isn’t entitled to collect license fees for those patents, either from Foxconn or, e.g., Apple if the modem is incorporated in an iPhone which is sold to Apple.

As for other chip makers wanting to license necessary patents from Qualcomm, Qualcomm is required to grant them licenses on FRAND terms. At that point, Qualcomm’s patent rights are exhausted and it isn’t entitled to collect license fees (for the patents in question) from, e.g., smartphone makers who buy chips from those other chip makers. As for how to account for how many licensed chips are made, that’s something the parties need to agree on or have a court sort out.
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...

Appreciate the thoughtful info and your polite delivery!

You're welcome.

 

[KPandian1]

It’s not an IP suit. And one of the two parties is the federal government.

The Chinese injunction is what I was referring to as boring; the Federal suit is the second one we discussed in an earlier thread. I can try to find the link later; we mentioned Judge Koh then, on a link from 9to5.

On the Chinese (/German?) injunctions, the IP contention seems very frivolous! Definitely boring.

 

[0388631]

I'd rather see Qualcomm suffer.

 

[IG88]

WTF is the chip good for other than its function? The tech is required to fulfill its function. Qualcomm is crazy. Apple must win; what a horrible precedent to set otherwise.

Partly because you can buy a chip, make something with it, keep it for yourself, and never need to pay FRAND royalties.

As in, I could buy a QC modem, not pay any patent royalties, and do whatever I want with it, as long as I don't try to create a business selling things I make.

 

[Carnegie]

Partly because you can buy a chip, make something with it, keep it for yourself, and never need to pay FRAND royalties.

As in, I could buy a QC modem, not pay any patent royalties, and do whatever I want with it, as long as I don't try to create a business selling things I make.

Infringement isn't limited to selling or offering for sale. Using a patented invention can also represent infringement. See 35 USC §271(a):

Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

But, as we've said, buying the chip from the patent owner (or from someone who bought it from the patent owner) means that you have authorization. So you aren't infringing.

 

[gnasher729]

The Chinese injunction is what I was referring to as boring; the Federal suit is the second one we discussed in an earlier thread. I can try to find the link later; we mentioned Judge Koh then, on a link from 9to5.

On the Chinese (/German?) injunctions, the IP contention seems very frivolous! Definitely boring.

In Germany, you can get a preliminary injunction on just about anything- but you have to post a bond (here: 1.5 billion dollars) which is meant to pay for damages if your preliminary injunction turns out to be unjustified. So compared to other countries, it is much easier to get a preliminary injunction in Germany, but it can backfire in a massive way. I have a slight suspicion Qualcomm may have missed that part when they talked to their German lawyers.

 

[cmaier]

Partly because you can buy a chip, make something with it, keep it for yourself, and never need to pay FRAND royalties.

As in, I could buy a QC modem, not pay any patent royalties, and do whatever I want with it, as long as I don't try to create a business selling things I make.

If you buy the chip, and assuming it was legal to charge loyalties to a buyer (it’s not), you would infringe even if you keep it for yourself. You infringe a patent by making, using, selling, offering for sale, or importing. Using it yourself still infringes patents.

Creating a business is not necessary.

Some might argue that the fact that Qualcomm decides to charge a royalty based on your sales price is just more proof that their license demands are not non-discriminatory. They would argue the license shouldn’t depend on what you do with the chip.
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In Germany, you can get a preliminary injunction on just about anything- but you have to post a bond (here: 1.5 billion dollars) which is meant to pay for damages if your preliminary injunction turns out to be unjustified. So compared to other countries, it is much easier to get a preliminary injunction in Germany, but it can backfire in a massive way. I have a slight suspicion Qualcomm may have missed that part when they talked to their German lawyers.

Also in Germany you cannot claim invalidity of the patents as a defense. You need to do that in a separate action. So you can get an injunction and then find out a year later that the patent wasn’t even valid.

Es ist verrückt.

 

[cmaier]

Infringement isn't limited to selling or offering for sale. Using a patented invention can also represent infringement. See 35 USC §271(a):



But, as we've said, buying the chip from the patent owner (or from someone who bought it from the patent owner) means that you have authorization. So you aren't infringing.

I think we’re in the same business