Worldwide skirmishing between Apple and Qualcomm has now erupted into a US legal battle. Apple has launched a billion dollar U.S. suit attacking Qualcomm’s licensing model. The suit’s specifics are thoroughly explained by Steve Brachman in an IPWatchdog post. Research university TTO’s generally pay little attention to such big tech combat but this suit is worth watching because Apple now seeks relief from the marketplace bargaining envisioned by our patent system through more narrowly focused judicial pricing. In an earnings conference call earlier this week, Qualcomm’s CEO put it bluntly. “Apple’s complaint contains a lot of assertions, but in the end this is a commercial dispute over the price of intellectual property,” CEO Steve Mollenkopf said. “They want to pay less than the fair value that Qualcomm has established in the marketplace for our technology even though Apple has generated billions in profits from using that technology.” See Forbes article here. Mollenkopf’s blunt assessment summarizes what the last ten years of congressional patent reform have been all about lowering the supplier cost of patented components to ICT assemblers who distribute finished products to the public in a very competitive global market governed by the exponentially accelerating pace of Moore’s Law. After fighting with each other over product market share, big ICT tech patent reformers are gladly holding Apple’s coat as it tries to suppress Qualcomm’s share of its product’s sales price by judicially attacking its licensing model.
Big tech intermediaries who market their ICT products (like smart phones) to consumers gained overwhelming bargaining leverage over their suppliers when the eBay decision effectively denied non-practicing patent holders the protection of permanent injunctive relief. Having judicially secured that bargaining edge, price negotiations with lesser-resourced component suppliers reverted to under-payment or simple avoidance. Efficient infringement had become irresistible but led to the creation of secondary market specialists who were branded ” patent trolls “by efficient infringers. For big ICT tech, which already had weaponized patents to fight for market share with big tech adversaries eBay set the stage for big tech to open up a second front they called patent reform. This new war would be waged on Capitol Hill against the patent trolls but in fact it was brought by big tech aggregators against their supply chain component originators in order to gain a greater share of final product price. In this battle the warring ICT intermediaries were allies. For lesser-resourced component suppliers’ efficient infringement and AIA eroded patent values. But well-resourced suppliers able to afford post AIA enforcement suits were impervious to efficient infringement and could manage the punitive costs of AIA. Qualcomm is such a supplier. Its size and must-use technology supplier enabled pricing that had to be attacked in court.
At congressional patent reform’s outset, efficient infringers had little to lose. If eventually they were found guilty, unauthorized use of the patented infringed technology would be “judicially priced” in the form of damages hypothetically calculated under Georgia Pacific’s royalty requirements. Royalty damages would be hypothetically calculated as if their use had been mutually agreed to in timely pre-infringement negotiations. This is retroactive compulsory licensing in effect without further imposition of other contractual limitations on the “compulsory licensee’s” conduct and use of the patented technology. “Infringe now and price later” may have been economically advisable in ICT markets propelled by Moore’s Law, but is unlawful under US patent law. Moreover, this widespread business model has clogged courts and has encouraged genuinely abusive and predatory trolling conduct. But well-resourced suppliers are not intimidated in the new post AIA environment. They must be bargained with on even terms. The courts have now been drawn into a battle to unbalance those terms. In order reduce Qualcomm’s licensing powers Big ICT tech wants to undermine Qualcomm’s licensing strength, hoping that judicially-imposed licensing restraints will lower supplier costs giving Apple a larger share of their product’s sales price.
Kindness of LES’ Brian O’Shaughnessy, a letter was sent to USPTO Director Michelle Lee by the NY House congressional delegation. It outlines how IPR’s reputation for patent nullification is being leveraged by abusive hedge funds who are filing petitions for IPR review of publicly traded, patent reliant firms to reduce their stock prices. Continue reading Letter From NY Congressional Delegation to (former?) Dir. Lee
Every day, Hill Members and staff are assailed by lobbyists they know and like whose interests and arguments are opposed. To get to the truth many use Hill heuristics or “rules of thumb” to help them decide which side’s argument to believe. For example, they prefer arguments based on actual narratives to manipulatable numbers. Constituent experiences with an issue in conflict are easy to understand and recall and of course are politically relevant. Recent Hill appearances by inventors already harmed by AIA also have been persuasive. Sometimes it helps to “follow the money”. Which side has the most to gain or lose can provide independent understanding regarding what is really going on. Mr. Issa’s public characterization of university opposition to HR 9 (see earlier post) not only confirms the persuasive power of past direct constituent congressional contact, it can provide valuable insight into the true motivation driving his attachment to the issue. Continue reading Capitol Hill Heuristics
Federation of American Societies for Experimental Biology (FASEB) members number 125,000 including thirty health-focused societies. It is the largest coalition of biomedical research associations in the United States. Widely considered as the policy voice of biological and biomedical researchers, FASAB annually advocates for “stable and predictable” congressionally appropriated federal funding for basic life science research. Its 2017 recommendations for added congressional funding of five federal life science grant agencies highlights recent medicinal therapies flowing from their life science grants. It also states why and by how much grant funding should be increased for each agency. here. Federal funding stability and predictability enable projects already being conducted to continue and enable formation of new commercialization partnerships leading to more promising scientific discoveries through private sector investment. Continue reading Drug Pricing and Life Science Commercialization
At every year’s end IP Watchdog’s Gene Quinn asks “IP Insiders” to comment on important patent developments during the prior 12 months. This year’s patent section is linked below. Its collective commentaries summarize important 2016 developments affecting the future viability of research university commercialization. Significantly, every setback to the protracted sequence of commercialization is felt most acutely at its earliest stage of TT where uncertainty, financial risk and market unknowns are greatest. Our response to Gene’s invitation is attached below. Continue reading End of Year IPWatchdog Commentary
The posts below are paired because together they accurately describe today’s parlous patent reality. Soloman and Quinn do not pull their punches. They neither bend economic realities nor misstate facts. But others must share the blame. The unfortunate truth was stated by comic strip possum Pogo who said “We have met the enemy and it is us.” Those of us who understood what was happening but failed to speak up are guilty. Those of us who supported AIA and now fear facing up to its flaws are guilty as well. Continue reading Trump Tower Meeting
As the holiday season moves into full swing there is much to distract us from protecting tech transfer. Yet commercialization’s continued viability is all that protects continued political support for mission-critical basic research. That viability depends upon the early stage investability we now see fading. Patent uncertainties not only permeate our patent system, they are at their zenith at innovation’s earliest stage. Big Tech meets this week with Mr. Trump. They will find a way to woo their way into his favor. Continue reading Congressional Record – Rohrabacher on Property Rights
As usual, Paul Morinville’s logic is compelling . AIA should at least be repealed and replaced while Congress expressly restores IP property rights and fixes Sec 101. Continue reading Restore Patent Property Rights
We keep hearing about a pending post-election strategy meeting of Silicon Valley mega-tech leaders who clearly landed on the zero side of a very binary Presidential election. With the exception of Peter Thiel, a strong Trump supporter and member of the President Elect Trump (PET) Transition team, the Valley big-wigs were firmly planted in the Clinton camp. They may be looking forward to the antithesis their cozy relationship with President Obama, including punitive sanctions for their production processes. So far there are no reports that the strategy meeting has taken place or of any strategies emerging. But there are signs that big IT tech may now have more pressing concerns than passing patent reform. Continue reading Technet Hint of Possible Strategy Shift
Here is an interesting, encouraging look at President Elect Trump’s presumed IP leanings by two smart IP policy people. Gene Quinn and Peter Harter share their views about the rising likelihood of efficiency infringement’s potential to conquer the Hill’s PR manufactured troll crisis. Beyond the virtually certain influence on Trump of prominent libertarian and Facebook Board member Peter Thiel (of Paypal, Palantir fame ) the rest of Silicon Valley has prominently been opposed to Trump. Many still are now actually threatening to leave the USA. Google has successfully installed influential acolytes in many powerful positions, including USPTO, but once the FTC’s recent condemnation of framing patent reform with the “unhelpful” distraction of the troll terminology the troll meme may finally be erased. And for many in Congress that is all they know about patents. We have made substantial gains in recent years with many members. For the rest of the congressional membership empty (and thus open) minds may allow for fresh interest where before there was only lobbyist manufactured apathy. Continue reading Silver Lining?