Telecommunication is somewhere in the middle ground between the pharmaceutical industry where every patent infringement gets challenged in the courts, and the software industry, where patents are rarely enforced.
At one end of the spectrum, Pharma R&D is risky and takes a long time. Getting FDA approval is also a time consuming. Since bootlegging Viagra and other drugs over the Internet is far more profitable and less risky than other forms of drug dealing, the problem is a serious one.
On the other end of the spectrum, the software industry has a growing anti IP sector that believes open-source. Those that do file patents, tend to do so to raise venture capital and the patent portfolio is then used as a quick and easy guide to valuing companies in takeovers and mergers. Many jurisdictions do not allow software patents, per se. Rather, they have liberally interpreted copyright law to provide IP protection and injunctive relief. One advantage of this approach is that it is objectively difficult to examine software – the USPTO makes a lousy job of it – and because the technology is changing so fast, by the time a backed up patent application is eventually examined, it is well past its sell by date.
Now telecommunications, on the other hand, tends to develop at a medium pace and has significant investment. Because of the need for compatibility and standardization, niche markets such as GSM and CDMA have tended to cross-license each other for free.
Qualcomm takes a more aggressive position. Industry analysts say Qualcomm’s attempts to enforce its IP rights in court has created a cultural clash among the traditional wireless industry players.
Now the GSM community, led by Nokia, is fighting back, challenging Qualcomm’s royalty rates and its premise that the radio technology embedded in their handsets forms the primary value of the phone. They are now counter litigating, by filing their own IP charges against Qualcomm’s chipset division.
Qualcomm and Nokia’s latest royalty battle is a kind of stalemate, with the companies trying to reach mutually acceptable terms for for cross-licensing each other’s GSM and wideband-CDMA technologies.
Qualcomm has a massive IPR portfolio and there is now talk of the GSM vendors who want to see technology freely cross-licensed, trying simply to shut Qualcomm and its technology out of their future products and business strategy decisions.
In South Korea, the WiBro initiative was driven by vendors and regulators tired of paying royalties on Qualcomm CDMA technologies. Rather than paying to use CDMA, the Koreans have developed the alternative OFDM technology.
I am not sure that I agree that Qualcomm’s use of its substantial W-CDMA IP is unfair. Patents are expensive assets whose main purpose is and should be to get limited rights. These rights are monopolist, and can be to block competitors. If licensing is in the mutual interest of both parties, a licensing agreement will be reached. If a company is unreasonable, most countries have compulsory licensing legislation to independently determine suitable compensation for using patented technology, particularly in essential industries such as power distribution, medicine and military security. Arguably mobile phones are essential. Certainly the enormous sums paid in the RIM – Blackberry case implies this. My daughter and her friends would concur.
If licensing a technology becomes more expensive than developing an alternative, well that merely greases the wheels of progress.
I am a little fed up with upgrading my mobile phone and getting all these functions I don’t need and can’t be bothered learning to use, however.
This industry could run into legal problems of cartel type abuse if they seek to lock out newcomers or even merely make some major players equipment non-compatible in a calculated, concerted manner.
Qualcomm’s attitude is symptomatic of companies that are in decline. It could be that their technology is out of date and they are merely trying to liquidate their assets. It appears that they may liquidate themselves however.
The question is, how will the culture of the industry change. We are keeping our fingers on the pulse.