Posts Tagged: "Raymond Millien"

Some Observations on the Market Reverberations of the Smart Phone Patent Wars

Commenting on the Yahoo! Inc. patent infringement lawsuit filed against Facebook in March of 2012, Mr. Cuban concludes his post by stating: “I hope Yahoo[!] is awarded $50 billion dollars. It is the only way that consumers will realize what is at stake with patent law as is. Then maybe we can get it right and further innovation and competition in this country.” These statements are from a very influential technology entrepreneur, investor and generally-recognized American business guru. Thus, it would seem that the continuous negative headlines from the smart phone patent wars are definitely giving patents a bad rap!

The Smart Phone Patent Wars: What are FRANDs For?

In all cases, the IEEE, JEDEC, ITU and TIA policies apply to both issued patents and pending applications (regardless of whether such applications are published). Further, all four policies make clear that the SSO will not get involved in the particulars as to what constitutes FRAND licensing practices. Interestingly, and for those paying attention, the IEEE, JEDEC and ITU policies require disclosure of essential patents, whereas the TIA policy simply encourages disclosure of essential patents. Again, there simply is no generally-accepted test to determine whether a particular license offer satisfies the reasonable aspect of an SSO participant’s FRAND commitment. How does this play out in practical terms? A recent case is instructive.

The Smart Phone Patent Wars: What the FRAND is Going On?

This all came to a head when, on February 22, 2012, Microsoft Corporation filed a formal competition law complaint against Google with European Union antitrust regulators. Microsoft’s complaint was brought about because Google (i.e., Motorola Mobility) “has refused to make its patents available at anything remotely close to a reasonable price” and “attempting to block sales of Windows PCs, our Xbox game console and other products.” Well isn’t Google’s “maximum per-unit royalty of 2.25% of the net selling price for the relevant end product” in compliance with FRAND!? If you consider that often dozens (and sometimes, hundreds) of patents cover a single device, the answer is a resounding “no.” At 2.25% per patent, it would take only about four dozen patents before the entire selling price would be paid in royalties – an obviously absurd result.

Are the Smartphone Patent Wars Giving Patents a Bad Rap?

So who is the villain in all of these wars responsible for again giving patents a bad rap? Well, the villain in not the ITC, USPTO or any U.S. government agency. Nor it is any country’s protectionist trade regime, or an “irreparably broken” U.S. or global patent system. No, the real villains here may very well be a handful of companies that willingly contributed patented technologies to various SSOs, championing their adoption and encouraging their use in a host of consumer electronics, and now claim (years later) that the very producers they encouraged to implement these standards should be barred from making, using or importing their products into the U.S. market.