"Fair" makes sense to me in that various licensees should be treated equitably. I don't know how a court would determine fair when relationships are complex and cross-licensing is all over the map. Then there are the pass-through rights, ASIC purchases, time element for the patents involved, etc. But I can see that "fair", if it could be pinned down, could make sense.
But "reasonable" doesn't make sense to me at all.
A company should charge what the market will bear. If they don't, they are handing money to the licensees who assuredly will charge what the market will bear for their products [including the patented technology]. QCOM also handed money to the governments who licensed the spectrum [in the QCOM case] who would not have been able to sell spectrum rights for such huge sums if QCOM had charged market rates in the first place.
Unfortunately, SETI and such central planning types operating on Kremlin thinking think of "going rates" or "normal charges" or something like that. Perhaps "typical industry rates".
Of course, the patent rights should be sold for what the market will bear, being the price which will maximize QCOM profits. That amount of course is guesswork, but at least having the right goal is more likely to lead to the right answer than not even having an idea.
They should leave "reasonable" out of it. The subscribers will decide what is reasonable and licensees will do so too. If one company thinks the price is unreasonable, they will decline a licence. If another thinks it's reasonable, they'll accept a licence.
Whether it's the right price or not will be decided not by QCOM or the licensee, but the subscribers who might or might not sign up in sufficient numbers to validate the price paid by the licensee and accepted by the patent holder. One or other is sure to have got a worse deal. That is unless they come up with some "hindsight" agreement in which payment is a function of sales to subscribers. If the technology doesn't sell well, the patent holder wouldn't get a lot, but if there is big demand, then the patent holder would be paid a lot.
An example of "reasonable" would be charging CDMA on a similar basis to GSM charges. GSM is a TDMA technology which could deliver less than 10 kbps and used a lot of spectrum to do it. CDMA is a technology which can deliver megabits per second and use less spectrum than TDMA technologies like GSM.
We'd have to get out the precise numbers, but both are mechanisms to transfer bits through the aether.
Even in 1996, CDMA could do 3 times what GSM could do [data for a given amount of spectrum]. With upgrades and GSM not being allowed to use QCOM technology to upgrade [which they have done] GSM would still be in their old mode, while CDMA has stretched out to something like 10 times the ability of GSM.
Even in that most basic measurement, QCOM royalties could therefore reasonably be 160% since GSM charges 16%.
But on a "what the market will bear basis", which is a much more reasonable way of deciding what royalties are reasonable, to avoid transferring profits from the patent holder to the licensees, CDMA enabled mobile cyberspace, which is vastly more valuable than a simple voice call. It's not just data transfer rates, it's the quality and value of the data which can be transferred which matters to subscribers and therefore how much is reasonable for them to pay; in their eyes and only they are the ones to determine what is reasonable, not a court.
Globalstar management had their idea of what was "reasonable". Subscribers determined that Globalstar management were fools who had no idea of value and "reasonable". So they didn't buy.
Similarly, if QCOM charged too much, potential licensees and subscribers would determine that the charges were unreasonable and they'd decline to buy.
It is therefore not possible to charge an unreasonable amount for a royalty because licencees won't buy and neither will subscribers.
But that would make a standard fail, [like Globalstar], when it could perhaps have succeeded if a reasonable rate had been charged. All the companies putting effort into the standard would be frustrated and waste their money. So a standard setting process should define the price of the patents BEFORE buying them by making them essential. One doesn't stay in a hotel because one finds it open and unlocked and then complain when they charge the rack rate. The price needs to be set BEFORE buying, and standards setting bodies are buying technology on behalf of the industry and subscribers.
Mqurice |
