Abstraction, Logic, and Cross Licensing by SPINCO
DS,
You begin by saying, "Don, the spin-off is not abstract. There are many nuances to reality that are not shown in simple deductive reasoning…" I do agree that the spin-off is real, concrete, and complex. If you intend to imply that I must believe "reality" is merely "abstract" and "simple," then I disagree that by doing so you can so easily overturn my use of deductive reasoning.
The trick in "abstracting" is to faithfully translate and retain only what is crucial when moving from the concrete to the abstract or from the abstract back to the concrete.
Whether using Venn diagrams or symbols, the trick of "abstracting" through logic is to abstract the logical "form" from the "words" in the argument. I believe that my translation was faithful to the worded intentions of QCOM and SPINCO.
Although you can attack an analogy by using the example that you characterize as "ridiculous," that SPINCO would give its IPR away and loses its strengths, my analogy might remain fruitful. My analogy was this: SPINCO will be like QCOM in having some "essential and enabling patents." "Like" is not identical in every respect.
Of course, that analogy was the minor premise in a valid deductive syllogism, which remains much more than an analogy. The logic is valid; although you can, if you choose, attack my premises. In fact, that is the only logical point of attack. J
Any sound logical argument cannot be reduced to absurdity; often that approach does deflate invalid arguments. Of course, it would be truly absurd for QCOM to give its IPR to SPINCO so they that could "give it away" by cross licensing. And, as you seem to imply, in that process, somehow destroy QCOM's claim to royalties. The absurdity in the absurdity of such a claim is that it requires that IJ and RS be far less competent than I believe you know them to be. If not, sell your shares. J
Your stronger claim, because it requires examination, was that there is a middle ground between "giving it away and selling rights the same way that QCOM does," including that SPINCO might place the intellectual property in a "pool." Making a favorable interpretation of your position, I believe you mean that: inadvertently, SPINCO might dilute its (and QCOM's) intellectual property. Dilution of intellectual property does occur. I grant that, somehow, an excessive transmission of CDMA Know-How could prove to be a small but legitimate danger. Porter uses such dilution as an example of late-mover competitive advantage. Seriously though, I think SPINCO would have to shoot itself in the foot to lose several generations of competitive advantage in "Know-How." I consider this danger, in reality J, to be both small and slight.
I will not concede your last four sentences, which, if you have not noticed already, are also in the form of a deductive argument. Allow me to examine each of them in turn.
DS, "We already determined that x-licensing would be very bad for QCOM with respect to its control of its IPR." If you mean, "if QCOM cross licensed under its present corporate structure that it might end up with reduced royalty rates," then I agree that would be bad. Of course, the SPINCO arrangement is designed to avoid precisely that. Under no licensing scenario does QCOM (or SPINCO) lose control of it patent rights. I do not accept that as a legitimate major premise.
DS, "Following your reasoning, x-licensing will be very bad for SPINCO with respect to its control of IPR." With all due respect, DS, that does not follow from my reasoning. Although you appear to me to be imagining such a possibility, as I said above, I am not. Not only is dilution a small, but possible, danger, but also cross licensing, including some level of technology guidance, is essential to building both the SPINCO and QCOM value chains. This is an outcome that is much to be desired; it grows the market. This does entail the transfer of some practical knowledge, but QCOM has already been doing this for some time without losing either its patent rights or competitive advantages in Know-How. For example, consider NOK's difficulty in building chips and MOT's difficulty in implementing Sprint's base stations.
DS, "But we know that compromise is required." What compromise specifically is required? Here I may not know what you mean, given the claim that follows in your next sentence. If I place a positive interpretation on your sentence, I imagine that you mean that cross-licensing of CDMA and GSM would be useful for all parties, so long as QCOM retains it royalties. If so, I agree so long as IPR is protected, which I maintain it can and would be.
DS, "One result of that compromise is that SPINCO becomes a royalty play." The logic of this conclusion escapes me. What is the compromise that leads to SPINCO becoming a royalty play? I am baffled by your conclusion, particularly given the argument that I made that a successful transfer of enabling and essential patents from Qualcomm to SPINCO transfers Gorilla power: proprietary architecture with high switching costs. Perhaps, I have missed the post in which you lay the foundation for this claim. Please help me here. What (or where) is your argument that SPINCO is a King and is not a Gorilla?
(In a later post, I will try to explain my thinking about some distinctions among types of intellectual property rights by examining patents, non-disclosure agreements, and Know-How. I hope that this will clarify my thinking and, perhaps others, so that we are not forever lost in missing each other's intended meaning.)
I hope this helps.
Just another old Alabama boy having fun,
Don |
