IP Strategy: Active or Passive; Defensive or Offensive ...
chapq,
<< Q's business plan is fundamentally defensive, soundly based, globally cool. >>
While an effective defensive capability contributes to a strong offense, QUALCOMM's IP strategy and its business model are FUNDAMENTALLY OFFENSIVE.
If someone were publishing an up to date book on globally implemented Offensive IP Strategy that included case studies, IBM, Rambus, QUALCOMM, InterDigital, and NTP would certainly deserve a chapter each, and Motorola would deserve mention since their own offensive strategy precipitated the 1st clash of IP and open standards in the telecoms industry with their GSM patent surprise of 1991/1992.
While their IP strategies and postures in the last decade were decidedly defensive, today the strategies of patent rich Nokia and Ericsson (and increasingly Siemens) are also decidedly offensive, and actually Ericsson who brought Ericsson v. QUALCOMM in 1996, shifted gears faster than Nokia (or Siemens). A worthwhile book on the subject that gives insight into Nokia's evolved and evolving IP strategy is "Intellectual Property Rights, External Effects, and Anti-trust Law - Leveraging IPRs in the Communications Industry" (Oxford University Press, 2003) written by Ilkka Rahnasto, Nokia's IPR Director ...
tinyurl.com
Intellectual property rights have gained new popularity as ingredients of industrial policy. At the same time, entirely proprietary product concepts are giving way to products and services that combine various technical and creative components. A successful business strategy is increasingly based on intellectual property rights because through intellectual property rights it is possible increasingly to control the activities of other companies. Accordingly, companies are adopting either offensive or defensive intellectual property strategies. An "offensive intellectual property strategy" is based on strategic planning of the use of intellectual property rights in the business, proactive litigation of intellectual property rights and active lobbying for new intellectual property legislation. A "defensive intellectual property strategy" is aimed at minimizing any effects the intellectual property strategies of others may have on the business of the company. - Ilkka Rahnasto -
There is no question but that QUALCOMM's offensive IP strategy and business model is soundly based and extremely well executed. They operate a large, highly profitable, and non-capital intensive patent factory and they are a very successful patent predator (with capital 'P's) that shields itself from cross-licensing by removing themselves from the manufacturing sphere. By the end of this decade or shortly after, it is conceivable that their revenue flow from IP based licensing and royalties cold exceed IBM's. It is (one of) the reason(s) I invested in them initially and am still invested in them today and consider that investment to be a core portfolio holding -- that and the fact that they have an architectural lock on their own proprietary (open) implementation of cdma and cdm/tdm technology, making them what Geoffrey Moore would term a 'gorilla' in that niche of mobile wireless space which, unfortunately, is becoming more of a niche with each passing year.
Whether or not QUALCOMM's IP strategy and its implementation are 'cool' depends on what hat you are wearing. It is decidedly uncool for the end user consumer of mobile wireless telephony and the carrier community licensed to serve those consumers . OTOH, it's decidedly cool for the Jacobs and Nazarian families and well optioned QUALCOMM executives, as well as for institutional and individual investors with a QCOM holding.
<< This is not a good case for the EC to impose regulations modifying the rules of the game. >>
To my way of thinking, and with my investor's hats off, and both my professional and consumer hats on, this is an exceptionally good, worthwhile, appropriate, and necessary case for the generally prosumer Competition Commission of the EC to examine, and one that I long considered to be overdue for filing by credible parties. If the Commission decides to pursue the matter and issues a Statement of Objectives under Article 82 then we all will know that the commission feels it is a good case and in the interests of their constituency to examine. If they don't, those of us that observe and coach from the peanut gallery will know that it is not.
As for "modifying the rules of the game," there are no rules and guidelines are vague, and that is what has created a labyrinth that is likely to become increasingly more complex to navigate as future generations of mobile wireless technology evolve.
The action taken by 5 (plus Broadcom) of the patent rich and innovative multinational companies headquartered on 3 continents that along with DoCoMo, Fujitsu, and Motorola had the most to do with developing, standardizing, and commercializing 3GSM UMTS (WCDMA) while QUALCOMM did everything in its power to delay it, change its architecture to one resembling their own proprietary implementation, and promote their own competitive alternative (rather unsuccessfully), has the potential to define more clearly what is acceptable behavior and what is not acceptable behavior in collaborative technology development and IPR licensing. Assuming the EC decides to act, and I personally feel that they will do so because they need to do so, it will take considerable time for decisions to be reached. In the interim, the focus placed on the issue could clear the way for SSOs to add substance and clarity to their IPR policies and sharpen the definition of FRAND.
JMHO (except for whether QUALCOMM's IP strategy and business model are defensive or offensive) and FWIW.
Best,
- Eric - |
