To: Qurious who wrote (146602 ) 5/28/2018 11:43:11 PM From: VinnieBagOfDonuts 11 RecommendationsRecommended By
Read Replies (1) | Respond to "But that is entirely due to Q's self-serving decision to forego any claim to IP at the modem "Clearly, Q embraced patent bundling licensing early on because defending the patents and being appropriately compensated was crucial to their ability to make fair profits and fund long term R&D. sls.gmu.edu (Exec Summary pasted below - perhaps Tim, in an effort to better assess his litigation risks, should lose his couch analogy and peruse this before his next Q settlement conference) Myth 1: Licensing royalties should be based on the smallest saleable patent practicing unit (SSPPU) implementing the patented technology, and not on the handset. The SSPPU concept is completely inapplicable in the real world of licensing negotiations involving portfolios that may have thousands of patents reading on various components, combinations of components, entire devices, and networks. In the cellular industry, negotiated license agreements almost invariably calculate royalties as a percentage of handset sales prices. The SSPPU concept is inapplicable because it would not only be impractical given the size and scope of those portfolios, but it would not reflect properly the utility and value that high-speed cellular connectivity brings to bear on all features in cellular handsets. Myth 2: Licensing fees are an unfair tax on the wireless industry. License fees relate to the creation—not arbitrary subtraction—of value in the cellular industry. They are payments for use of essential patented technologies, developed at significant cost by others, when an implementer chooses to produce products made possible by those technologies. The revenue generated by those license fees encourages innovation, and is directly related to the use of the patented technologies. Myth 3: Licensing fees and cross-licensing diminish licensee profits and impede them from investing in their own research and development (R&D). Profits among manufacturers are determined by competition among them, including differences in pricing power and costs. Core-technology royalty fees, which are charged on a non-discriminatory basis and are payable by all implementers, are not the cause of low profitability by some manufacturers while others are very profitable. Cross-licensing is widespread: It provides in-kind consideration, which reduces patent-licensing costs and incentivizes R&D. Myth 4: Fixed royalty rates ignore the decreasing value of portfolio licenses as patents expire. Portfolio licensing is the norm because it is convenient and cost efficient for licensor and licensee alike. All parties know the composition of the portfolio will change as some patents expire and new patents are added. Indeed, this myth is particularly fanciful given that the number of new patents issued greatly exceeds the number that expires for the major patentees. In fact, each succeeding generation of cellular technology has represented and will continue to represent a far greater investment in the development of IP than the prior generation. Myth 5: Royalty charges should be capped so they do not exceed figures such as 10% of the handset price or even well under $1 per device. There is no basis for arbitrary royalty caps. It is not unusual for the value of IP to predominate as a proportion of total selling prices, in books, CDs, DVDs, or computer programs. Market forces—not arbitrary benchmarks wished for or demanded by vested interests and which do not reflect costs, business risks, or values involved—should also be left to determine how costs and financial rewards are allocated in the cellular industry with smartphones.
