Patents, CDMA, trolls and standards

CDMA is also another interesting oddity from a patent point of view. Most patents are tiny pieces of incremental innovation that form the many little pieces you need to build complex technological products. You can’t build a semiconductor without violating thousands if not millions of patents. For example, Motorola (Freescale now, I suppose) owned a patent on the idea of filtering photoresist which surprisingly passed the non-obvious test. This used to be a minor annoyance since the patents were owned by other semiconductor companies, and the problem could be resolved with a manageable payment or royalty and a cross-license. After all, you don’t need to be in the business for long before they can’t build anything without your patents. Now that a huge number of patents are owned by so-called patent trolls, people who have purchased patents for the explicit purpose of trying to generate disproportionate licensing revenue, the cross-licensing approach won’t always work and, as a result, the patent system is effectively broken for technologies like semiconductor (and EDA for that matter) that stand on the shoulders of those who went before in ways too numerous to even take time to examine.

Patents were a problem for GSM phone manufacturers since companies like Philips and Motorola managed to design their own patents into the standard. GSM had the concept of essential and non-essential patents. An essential patent was one that you couldn’t avoid: if you were compliant with GSM you were violating the patent, something that "shouldn’t happen." However, the essential patent owners preferred to keep their heads down for political reasons (don’t want those European governments telling us off in public) and keep quiet about what patents they owned until businesses were rich enough to be worth suing. For example, Philips owned the patent on the specific vocoder (voice encoder) used in GSM. Not the general idea of a vocoder, or that type of vocoder, just the specific parameters used in GSM, for which they would like about $1/phone. It was as if Ford owned the patent on the order of the pedals in a car. Not the idea of an accelerator, clutch and brake but the specific configuration of the clutch to the left of the brake to the left of the accelerator. And then got some car standardization authority to mandate that order for all vehicles. Come to think of it, that’s pretty much what GM did when they got the US government to mandate catalytic converters for all cars, which required all car manufacturers to license catalytic converter patents from a certain car manufacturer beginning with G. And there was some of this with Qualcomm too, since "everybody" knew that the main US carriers would choose GSM, the almost world-wide standard, until someone from the President’s office apparently told them at the last minute that it really ought to be a US standard.

People are smarter these days about making sure that patents don’t get designed  into standards. Look at the fuss over Rambus. However, it is still a grey area. After all, nobody knows what even their own company’s patent portfolio really covers. If you’ve read a patent, you know how hard it is to tell what it really says. You can only read the word “plurality” a limited number of times before your eyes glaze over. And at the company level, nobody knows the whole portfolio. If you are the representative from, say, Nokia on some standardization committee, then you can’t really guarantee that any particular standard doesn’t violate any Nokia patents, and you are certainly not going to sign up for guaranteeing never to sue, say, Samsung over a patent violation. Especially as you are not the corporate counsel, you are some middle level engineer assigned to a standardization committee that may or may not turn out to be strategically important.

But CDMA was a complete patent-protected technology more like a blockbuster drug formula. You couldn’t do anything in CDMA without licensing a portfolio of patents from Qualcomm on whatever terms they felt like giving you. They invented the entire technology and patented it before anyone else really knew it was feasible. They sued Broadcom, they sued Ericsson, they sued everyone and pretty much established that there was no way around this no matter what. In 2G this wasn’t a big issue since GSM doesn’t depend in any way on CDMA. But W-CDMA and all the later technologies use various aspects of CDMA and so Qualcomm is in the happy position of having a tax on every cell phone.

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