The story behind the story is always more interesting, somehow, than the story itself; and the story behind last week’s Mobile World congress wasn’t just the obvious stuff about backhaul capacity. Instead, people were mumbling furtively about piracy – intellectual piracy, that is. You know, like intellectual property, but acquired by devious means.
I asked Scott McGregor, CEO of Broadcom, what he thought of 2008 in the intellectual piracy arena. He said: “Patent enforcement has gone too far. It’s time to see an adjustment in roll-forward royalties, where people have a business model predicated on charging royalties several times on the same component.”
The problem is not the patent system but the litigious exploitation of it by trolls shopping their synthetic IP baubles and beads before gullible rotten borough Texas judges high on handouts and Lone Star booze. On target is the quote about sudsy ideas ginned up in the bathtub, defying non-obviousness and reduction to practice (which are crucial to a practical patent). The Broadcom and NBT cases were typical, racing to find a round-heeled court to award extortionate terms minutes before the news reached the boondock bench that the patents were getting thrown out with the trash.
Qualcomm actually has inventions, which were so non-obvious that they were widely depicted as violating physical law and were reduced to practice every which way by Qualcomm in vertically integrated businesses from infrastructure to handsets. But Broadcom’s claims are typical of the process of debauching the entire patent system into a circus of grifters with gotchas. There is no reason the Chinese should respect this debauchery and their current maneuvers seem like typical disruptive business to me. We have got to get rid of our rotten borough patent farms.
Qualcomm is meeting the challenge with patented low-cost devices, but it may not be enough in some of these markets. In any case, Qualcomm has always ultimately won through its chip prowess.
It is the chip design prowess and vertical shows of capability that distinguish the Q from other winners of royalty streams. I am not saying that the royalties are unimportant, just that they are dependent on engineering demonstrations and chip designs. If Qualcomm had merely relied on its patents, CDMA would never have happened.