Supreme Court rules against Lexmark strengthening FTC/Apple cases against Qualcomm

“The long-awaited Supreme Court ruling in Impression Products v. Lexmark International has just been handed down. It deals with two questions related to patent exhaustion, and I was aware of it before but wanted to wait until the implications of that dispute on the smartphone cases I’m primarily interested in would be clearer,” Florian Mueller writes for FOSS Patents. “The good news is that the Supreme Court has once again overruled the Federal Circuit in a way that strengthens those defending themselves against attempts to gain excessive leverage and extract overcompensation from patents. The Supreme Court is staying its course with respect to patent matters, regardless of some patent troll lobbying groups suggesting that all those decisions would result in the demise of the American inventor (quite the opposite is the case).”

“No overcompensation. No overleveraging. No double-dipping. No restrictions that go beyond what the Patent Act allows. That’s the message here,” Mueller writes. “Presumably, some people in another Washington DC building are now reading the Supreme Court decision: the lawyers working on the FTC’s case against Qualcomm.”

“Patent exhaustion as a concept has been strengthened today, and its profile in certain other cases will likely be even higher now,” Mueller writes. “While Apple takes certain positions when it enforces its own patents (and would rather avoid Supreme Court review of a highly controversial Federal Circuit decision in its favor), exhaustion is not an issue in Apple v. Samsung but it does play a role in Apple v. Qualcomm: Count XXIII of Apple’s antitrust complaint against Qualcomm is a request for judicial “declaration of unenforceability [of Qualcomm’s patents in certain contexts] due to exhaustion.””

Read more in the full article here.

MacDailyNews Take: More good news for Apple!

Qualcomm’s FRAND abuse must not stand. Qualcomm’s licensing scam — charging a percentage of the total cost of all components in the phone, even non-Qualcomm components — is unreasonable, illogical, and irrational.

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Desperate Qualcomm seeks injunction against Apple’s suppliers – May 25, 2017

8 Comments

  1. Qualcomm’s behavior is outrageous, but the MDN suggestion simply will not work. Somebody can correct me if I am wrong on this, but I don’t think I am:

    The Qualcomm suit involves FRAND (fair, reasonable, and non-discriminatory) compensation only because the software patents in question are SEP (standards-essential patents).

    If they were not, Qualcomm could charge anything it likes for the use of the intellectual property that it owns under a governmentally guaranteed monopoly… or refuse to license its patents entirely. If the patents were not essential, Apple could simply find an alternative technical solution.

    In reality, Qualcomm submitted the patents as part of the standards-establishing process for the protocols that govern communications between any device and any standards-compatible wireless network. Because the SEPs are embedded in the standard, any device that accesses the network has to use them, and they are only available if the use of the patents has been licensed by Qualcomm. Qualcomm, in turn, is required to license the patents to everybody on FRAND terms.

    Because they are SEP for software, not hardware, the patents are not dependent on whether the device uses Qualcomm chips. In fact, some iPhones and other devices use chips from Intel. However, Qualcomm is still entitled to FRAND payments for those devices. The fees cannot be based on the price of the Qualcomm components if the device does not contain any Qualcomm components—but still uses Qualcomm’s SEP intellectual properties.

    I agree that charging a sliding scale based on the total selling price of the device is grossly unreasonable and discriminatory against makers of premium devices like Apple. However, Apple does owe something. The only question is how much?

    1. Of course SOMEONE owes something!!! Qualcomm deserves to be paid for their work. Who the hell said they don’t? Certainly not Apple. Perhaps you should read the argument again to fully understand what’s at issue here?

      Company A licenses IP from Qualcomm to make their product. They then turn around and sell that product to Company B. Qualcomm thinks that Company B should also be required to pay those same fees. Even though the IP licensing fulfillment has been exhausted by the original payments from Company A.

      That’s called double-dipping and that’s exactly what the Supreme Court ruled.

      That practice could literally continue down the chain and Qualcomm could come after you if you tried to sell a smartphone that contained their IP.

  2. I hate it when people announce things like……”However, Apple does owe something. The only question is how much?” Huh, as if you were so wise and sane to hand down the final judgement??

    How do you know they owe something? The software SEP licence fee should be a licence fee paid by the party that manufactures the module sold to Apple. Apple should not pay AGAIN after buying the module from a third party. Why would Apple owe something if they already pay the third party.

    Where does this silliness stop? Let’s say I built a house and sold it with an iPhone included, does QCOM get a royalty based on the entire cost of the house?

    1. Perhaps the argument is if the patent covers an essential component in the working of the final product (since we are discussing SEPs) whether the product be a component or a combination of such, like mobile devices, they have a cut owed. In that case the example of having an iPhone in a house for sale does not constitute an essential function of the dwelling (living in) and as such does not qualify for royalties.

      1. It’s still double dipping and should not be allowed. The royalty payment should complete at each first manufacture request thats when the sale of the licence should be granted.
        In Apples case intel make the chip and pay the royalties. When the manufacturer (intel) sell that chip all royalties have been paid so what ever the next user (Apple) decided to put that chip into in order to create something new they should know all royalties for that chip are paid in full and no further attempts for payment can be made (Double dipping)
        If this is not halted in its tracks there is the potential for every piece of tech inside any equipment to be due additional repayment of royalties at every resale which is ludicrous .

        1. Agreed, double dipping should not be allowed.

          However if Qualcomm SEPs that are not covered by the components (in the case of software) are used in the final product, would you agree that full royalties should be paid? If not, how would you calculate the ‘additional’ amount due?

          1. Xennex1170 has correctly identified the issue. What Qualcomm is asking for is a payment for those inventions that apple is using in their phones apart from what it originally got from its contract manufacturers. Apple is trying to get the cost lower on their phones by circumventing the law. America is based on innovations and such acts by companies like apple undermine the inventors’ reason for invention and the reward for the same.

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