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Saying Doesn’t Make It So—Why You Still Shouldn’t Listen To Qualcomm

Last week, CCIA filed a statement on the public interest in Qualcomm v. Apple at the International Trade Commission (ITC), Qualcomm’s newest attempt to use patent law to reinforce their monopoly power over the baseband processor market.

In a response filed yesterday, Qualcomm accused CCIA of partaking in a “coordinated effort aimed at misdirecting the [ITC], all but ignoring the statutory public interest factors.”1  Unfortunately, Qualcomm’s response fails to actually address the filing’s criticisms.  Qualcomm’s engaging in some misdirection of their own.

Qualcomm Is Feeling Entitled

Right off the bat, Qualcomm tries to say that this case is just about Qualcomm protecting its intellectual property as it’s entitled to do. And Qualcomm goes on to say that the focus on other litigation is misplaced.

If this case was filed by Golden Bridge Technology or Nokia or Bob’s Discount Patent Hut, it might be different.  Those companies (or fake companies) wouldn’t be asking for a remedy that excludes a third-party competitor—including, as Intel’s filing noted, based on patents that don’t have anything to do with the competitor’s product.  They wouldn’t be facing antitrust action across the world.  And they wouldn’t have filed their ITC case immediately after losing their bid to have the antitrust case against them dismissed.

But that’s not this case.  Qualcomm filed this case.  Which means that it is asking to exclude a third-party competitor on unrelated patents.  It is facing antitrust action worldwide.  And it is filing an ITC case against one of the companies complaining that Qualcomm are monopolists, right after Qualcomm lost its dismissal bid.

Any Color You Want (As Long As It’s Qualcomm)

I’m going to place two quotes here.  One is from Qualcomm’s original complaint.  One is from Qualcomm’s reply claiming that CCIA is misdirecting the Commission.  I have added emphasis to the key text.  This was then:

Qualcomm respectfully requests that the Commission … exclude entry into the United States of mobile electronic devices that do not incorporate a Qualcomm brand baseband processor modem and that infringe one or more claims of the Asserted Patents.  

And this is now:

Second, this case is not about Intel or its baseband modems. The accused products are the Apple mobile electronic devices that infringe Qualcomm’s proprietary NSEPs for technologies relating to the design, structure, and operation of products with envelope tracking technology, voltage shifter circuitry, flashless boot, power management circuitry, enhanced carrier aggregation, and graphics processing units.

Current Apple products either include a Qualcomm baseband chip or an Intel baseband chip.  Requesting exclusion only of Apple products that don’t incorporate a Qualcomm baseband chip is the exact same thing as requesting exclusion of Apple products that do incorporate an Intel baseband chip.

Qualcomm claims this is about Apple’s (allegedly) infringing products.  And Qualcomm is very, very clear that it thinks that no Apple products are licensed to the patents, regardless of who makes the baseband chip inside them.  But then Qualcomm only asks for a remedy against some of the allegedly infringing products.  And oddly enough, it’s the ones where exclusion harms a competitor, not Qualcomm.  

Qualcomm says “[t]his case was not filed to stifle competition.”  I guess hurting competitors is just a happy accident.

Six of One, Half Dozen Of Wait Actually It’s Just One

Qualcomm also complains about the focus on Intel’s baseband chips.  Setting aside the fact that, as I just described, the proposed exclusion order targets Intel basebands, Qualcomm says that, in addition to Intel, “there are now multiple sources of LTE baseband processors that compete with Qualcomm.”  Qualcomm goes on to name Samsung, Leadcore, Spreadtrum, HiSilicon, MediaTek, and Marvell.

I’ll take it from the top.

Samsung doesn’t sell baseband chips outside of Samsung.  In fact, it reportedly doesn’t do that because Qualcomm won’t allow them to.  If Samsung did, it would jeopardize its access to Qualcomm’s chips for Samsung handsets.  (And Samsung basebands generally don’t support CDMA, which is still used for voice on Verizon in the U.S., so they aren’t a true solution in the U.S. market.)

Leadcore and Spreadtrum exist, but their chipsets are focused on the flavors of LTE used in the Chinese market; they’d have far more limited capability on U.S. networks (and, like Samsung, wouldn’t be usable on Verizon, lacking CDMA voice.)

HiSilicon would be in the same bucket as Leadcore and Spreadtrum, but it finally started offering a CDMA solution late last year.  (Note that there’s quite a bit of lead time between baseband release and integration into a phone—there was an 18 month lag between Intel’s baseband release and its integration into the iPhone 7, for example.)

MediaTek is an actual competitor (finally!), although primarily outside of the United States.  MediaTek also has some of the same CDMA difficulties as Leadcore and Spreadtrum in the U.S. market, though it does have some CDMA options.

And then there’s Marvell.  Marvell got out of the baseband business a couple years ago, and any sales of its basebands are essentially selling off old stock.  

Qualcomm didn’t mention any of that, of course.

The ITC Should Give Consideration To The Public Interest

The ITC is required to, before excluding products, consider the impact on “competitive conditions in the United States economy” and on “United States consumers.”  CCIA filed its statement because Qualcomm’s anti-competitive actions have harmed competitive conditions and U.S. consumers, and an exclusion order would reinforce those harms.

Unfortunately, the ITC has not, historically, given a lot of weight to the public interest in comparison to the interests of patent owners, even to the point of continuing to ban imports of products based on patents that the Patent Office invalidated.  

But our comments, and Qualcomm’s complete failure to substantively respond to the public interest considerations we raised, shows exactly why the ITC should give the public interest more weight.  Being used as a tool to maintain a monopoly is hardly protecting competitive conditions in the U.S. economy.

  1.  The public interest factors are, quite literally, the only things that CCIA’s statement discusses.

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