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Study: Royalty Charges Almost On Par With Component Costs For Smartphones
Bismillah (993337) writes "An interesting study by WilmerHale lawyers and Intel's assistant general counsel Ann Armstrong looked into how much royalty payments and demands actually amount to per device, and found the cost so high it threatens industry profitability and competitiveness. 'As the bank robber Willie Sutton is reported to have said, he robbed banks 'because that's where the money is' - so too of smartphones for patent holders,' the authors wrote."
and then they won't pay any royalties just do all the R&D for the thousands of patents that cover antennas, modulation, encryption, LTE, beam forming the signal and everything else it takes for a modern phone to work
And yet if they did reinvent the wheel, they'd get sued into oblivion by these companies nontheless. With the speed at wihch technology progresses increasing as drastically as it has been, we need to rethink the we we grant patents. Software patents need to pass the CS201 stink test (if a CS201 student can figure it out, it ain't novel), and important hardware patents should have a shorter lifespan.
"Never let your sense of morals prevent you from doing what is right" - Salvor Hardin
Why should there be software patents to begin with?
and of the rest of these fucking patents, how many are non-obvious and/or without prior art?
Patents were intended to promote competition and a viable public domain, they were not intended to be a cudgel to keep the little guys from playing.
With commodity hardware what it is, there should be thousands of cell phone manufacturers. (or hundreds? either way, vastly more than what we have today)
When rent seeking companies succeed, they are taking away from the public. I think that gets forgotten sometimes. :(
Since most smartphone royalties are charged as a % of the price of the device, they have to do the calculation given a hypothetical device with a specific price. They chose $400, seems that seems to be near the average price of a high-end smartphone. /., but if you have such a basic question about the article perhaps you could take a quick look...
I know it is
In general I can understand basic technology royalties like LTE etc. I mean, somebody spent a lot of money developing a technology essential for a device type, so you'd have to pay to enter the market of that device which would not exist otherwise. Ok, with so many companies involved the royalties may get a bit high. But in addition to that, there are companies allowed to patent obvious things (that most of the time they did not even "invent" first) like swiping the screen, or even generic designs like rounded corners that essentially had near ZERO cost in R&D and yet either demand high royalties or try to block competitors...
Violence is the last refuge of the incompetent. Polar Scope Align for iOS
They have no place in the modern world, if they ever had a place at all. Creating art is a privilege and invention is the nature of intelligence, they will happen just fine without greed as the motivation. Down with unfettered capitalism, live like rational humans instead of psychopaths.
CSIRO didn't invent most of wifi, and the Fraunhofer Society didn't invent mp3 alone.
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You seriously think that a company could keep secrets for more than a product cycle? The spying-security arms race would be won by the spies in a matter of minutes.
You do realize that 'standing on the shoulder of giants' is far more of an anti-patent notion than a pro-patent one, right?
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They could, but since there are phones for less than $120 with being subsidized, I'm going to guess they potentially aren't.
You know, that subsidy doesn't mean you got a $600 phone for $100... it means you got a $600 phone for $1000, but get to pay in installments.
That depends on whether you consider yourself the one being stood on.
You do not have a moral or legal right to do absolutely anything you want.
It's not really pro- or anti-patent, unless you believe the absence of patents would cause most companies to resort to trade secrets, in which case, it's a pro-patent notion.
One of the main purposes of the patent system (aside from royalties) is to document innovations for the public benefit. Of course, this holds more value for things like a schematic to build a steam engine versus more trivial things like design patents.
It is more difficult to stand on the shoulders of giants if none of them come out in public.
On the other hand, if you believe that many modern technologies and standards would be open anyways, the statement is patent-neutral.
"They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety."
With the speed at wihch technology progresses increasing as drastically as it has been, we need to rethink the we we grant patents. Software patents need to pass the CS201 stink test (if a CS201 student can figure it out, it ain't novel), and important hardware patents should have a shorter lifespan.
Part of the problem is the complexity of the product being built, which naturally increases the number of technologies, and therefore the number of patents being included in the product.
Invent a plow today and you need... 1 patent. Its a sheet of metal for cutting the earth. Throw on a yoke and use a new alloy and may be a couple more for hooks and leather straps and you're still around 5 patents. Granted I'm not a plow engineer so I really don't know everything that goes into one, but how complicated can one plow really be... when compared to a modern smart phone?
We're no longer standing on the shoulders of giants, we're standing on the shoulders of giants who are standing on the shoulders of giants who are standing on the shoulders of giants... and every single one of them wants to get paid for holding us up. (Atlas shrugged cause he wasn't getting paid).
I'm having trouble linking royalty costs to "stifling innovation" though. Getting paid via royalty payments is a pretty good reason to innovate: invent something, get paid. Increases in the amount people are paying in royalties just increases the incentive to invent something and get paid. In fact, it is doing exactly that. Companies invent stuff, or buy inventions, just to use those inventions as collateral to get access to other inventions. That $120-$150 estimate they put on there is not cash payments, it is $120-$150 of something... such as their own inventions.
I don't particularly recall that many "Cant afford royalty payments so our product is cancelled" stories. I do see Apple's $160 billion bank balance though, which to me says there is no problem with royalties or lawsuits over royalties or profit margins. In fact that tells me the royalties have saved Apple quite a bit of money in R&D costs.
This is the market in operation. Stopping patents will not slow or stop innovation, it will spur some as companies need to invent to differentiate from the rest. Then when they are copied, it continues. In this sense, necessity is the mother of new invention. The necessity of being unique and valuable Ina sea of clones.
Silence is a state of mime.
MPEG is (theoretically) a non-profit, open to all international standards body. The separate entity MPEG-LA is the MPEG License Authority. It's the business end. The technical committees are front organizations for the license authority, which generates a lot of cash.
The entire setup is a sham. The big players send so many representatives to the technical committees that they dominate by sheer numbers. Sometimes meetings extend for hours late into the night. The faction that wants to get their proposal excepted keeps their people in the meeting, and then when they count a majority they hold a vote and get what they want.
It's not about technology or quality or making things faster/better/cheaper. It's about decades long revenue streams protected by international standards and laws like the DCMA. Even though it looks like technology is driving to lower costs, the reality is that patent royalties are effective a huge tax on users.
The return is completely disproportionate to the initial investment. How much do you think it cost to come up with the standard for the HDMI cable? How much do you think is being made worldwide if even $1.00 US is going for license fees?
No capitalism here. Nothing to see. Move along.
Why is Snark Required?
Patents were intended to promote competition and a viable public domain
[citation needed]. Per the Constitution:
The Congress shall have Power...To promote the Progress of Science and useful Arts
and from the USPTO, "To foster innovation and competitiveness...", saying nothing about the public domain. In fact, I'd argue that a state-of-the-art public domain is actually bad for innovation, because there is little incentive to advance beyond the good-enough level of what's public.
From the perspective of competition, what exactly is the prize for competing? With weak patents, a company that does its own research and actually innovates has nothing to gain except a few months' lead to market, but a large investment being risked for it. Is that any better for the beloved "little guys", who can't afford to lose that investment to a bigger company with a better marketing department?
When rent seeking companies succeed, they are taking away from the public. I think that gets forgotten sometimes. :(
Along with the actual definition of "rent-seeking". Rent-seeking is when one spends wealth on lobbying to increase their share of some limited resource, without creating anything of value in return. The closest the term comes to patents is when a patent troll buys patents to increase its chances of winning a lawsuit, but even that's a stretch, because the purchase isn't lobbying. Patents do create value by incentivizing R&D, so they are economically different.
You do not have a moral or legal right to do absolutely anything you want.
It's not really pro- or anti-patent, unless you believe the absence of patents would cause most companies to resort to trade secrets, in which case, it's a pro-patent notion.
Trade secrets were a more charming concept. You could see what a competitor was achieving. So you could look into their product and reverse engineer their results - often coming up with a completely different solution. It was based on effort and merit. Whoever implemented it first had a head start, and if it was simple enough to copy quickly, then your invention wasn't so revolutionary anyway.
Software patents need to pass the CS201 stink test (if a CS201 student can figure it out, it ain't novel)
The law already says that (and I think you mean obvious btw, not novel). The problem is how the law is applied/enforced. And frankly, somebody "skilled in the art" ought to mean somebody with a CS degree and several years of experience, not just a CS201 student, so you're setting the bar too low.
Novel = Has the problem been solved this way before?
Obvious = Is the same solution obvious to somebody skilled in the arts when presented with the problem it's trying to solve?
So then the issue is: who decides whether it's non-obvious and novel? The answer is the courts, and the winner is usually the side with the biggest legal budget (with the real winner being the lawyers). That's the part that needs to be fixed. I've heard lots of solutions that are less bad than the existing system, but nothing that really solves the problem. And even if there was a solution that solves the problem, how do you get lawmakers (who are usually lawyers and thus see lawyering as a decent solution) to adopt it?
In this case, there are probably some patents that somebody put a lot of time and expense for R&D into and came up with a non-obvious and novel solution, and they deserve to get paid. There are probably even more that are obvious or not novel, but it's cheaper and/or faster just to pay their licensing fee (extortion fee) than to fight a long expensive legal battle.
Your carrier is Verizon I take it?
Two of my imaginary friends reproduced once
> if it was simple enough to copy quickly, then your > invention wasn't so revolutionary anyway.
I canmake a copy of the declaration of independence in about two seconds . The document was obviously revolutionary. :)
More seriously, though, it is not too uncommon to try a thousand different things before finding what works. Once you know what works, reproducing it is trivial. For example, the lightbulb. Thousands of different materials and approaches were attempted. Once you find the right design and materials, making another copy is trivial. The payoff for spending all that time and money trying different things in the HOPE of finding something that works is you get to temporarily profit by being the only seller for a while. Without that, it would be silly to spend years trying different designs and materials (or paying your employees to do so) - you'd be better off letting the guy down the street do all of the hard work, then just rip off his design.
Dyson literally built over a THOUSAND prototypes trying to come up with a better vacuum. It was probable that he was wasting his time and money - that he'd never perfect an effective, affordable, reliable design. The reward for taking that risk and putting in the work is a temporary patent, so he can sell his invention rather than having the pre-existing vacuum companies sell his design thorough their network of established retailers without him getting any reward for his work.
Of course two key components of the system are that it is supposed to be a TEMPORARY protection for a NEW INVENTION. The appropriate definition of "temporary" has changed in our fast-paced world. Also half a dozen patent trolls have been trying to assert patents on a lot ofthings that aren't new inventions, and trying to assert them against people who have not actually infringed the appropriately narrow scope that the patent should cover. So we do need to deal with these patent trolls. Fortunately, there are very few of them and a whole lot of us.
Well said! The age of enlightenment would be hard to imagine under the patent and digital rights regimes of the current U.S. and the nations it controls. Nevertheless, it's a bonus for the financial elite, so it won't change in a hurry.
paleoflatus
Judging obviousness is difficult, because most solutions are obvious if someone explains the problem well enough. One of my favourite papers describes a series of spinlock implementations, and by the time you get about half way through you've worked out what their good solution will be, but most people will not come up with that design if you tell them to design a spinlock. Even if you tell them to design a spinlock to minimise cache-coherency bus traffic, their final design isn't quite obvious, but by the time they've finished defining exactly what the requirements and limitations of the physical hardware are, then it starts to be. There are lots of similar examples, where the difficulty is not in solving the problem so much as identifying exactly what the problem that needs to be solved is. This is also a problem in a number of tech companies' hiring processes (Google is the most obvious example), where they focus so heavily on finding problem solvers that they end up with a shortage of people who are good at working out which problems are the ones that need solving.
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