Updated: 8 October 2020 | 10:52 IST
Battles unfolding on several continents over who profits from connected cars, smart homes, and robotic surgery may dwarf the dimensions and scope of the tech industry’s first worldwide patent war, the one over smartphones.
Automakers are now in court fighting a number of equivalent companies that phone makers like Apple had to pay billions of dollars to be used for the technology of their wireless standard. Those companies, Qualcomm, Nokia, and other telecommunications developers, may reap 5G royalties not only from “talking cars” but from products that will communicate wirelessly being planned in agriculture, medicine, appliances, and other sectors.
“So many various sorts of companies need to find how to urge these deals done,” said Joe Siino, president of Via Licensing, a Dolby Laboratories unit that works with audio, wireless, broadcast, and automotive industries. “It’s taking the issues we had with smartphones and multiplying it by 10.”
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The value of standardized technology was a key issue within the smartphone wars that pitted the developers of wireless technology, like Nokia, Qualcomm, and Motorola, against then-new entrants into the handset market, like Apple and Microsoft. Dozens of legal battles were waged over nearly a decade, costing many many dollars in legal fees alone.
The new disputes are potentially more lucrative as sales of devices using 5G is forecast to grow to $668 billion (roughly Rs. 48,89,927 crores) globally in 2026 from $5.5 billion (roughly Rs. 40,261 crores) this year, consistent with Allied marketing research. The technology promises to rework a good range of products from the dishwashers you program on your morning commute to driverless delivery trucks and sensors that permit a farmer to monitor crops, livestock, and equipment from a smartphone.
Courts within the US and Europe have within the past few weeks rejected efforts claiming the telecommunications companies’ licensing policies violated antitrust laws and confirmed their ability to limit the utilization of fundamental wireless technology by those that refuse to satisfy their licensing demands.
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Those rulings have already favored the telecoms in cases brought by the car industry in Europe and therefore the US over the present wireless standards
In the past few weeks, judges in Germany sided with Sharp’s request to limit Daimler AG sales in its home country for using its mobile technology without a license. In an unrelated case, a federal judge in Texas threw out an antitrust lawsuit filed by Continental AG, a Daimler parts supplier, against a patent-licensing pool found out as one-stop buy access to patents.
That pool, Avanci, handles licensing patents owned by Qualcomm, Nokia, Sharp, and other telecom companies. It charges $15 (roughly Rs. 1,100) per vehicle for a variety of patented inventions needed to suits 2G, 3G, and 4G standards, and is developing an idea to charge for the subsequent generation, referred to as 5G.
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“Patent owners want to urge paid because they’re pleased with what they created and still innovate,” Kasim Alfalahi, founder and CEO of Avanci. “You need to find a middle ground, you’ve got to seek out an area where this stuff can meet.”
Automakers typically leave patent issues to their parts suppliers, who pay any needed royalties and indemnify the automakers against lawsuits. Mercedes-Benz maker Daimler is chafing at the way the telecom industry handles licensing, saying the patent owners should affect the suppliers like everyone else.
Continental said it had been willing to pay royalties, but Avanci will only affect the automakers so it can collect extra money. Royalties should apply to the $100 (roughly Rs. 7,300) part that permits connectivity, not a $50,000 (roughly Rs. 36,60,100) car, the parts maker said.
In a letter to the US Federal Trade Commission, Daimler and Ford warned that an appellate court ruling won by Qualcomm could “destabilize the standards ecosystem by encouraging the abuse of market power acquired through collaborative standard-setting.”
“The incontrovertible fact that more and more industries are getting to start incorporating technology that has got to be standardized means it’s getting to be even more important to resolve these issues,” said Katie Coltart, a patent lawyer with Kirkland & Ellis’s London office.
Industry standards are necessary to make sure devices can ask one another and corporations that develop those standards promise to license relevant patents on fair, reasonable, and non-discriminatory terms referred to as FRAND. But the standard-setting boards have purposefully never defined that phrase to avoid in-fighting that would hobble the power to make the standards.
“You’ve got a couple of companies that are investing billions of dollars in research,” said Mark Snyder, deputy general counsel for Qualcomm. “In a functioning market, you would like people to interact in earnest negotiation. FRAND may be a street .”
The fight between Avanci and Daimler notwithstanding, Siino said patent pools give firms access to large swaths of patents needed to suits the wireless standards. they will be a “safe haven” that limit the number of negotiations needed and take the dispute out of the trade wars that pit country against country, he said.
Still, there are potentially thousands of patents that are not a part of the pools and are not encumbered with FRAND obligations, said Craig Thompson, head of Unified Consulting, which helps companies analyze patent portfolios. Huawei, as an example, has only become a serious player in standards boards with 5G, and it’s still fighting lawsuits to undertake to limit the quantity it’s to pay in royalties on earlier generation technology utilized in its networking gear.
The American and European telecom companies have found their biggest supporter with the Trump administration’s antitrust czar, Makan Delrahim. the top of the Justice Department’s Antitrust Division has written courts on behalf of patent owners like Ericsson and InterDigital. that royalty fights are a contract or patent dispute, not an antitrust violation.
The rulings indicate a “pro-innovation understanding of the law” and are important for “competitiveness of the US technology market but more importantly, innovation internationally,” Delrahim said at a September 10 Leadership 2020 conference in Washington.
There’s no guarantee it’ll be smooth sailing for the patent owners. A Chinese court has issued an order that might limit InterDigital’s powers during a royalty spat with handset maker Xiaomi, albeit the legal fight is in India. And judges in Dusseldorf indicated they need the ECU Union’s top court to weigh in on the dispute between Nokia and Daimler, which could turn the tide against the previous handset maker if the EU top judges side with the carmaker.
The concern is that if there’s not enough money for patent owners, they will not work together to develop one system which will be used for anyone. an excessive amount of money, though, means manufacturers will increase their prices or prefer to expire using the newest technology, said Mauricio Uribe, a patent lawyer with Knobbe Martens in Seattle.
“Neither extreme is sweet for consumers,” he said.