A good no-call
BALTIMORE–On Monday, the Bush Administration declined to veto an International Trade Commission ruling that bans the sale of new phones in the U.S. using Qualcomm chips that have been determined to violate patents held by Broadcom.
There was considerable political pressure for the administration to overrule the ITC. Wireless carriers and retail outlets are eager to sell devices with the new Qualcomm chips. Moreover, public-safety organizations like APCO have noted the potentially dangerous “blanking” problems associated with 911 calls made from cell phones using older Qualcomm chips, as well as the need for public-safety entities planning to use CDMA EV-DO networks to have access to new devices with robust feature sets.
Media reports cite the fact that Verizon Wireless has agreed to pay Broadcom as much as $200 million for the right to sell devices that use the new Qualcomm chips and the reported availability of technological workarounds were reasons for the Bush Administration decision.
That may be the case, and certainly such circumstances probably made it easier to make a decision to take no action. But the real reason the administration should not have vetoed the ITC ruling is much more fundamental: doing so could have hampered innovation—and not just in the wireless industry—in this country for years.
Under the current system, businesses with bright ideas have enough troubles bringing their innovations to market and protecting the economic value of their intellectual property. Being granted a patent is one thing, but marketplace realities associated with financing, competition and a complex legal system mean small businesses that develop breakthrough technologies rarely get to realize fully the fruits of their labor.
One exception to that rule is Qualcomm, a company that has become so successful that it is often cited as a model for companies wanting to play the intellectual-property game. Qualcomm’s business is not based on manufacturing but on the massive intellectual-property portfolio it has accumulated, beginning with patents it secured for making CDMA technology an alternative in the marketplace.
By being willing to defend its patents vigorously in the legal system, Qualcomm has protected the economic value of its intellectual property to establish a very successful business, despite repeated cries from handset manufacturers like Nokia that claim Qualcomm is hurting the industry by charging high royalty fees for its technology.
It is this situation that makes the Qualcomm-Broadcom scenario rather ironic. In this dispute, it is Qualcomm that has balked at paying Broadcom the money it wants to license technology that extends the battery life of phones.
I’m in no position to judge whether Broadcom is asking for a reasonable royalty fee or whether Qualcomm is even violating the patents in question. That’s for the market and the legal system to decide, and that’s where such disputes need to be resolved.
By not issuing a veto in the case, the Bush administration did not introduce an undesirable political element into the already complex world of intellectual-property protection that fuels innovation in every industry, including wireless communications. Patents should be granted on the merit and protected in the legal system, without a caveat on how well a company may be connected to those who can influence the White House.
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