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Study: Royalty Charges Almost On Par With Component Costs For Smartphones

samzenpus posted about a month ago | from the cost-of-things dept.

Patents 131

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."

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131 comments

Shoulders of giants (0)

Anonymous Coward | about a month ago | (#47124445)

If people wanted to sell a royalty free cell phone they should have invented one, along with all battery and display technology and infrastructure technology. Otherwise you're just the final link in a long chain of innovators who made cell phones possible.

Re:Shoulders of giants (5, Insightful)

king neckbeard (1801738) | about a month ago | (#47124911)

You do realize that 'standing on the shoulder of giants' is far more of an anti-patent notion than a pro-patent one, right?

Re:Shoulders of giants (3, Insightful)

Sarten-X (1102295) | about 2 months ago | (#47125005)

That depends on whether you consider yourself the one being stood on.

Re:Shoulders of giants (2)

ATMAvatar (648864) | about 2 months ago | (#47125071)

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.

Re:Shoulders of giants (3, Insightful)

ifiwereasculptor (1870574) | about 2 months ago | (#47125437)

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.

Re:Shoulders of giants (0)

coolsnowmen (695297) | about 2 months ago | (#47125629)

if it was simple enough to copy quickly, then your invention wasn't so revolutionary anyway.

I disagree. The innovativeness of an idea is almost completely independent of the challenge of reproducing the work.

Re:Shoulders of giants (1)

pnutjam (523990) | about 2 months ago | (#47128103)

Is that you Bezos?

Re:Shoulders of giants (1)

delt0r (999393) | about 2 months ago | (#47128283)

And if more than one person independently come up with the same invention?

I can copy the declaration in seconds (4, Interesting)

raymorris (2726007) | about 2 months ago | (#47126019)

> 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.

Re:I can copy the declaration in seconds (4, Insightful)

houghi (78078) | about 2 months ago | (#47127155)

To be clear: patents are to stiffle or hinder or prohibit the competition from making the same prodiuct to you will have a monopoly on that product. (like the lightbulb)
Next to it is copyright, which does the same, but for things you create and not so much products. (e.g. the decleration)
Then there also is trademark, which protects your brand. (e.g. Linux)

Where it went terribly wrong was that these three expanded untill something extremely unreasonable.

Talking about the invention of the lightbulb: It was Swan [coolquiz.com]

The danger is further not only with the patent trolls. Take e.g. IBM who have so many patents that if they decide to build a Dyson like vacuum cleaner, Dyson could sue them, but the counter sue would prevent him from doing any business anywhere in the world. So he can either give in a give IBM the rights to buil a likewise machine, which goes in against what patents are intended are for or he is not really proteced by his patent a shmans see it (not the law)

Even if patents, copyrights and trademarks are made by the best intentions, we see that they NOW do not work anymore as they were intended.

The least that should happen is to go back to the original state. Copyright 14 years. Patent only on machines for 14 years. Trademarks only on company names and product names in production.

Re:I can copy the declaration in seconds (1)

volmtech (769154) | about 2 months ago | (#47127677)

Some companies shrewdly double up. The Kwik Lok bag closer machine (it puts on the plastic tab that closes the bag of potatoes or apples you buy). The stylized K is what the tab looks like and that shape is the only thing that will fit that machine. Each machine uses ten thousand tabs an hour and no other company can sell these because that would violate the trade mark, which is forever. You can only buy them from Kwik Lok.

Re:I can copy the declaration in seconds (1)

Gr8Apes (679165) | about 2 months ago | (#47128495)

But it doesn't stop someone from building a closer machine of their own once the patent has run out. They might even be able to utilize the Kwik-Lok tabs, in addition to other tabs.

Re:I can copy the declaration in seconds (0)

Anonymous Coward | about 2 months ago | (#47128975)

Dyson literally built over a THOUSAND prototypes trying to come up with a better vacuum.

Too bad he utterly failed. Dyson's vacuum cleaners don't suck. And that's a problem, because vacuum cleaners figure of merit is how much they suck.

They are totally shit. I'm so glad to have gotten rid of that piece of shit and got a real vacuum cleaner again.

Re:I can copy the declaration in seconds (1)

dj245 (732906) | about 2 months ago | (#47129461)

Dyson literally built over a THOUSAND prototypes trying to come up with a better vacuum.

Then he realized that vacuums are already good enough, and people don't really need a better vacuum. So he changed tactics and spent all of his efforts on marketing and style. The business model is exactly the same as Bose. The product isn't anything special but the marketing strategy is.

Re:I can copy the declaration in seconds (1)

Pop69 (700500) | about 2 months ago | (#47129711)

The declaration of independence was plagarised in large parts from the Declaration of Arbroath.

If lawyers had been as eager back then, the fledgling US would have been sued into oblivion for creating an unauthorised derivative work

Re:I can copy the declaration in seconds (1)

TemporalBeing (803363) | about 2 months ago | (#47129945)

The declaration of independence was plagarised in large parts from the Declaration of Arbroath. If lawyers had been as eager back then, the fledgling US would have been sued into oblivion for creating an unauthorised derivative work

Except the "Declaration of Independence" whilst important to the history of the United States of America is nonetheless (at the time) written by citizens of another nation - the USA did not even exist in any form for more than a year (US Constition didn't exist until September 1787; and its predecessor didn't exist until November 1777)after the DoI was written (July 4, 1776). It also has no legal bearing on United States of America.

Re:I can copy the declaration in seconds (1)

TemporalBeing (803363) | about 2 months ago | (#47129953)

> 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. :)

Except that would be Copyright Law, not Patent Law.

Re:Shoulders of giants (2)

paleoflatus (620397) | about 2 months ago | (#47126055)

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.

WUT? (1)

mythosaz (572040) | about a month ago | (#47124475)

The authors of the paper estimate that for such a phone, the potential patent royalties could exceed US$120 per device.

They could, but since there are phones for less than $120 with being subsidized, I'm going to guess they potentially aren't.

It is for a $400 device. (4, Interesting)

Ecuador (740021) | about a month ago | (#47124693)

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.
I know it is /., but if you have such a basic question about the article perhaps you could take a quick look...

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...

Re:It is for a $400 device. (0)

Anonymous Coward | about a month ago | (#47124961)

Ok, with so many companies involved the royalties may get a bit high.

Someone should advise their royalties to not inhale. Sets a bad precedent.

Re:WUT? (2)

Charliemopps (1157495) | about a month ago | (#47124975)

The authors of the paper estimate that for such a phone, the potential patent royalties could exceed US$120 per device.

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.

Re:WUT? (2)

Nethemas the Great (909900) | about 2 months ago | (#47125591)

Your carrier is Verizon I take it?

Re:WUT? (1)

pla (258480) | about 2 months ago | (#47126281)

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.

You know, the GP obviously meant to say "without"? Just this week, Amazon had a basic quad-core prepaid (ie, no contract or subsidy) Android 4.4 smartphone on sale for $69.

That said, royalties often use a percentage basis rather than a flat fee, so you can't necessarily take the existence of a sub-$120 smartphone as disproof of TFA.

so apple and samsung should just research it all (1)

alen (225700) | about a month ago | (#47124517)

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

Re:so apple and samsung should just research it al (5, Insightful)

Mordok-DestroyerOfWo (1000167) | about a month ago | (#47124629)

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.

Re:so apple and samsung should just research it al (2)

rogoshen1 (2922505) | about a month ago | (#47124691)

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. :(

Re:so apple and samsung should just research it al (2)

Sarten-X (1102295) | about 2 months ago | (#47125367)

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 [uspto.gov] , "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 [wikipedia.org] ". 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 [blogspot.com] .

Re:so apple and samsung should just research it al (0)

Anonymous Coward | about 2 months ago | (#47125855)

Fuckwit.

Re:so apple and samsung should just research it al (1)

Daniel_Staal (609844) | about 2 months ago | (#47126239)

'State of the art' public domain is not the same as 'viable' public domain.

One of the points of patents is to keep the public domain relatively current - New/current ideas are patented, but ideas a generation or so old are public domain. This is verses the previous system, where either it was open (anyone who could figure out how you did something did) or it was closed forever (anything you couldn't figure out from looking at it) - and occasionally lost.

In a good, healthy patent system the patent is a reward for innovation, and rent-seeking on those patents is difficult or impossible. The debate is about how healthy our current patent system is: There are a a lot of patents that are arguably not innovative, and there is a fair amount of rent-seeking using patents. It's probably impossible to have a system without any of that, but it's also probably possible to have a system with less than we currently have.

Re:so apple and samsung should just research it al (1)

xelah (176252) | about 2 months ago | (#47127327)

Along with the actual definition of "rent-seeking [wikipedia.org]". Rent-seeking is when one spends wealth on lobbying to increase their share of some limited resource, without creating anything of value in return.

That's a terrible definition.....even later in the same Wikipedia article it's redefined as 'an attempt to obtain economic rent', linking to the entry on economic rent itself, which has a section on monopoly rent [wikipedia.org] which specifically mentions patents.

Economic rent is pretty much everywhere in some degree, because monopoly power is everywhere to some degree (nothing is perfectly competitive). And I think it would be wrong to just assume that it always causes a welfare loss just because it's become a (justifiable) mainstream-ish term of abuse, a correctly designed patent and copyright system being an obvious counterexample. Maybe in a perfect first-theorem-of-welfare-economics economy, but not in a real one.

Re:so apple and samsung should just research it al (1)

Invisible Snake (681761) | about 2 months ago | (#47128047)

Patents are there to protected the companies that grew big by copying from others from other companies that want to do the same.

Re:so apple and samsung should just research it al (1)

evilviper (135110) | about 2 months ago | (#47125027)

we need to rethink the we we grant patents.

Very eloquently said...

Re:so apple and samsung should just research it al (1)

sjames (1099) | about 2 months ago | (#47125297)

To be fair, we-we is about the only thing not patented.

Re: so apple and samsung should just research it a (1)

Badblackdog (1211452) | about 2 months ago | (#47126135)

What does religion have to do with it?

Re: so apple and samsung should just research it a (1)

evilviper (135110) | about 2 months ago | (#47126751)

Every /. thread needs a crazy homeless guy, spouting irrelevant and incomprehensible one-liners...

Re:so apple and samsung should just research it al (4, Insightful)

Yakasha (42321) | about 2 months ago | (#47125093)

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.

Re:so apple and samsung should just research it al (1)

ozmanjusri (601766) | about 2 months ago | (#47125903)

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...

Complicated enough...

Following an initial trial, Richard, then in business with Clarence at Kalkabury (Arthurton) on Yorke Peninsula, exhibited two prize-winning versions of a stone- and stump-jumping plough at the agricultural show at Moonta in November 1876. The Farmers' Weekly Messenger accurately forecast that Smith's invention had the potential to 'cause a complete revolution in tilling uncleared land'. The mechanism allowed the shares to glide over stumps which otherwise required grubbing, a laborious and costly process. He failed, however, adequately to secure his rights under the Patents Act of 1877 and prosperity eluded him.

http://adb.anu.edu.au/biograph... [anu.edu.au]

Of course, if he invented it today, he and his descendants would have prosperity guaranteed for as long as they could buy lawmakers...

Re:so apple and samsung should just research it al (1)

houghi (78078) | about 2 months ago | (#47127063)

but how complicated can one plow really be... when compared to a modern smart phone?

When we talk about phones and licenses, we also need to include trademarks. What is the shape of the plow. What color did you make the plow. What type of handles. What is the shape of the handles.
And obviously there is a difference between a human driven and an animal driven plow.

Oh and obviously if the plow is made after 1492, you can add 'for the potato' to each patent and copyright.

If the plow was invented today by a company, the patent, copyright and trademark lawers would have a field day and come up with way more then just the 5 you think are logical.

Oh and obviously you can not just go to the townsmith and ask for a plow or make parts yourself. That would be equal pirating.

New Slashdot meme.... (0)

Anonymous Coward | about 2 months ago | (#47127183)

IANAPE (I am not a plow engineer)

Re:so apple and samsung should just research it al (1)

xelah (176252) | about 2 months ago | (#47127379)

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.

Innovation and improved technology isn't just about invention. An improvement in technology is an improvement in the techniques people use to do stuff. A marvellous new thing used by hardly anyone is only a very small innovation. So, if a law limits access to new inventions then the improvement in technology is also limited.

I don't particularly recall that many "Cant afford royalty payments so our product is cancelled" stories.

I suspect that 'new product not developed because its expensive' doesn't attract readers well enough. Besides, just think of how many more people would be using better technology if they could buy a better phone with the same money. Abolish all patents today and there'd be a jump in the technology people use - in the short term.

It all comes back to the core dilemma of intellectual property: the cost of reduced adoption of a new invention vs the cost of it not being financially worthwhile to invent.

Re:so apple and samsung should just research it al (0)

Anonymous Coward | about 2 months ago | (#47129079)

It all comes back to the core dilemma of intellectual property: the cost of reduced adoption of a new invention vs the cost of it not being financially worthwhile to invent.

It's never been scientifically tested though. "To promote the progress of science and the useful arts." but nobody has ever demonstrated that patents and copyright do indeed promote the progress of science and the useful arts. The old system before it was not free publication and invention, but censorship and guilded trades.

It's hard to argue that patents are worse than guilded trades, or that copyright is worse than censorship. There's plenty of economic theory that posits open invention would be more beneficial than patents and plenty that posits that the current state of affairs is optimal, but open invention hasn't been tested for more than one thousand years, so we really don't know how much better or worse it would work.

Re:so apple and samsung should just research it al (1)

Sarten-X (1102295) | about 2 months ago | (#47125143)

And yet if they did reinvent the wheel, they'd get sued into oblivion by these companies non[e]theless.

Maybe they shouldn't be using wheels, then. Perhaps a bearing caster would be better, or a nylon pad, or a small armature. If this "wheel" thing is patented, then it's because it's a particular solution for a particular problem. Avoid that solution and solve your problem differently.

Software patents need to pass the CS201 stink test (if a CS201 student can figure it out, it ain't novel)

Here's the catch: They aren't allowed to know the patented solution before they figure it out. If they're the standard for "reasonably skilled in the art", then a bad patent must be "obvious" to them before the state of the art has been advanced by the patented solution.

Having actually taught CS201 students, I expect this will be hilarious.

Re:so apple and samsung should just research it al (2)

NoKaOi (1415755) | about 2 months ago | (#47125493)

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.

Re:so apple and samsung should just research it al (2)

TheRaven64 (641858) | about 2 months ago | (#47127325)

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.

Re:so apple and samsung should just research it al (0)

Anonymous Coward | about 2 months ago | (#47129649)

Judging obviousness is difficult, because most solutions are obvious if someone explains the problem well enough.

Then I don't see why we need most patents. Why give someone a monopoly on a solution when anyone with that problem can solve it themselves?

Re:so apple and samsung should just research it al (1)

dshk (838175) | about a month ago | (#47124643)

It does not work that way. Even if Apple or Samsung or anybody else invents all the components themself, they still have to pay the same royalty to the original "inventors", because they received monopoly for 20 years.

Re:so apple and samsung should just research it al (1)

alen (225700) | about a month ago | (#47124697)

then apple and samsung need to open up a modern day bell labs and invent new stuff
like that australian university that invented most of wifi. or the german one that invented mp3

Re:so apple and samsung should just research it al (2)

king neckbeard (1801738) | about a month ago | (#47124791)

CSIRO didn't invent most of wifi, and the Fraunhofer Society didn't invent mp3 alone.

Re:so apple and samsung should just research it al (1)

daknapp (156051) | about 2 months ago | (#47125899)

... the Fraunhofer Society didn't invent mp3 alone.

No, but they led the way to making it needlessly complex! Seriously, the MP3 bitstream format is seriously screwed up.

Re:so apple and samsung should just research it al (1)

thesupraman (179040) | about a month ago | (#47124683)

Actually Samsung has done a lot of that research, however it is handwaved away by the US courts and valueless.
Samsung and other companies participating in the active development of standards for such important techniques also
cooperate, cross license, and charge very little.

Apple however slapped 'on a capacitive touch screen' on a mountain of prior art it is held up and important and innovative.
Apple then uses this 'high value patents' as a weapon to try and exclude competition from who markets so they can protect
their astronomically high per device profits (compared to industry norms).

THAT is the problem.

Re:so apple and samsung should just research it al (1)

alen (225700) | about a month ago | (#47124731)

most of those were design patents
and the holder of the most design patents in the usa is, Samsung. patenting their designs for fridges and microwaves

Re:so apple and samsung should just research it al (1)

sjames (1099) | about 2 months ago | (#47125279)

Unless the phone is a randomly shaped blob with razor sharp spikes and a morse code only interface that doesn't actually connect to anything, someone will have their hand out for royalties anyway.

Huh? (0)

Anonymous Coward | about a month ago | (#47124549)

Cost A is almost the same as Cost B!!!!!! Cost A is INVALID! Obviously! Kill cost A!! Only Cost B can be valid, because I said so!

Re: Huh? (0)

Anonymous Coward | about 2 months ago | (#47126579)

Do you understand... err... anything?

I thought Tesla gave everything up? (1)

gurps_npc (621217) | about a month ago | (#47124551)

Because he basically invented all of it, didn't he give up all patents? So prior work nullifies all of the new stuff? :D

Regulatory Overhead (0)

Anonymous Coward | about a month ago | (#47124609)

Very good, now figure out what percentage is regulatory overhead, paperwork shuffling, compliance, lobbying the gov't to keep them from raiding your offices for doing perfectly legal things, etc.

Capitalism. (0)

Anonymous Coward | about a month ago | (#47124631)

Why is it more important for the bosses of the people who glued the bits together to get more money than the bosses of the people who designed the bits to be glued? How many angels fit on the head of a pin?

Like Capitalism.. (0)

Anonymous Coward | about a month ago | (#47124659)

On the surface, the patent system seems like a good idea. Underneath you have to license 1000 patents from 1000 different companies to create a device, each patent holder feeling like they deserve the biggest chunk of your end sale profits. Always interesting when the research to back up logic is released..

The people that invent things must be compensated (0)

Karmashock (2415832) | about a month ago | (#47124673)

If you void patients then companies will stop sharing their innovations with people and instead rely on trade secrets to protect their intellectual property.

You think progress is slow now? See what happens when companies actively hide how they do things rather then relying on patients to protect their IP.

Re:The people that invent things must be compensat (2, Insightful)

Anonymous Coward | about a month ago | (#47124869)

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.

Re:The people that invent things must be compensat (1)

Karmashock (2415832) | about a month ago | (#47124981)

You lack imagination and a grasp of history.

You forget that prior to patents that is precisely how companies operated.

Would they have to change the way they make products and release them? Obviously.

or did you not realize that was an unavoidable component of that point?

Take the push for cloud computing which is itself partially seen a solution to piracy. Consider that invalidating patents and piracy are similar qualities and the means by which you fight one works well against the other. In effect you might see many products never enter your hands behind various mechanisms that make it impossible to reverse engineer it.

Furthermore, for the sake of argument I grant you that they can't stop you from stealing their IP... they will invest less in developing new IP because the profit margin for doing so will be less.

That means less new stuff... and the rate of technological development will come to a near halt.

This is in large part why patents were invented in the first place. To incentivize innovation.

If you hate the modern world. If you hate innovation. If you hate technology... then undermine the patient.

If you like all the modern new shiny stuff... then don't mess with the patients.

Re:The people that invent things must be compensat (1)

king neckbeard (1801738) | about 2 months ago | (#47125041)

Secrets weren't kept all that well even by guilds, and getting rid of patents would only serve to accelerate the growth, because innovation happens when ideas have sex and reproduce, and patents are a form of birth control.

Re:The people that invent things must be compensat (1)

fustakrakich (1673220) | about 2 months ago | (#47125301)

...patents are a form of birth control.

Yeah, by abortion.

Re:The people that invent things must be compensat (1)

Karmashock (2415832) | about 2 months ago | (#47125689)

In practice that doesn't happen because people don't invest the time to invent new things if they know their ideas will be stolen from them and used by their competitors against them.

Re:The people that invent things must be compensat (0)

Anonymous Coward | about 2 months ago | (#47126299)

Your claim is impossible to prove.

Re:The people that invent things must be compensat (0)

Karmashock (2415832) | about 2 months ago | (#47126429)

to the contrary, yours is impossible to prove. I base my case on historical record which is a matter of fact. Your argument is that this time it will be different and that what happened last time won't happen again.

You can't prove that.

So... now that your own silly rebuttal has been blown back in your face, will you accept the consequences and admit you have no case? Or are you allowed to have no case while everyone else is expected to have one?

I do have one by the way... history, remember... so where is yours?

*taps foot impatiently*

Re:The people that invent things must be compensat (1)

king neckbeard (1801738) | about 2 months ago | (#47126979)

No, it can be proven. People invented things when there were no patents and when trade secrets were not able to be effectively given. Your claim is that people don't invest time in new things if they know it will be used against them. There are countless examples, and one of the best ones is the polio vaccine. It was one of the greatest accomplishments of humanity, and those behind it purposefully didn't patent it because they found it unethical to do so.

Re:The people that invent things must be compensat (0)

Anonymous Coward | about 2 months ago | (#47127219)

Paragraphs containing more than one or two sentences are not patented. Use of the comma is not patented. Feel free to write more than 2 sentences per paragraph and use commas. Slashdot will thank you!

Re:The people that invent things must be compensat (1)

bug1 (96678) | about a month ago | (#47124923)

If you void patients then companies will stop sharing their innovations with people ...

What do people have to do with it ?

Re:The people that invent things must be compensat (1)

Anonymous Coward | about a month ago | (#47124933)

That seems like it would be interesting. Each company would pay more for research independently, so STEM gets a boost in pay and numbers. The small guy would likely be able to buy common-tech parts from some Chinese without worry about how they are made, just what they can do.

The problem at this point in time is that technology gets out paced before the patent's ink is even dry. The patent clerk's office gave up trying to find prior art and is letting the burden fall on the courts. No one wants to claim that they broke patent law, so they settle, dragging this out further and further. The general solution given here, is to reduce what can be patented, so the system can play catch-up.

Instead of that, we likely need more employees with varied specialties and a better database system for better / automatic lookups. Hell. Get Watson to best guess similar patents and have a human double check. There are many possible solutions, but the only real solution is to put some more money towards sorting this all out or remove parts. Going back to the first to make instead of first to file would be an improvement for those that make the technology.

Re:The people that invent things must be compensat (1)

alen (225700) | about 2 months ago | (#47125003)

that's not true
each new gen has new stuff and patents but it still uses inventions from prior generations of that product

Re:The people that invent things must be compensat (1)

Karmashock (2415832) | about 2 months ago | (#47125151)

No, the profit margin for innovating would be lower and the risks for innovating would increase... thus there would be less innovation.

if anything, the majority of effort would be put into protecting what IP could be kept secret.

Why are people so ignorant of the history on this? You do realize there was a time before patents, right? Do you know what innovation looked like at that time? Patients reward innovation. If you hate people that innovate, then by all means... cut off their livelihood. If you like innovation, don't take bread out of their children's mouths.

Re:The people that invent things must be compensat (1)

king neckbeard (1801738) | about a month ago | (#47124965)

If you could keep it a secret, you'd be a moron to get a patent. Also, outside of a few industries, you get LESS useful information from most patents than having someone with at least moderately related knowledge on the subject looking at it for five minutes.

Re:The people that invent things must be compensat (1)

Karmashock (2415832) | about 2 months ago | (#47125583)

Not at all. Keeping it secret often means literally keeping it secret... as in telling no one and doing nothing with it that would reveal the secret.

That keeps it secret but you don't make much money on it.

Savvy? This is how companies kept secrets. They would use the technology in house or with trusted customers... but the general public would get no access to it.

Again, this was at one point standard. I'm not debating this with you... you're arguing against historical fact.

Don't waste my time arguing against reality. It merely annoys people that know better.

Re:The people that invent things must be compensat (1)

king neckbeard (1801738) | about 2 months ago | (#47126965)

Even if you have perfect secrecy, it does nothing if someone else independently invents the same thing in a similar timeframe. That is actually the norm, even for something as complicated as calculus, and that was in a world far less than flat than ours today. Most patents are for things where it took more effort to write up the patent than to actually invent the subject matter. So, not only is there no chance of keeping it secret in most cases, it's not even worth the effort of attempting to do so.

Re:The people that invent things must be compensat (1)

NotInHere (3654617) | about a month ago | (#47124993)

The problem is not with the companies doing real research that don't have the money or intent to produce the products themselfes. Its more with the patent system being used to enforce DRM, shooting small competition into the knee with patent claims, patent trolls, or too long terms in certain industries.
I think that the current price for smartphone patents seems fair, even if there are some unfair patents like "swipe to unlock".
Patents shouldn't be issued for obvious stuff, and be required to be written in clear and common language.
There are other areas for smartphones to change regulations for. One would be to allow open source carrier chips. I don't think there would be any harm when anyone could legally hack that chip, and if there is, then its because of exploitable BTS or BSC software, which should be fixed either way.

Re:The people that invent things must be compensat (1)

Karmashock (2415832) | about 2 months ago | (#47125241)

As to patent trolls, those people are fraudsters.

Just because there are criminal elements in the patient system does not mean you should get rid of the patient system entirely.

That would be like saying that because some people defraud people out of down payments they put on houses that we should not buy homes anymore.

Just as we have an escrow system that protects home buyers and sellers the patient system probably needs some sort of infrastructure to stop fraudulent patient claims from interfering with people.

If the patient however is valid... that is someone actually did invent something, and patient it... then they're owed compensation for that. Pay the man.

Re:The people that invent things must be compensat (1)

NotInHere (3654617) | about 2 months ago | (#47125457)

If the patient however is valid... that is someone actually did invent something, and patient it... then they're owed compensation for that. Pay the man.

Agree.

Re:The people that invent things must be compensat (5, Interesting)

wbr1 (2538558) | about 2 months ago | (#47125207)

Interesting fact. In america , recipes are not subject to copyright or patent. General mills, and other cereal makers, as well as other food companies rely on jealously guarded trade secrets. This does not stop generic copy cat foods (is store brand sodas and generic cereals) from being made. In fact they proliferate. Some are indistinguishable or better than the original. Some are junk.

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.

Re:The people that invent things must be compensat (1)

Karmashock (2415832) | about 2 months ago | (#47125351)

Tell you what, why don't you ask inventors and companies that spend real R&D money what they think of your little theory?

They'll tell you what I just told you. If you won't listen to the inventors then that's like ignoring the farmers when they try to tell you what will happen to the harvest.

That's just willful ignorance... it is worthy of neither respect nor tolerance. Its just stupid.

I say this assuming that you won't listen to them... am I wrong?

Re:The people that invent things must be compensat (1)

wbr1 (2538558) | about 2 months ago | (#47127461)

Who is speaking? The smaller guys... artists, indie game crews, new egg.. they are fighting. The only ones espousing a point similar to yours are those who are gigantic, worth billions, and only wish to hold onto and amass more billions. Oh and those that troll using the laws to skim off the top.

Re:The people that invent things must be compensat (1)

jmv (93421) | about 2 months ago | (#47126811)

You think progress is slow now? See what happens when companies actively hide how they do things rather then relying on patients to protect their IP.

Yeah, imagine all these iPhone owners with rounded corners they can't even see because Apple had to hide them.

Re:The people that invent things must be compensat (1)

TemporalBeing (803363) | about 2 months ago | (#47130037)

If you void patients then companies will stop sharing their innovations with people and instead rely on trade secrets to protect their intellectual property.

You think progress is slow now? See what happens when companies actively hide how they do things rather then relying on patients to protect their IP.

So you do realize that the Computer Software Industry was flourishing quite well when it was under Trade Secret Law - one of the biggest reasons why Software has such as hard time with Patent Law, the majority of its origins are still hidden by the time it was under Trade Secret Law and many of those companies have since been bought or gone out of business due to market demands, not "intellectual" property protection issues. This is also one of the reasons why the original UNIX code base developed by AT&T and at recent dispute between Novell and The SCO Group was under the contract that it was - with a very high confidentiallity agreement that protected the trade secrets in the code.

Software then moved to being under Copyright Law (1980's era) and exploded (1990's era). It has only been since people have been trying to extensively put it under Patent Law (late 1990's to present) that the industry has started having lots of problems with law suits, etc. (That's not to say there were not law suits prior, there were - but it was not the issue it is today; no where near the same scale or breadth of the industry).

Trade Secret law as served many industries quite well. Copyright Law does too. Patent Law serves a few industries well and many industries poorly - there doesn't seem to be much in-between.

general purpose/embedded (1)

bytestorm (1296659) | about a month ago | (#47124701)

If you made a general-purpose pocket computer that has a LTE addon module (which you license as a single unit), how much of that royalty pool just melts away?

Re:general purpose/embedded (1)

Sarten-X (1102295) | about 2 months ago | (#47125075)

If your computer system is designed to avoid any other patents, a good chunk of those royalties probably do disappear. Of course, then you're missing most of the UI features that users have come to expect, and your naive implementations of subsystems are probably not as efficient as the patented implementations, so your cheap phone will seem awkward and slow to use.

But hey, it was cheap.

Patents and Copyrights are obsolete. (5, Insightful)

ReekRend (843787) | about a month ago | (#47124719)

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.

Re:Patents and Copyrights are obsolete. (0)

alen (225700) | about a month ago | (#47124801)

yes
now go to stanford and then find a place to live under a bridge while you work 18 hour days making stuff for me

Re:Patents and Copyrights are obsolete. (0)

Anonymous Coward | about 2 months ago | (#47126263)

ReekRend is an idiot. Creation and invention do need protection. The debate is about whether defanging legalized extortion is the correct protection, and not some stupid posture concerning capitalism and psychopaths. WTF is he saying?

However, Alen, your response is nonsense. Noise. No signal. Shut up until you can articulate a reasonable explanation for the possible link between some kind of real abuse and the lack of patents and copyright.

Not capitalism (1)

Anonymous Coward | about 2 months ago | (#47127593)

For the thousandth time...

Patent law is an attack on capitalism, not a benefit to it. It is only a benefit to "crony capitalism", which is really corporatism [wikipedia.org] in disguise.

True capitalism requires the absence of coercion in the market; patent law requires the presence of it. They are incompatible concepts, and work against each other, no matter what the patent lobby tells you. The more patent law (and coercion in general), the less capitalism, and vice versa.

Secondly, we are talking about the most expensive, most powerful, most far-reaching government in world history. Since capitalism requires the absence of coercion, not the presence of it, the idea that the US is a shining example of capitalism is laughable. The US has roots in capitalism, but the law has changed drastically over 200 years, to the point where the only realistic description of what we have now is corporatism -- which is just as opposite to capitalism as communism.

Re:Patents and Copyrights are obsolete. (0)

Anonymous Coward | about 2 months ago | (#47129921)

Facinating that you think unfettering capitalism of legal restrictions will bring down unfettered capitalism. Patents and copyright are not a capitalist structure, they're an artificial, government granted monopoly implemented and controlled through cronyism.

License fees are a hidden tax (4, Interesting)

Required Snark (1702878) | about 2 months ago | (#47125311)

I worked for a company that was trying to develop technology for MPEG. It was a pure intellectual property play.

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.

Re:License fees are a hidden tax (1)

FaxeTheCat (1394763) | about 2 months ago | (#47126815)

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?

But what if $0.05 is the fee per cable/unit?
Because that is the actual license fee for HCMI.
Why make up numbers when the actual numbers are available through a simple search? http://www.hdmi.org/manufactur... [hdmi.org]

Re:License fees are a hidden tax (0)

Anonymous Coward | about 2 months ago | (#47129329)

Still a fuckton of money to be made.

Oh, and it's extortion because you cannot make a device which connects to a TV or LCD without including the HDMI protocol and connector, because there is a criminal conspiracy among display manufacturers to include only HDMI and VESA digital interfaces, and NO displays have any other kind of digital interface.

And I have implemented HDMI on an FPGA, there is nothing good or inventive about it, it's just a simple pixel banging protocol over a SERDES, with a bunch of idiotic supplementary data blocks that exist only to require HDMI licensing from implementors. The data blocks contain such useless information as what image size you are sending (already encoded in the DE and vsync signals), and things that are marginally useful but mostly ignored like colorspace conversion.

The $0.15 (the $0.05 is only if you provide free advertising for the HDMI consortium) is miniscule to any kind of device someone might want to build, but the $10k annual fee which you ignored is not if you're some small maker building a few hundred units in total. Especially when you stack that $10k fee, with the $25k fee you have to pay for RapidIO and the $5k fee you have to pay for JEDEC (DDR SDRAM) and the $25k fee you have to pay to MPEG-LA, and so on. (numbers are off the top of my head, I may have made some mistakes, but they are always on the order of $5k to $50k)

If you are some maker, like I am, and you add up all the extortion you're supposed to pay, you would have to work for 90 years just to pay it, before taking into account the actual material costs of your business (which are miniscule in comparison). How are we expected to have an entrepreneurial economy when these hypothetical entrepreneurs that play by the rules have to work past retirement just to pay the entry fee, and the actual entrepreneurs like myself who skirt the rules are playing Russian roulette with their businesses in a patent minefield?

What it really comes down to, is a robbery game. If some patent holder doesn't want you as competition, the cheapest thing for them is to sue you into bankruptcy, and steal your IP as a lien. If you get lucky someone sends you a settlement agreement, and you sign away your business for far less than it's worth (but hopefully more than you put into it) to avoid getting sued into bankruptcy. And if you're exceptionally lucky, you get bought out by some big player who has already paid all the patent pool dues. Paying the extortion at the start isn't an option, since you don't start the game with a million dollars, you start with whatever you could scrape together working for the first five years of your career.

Re:License fees are a hidden tax (1)

Gibgezr (2025238) | about 2 months ago | (#47129331)

So he was off by a factor of 20. Are you implying that a royalty of 5 cents per cable is still not HUGE money if you add it up over a year?

The industry doesn't suffer (1)

wvmarle (1070040) | about 2 months ago | (#47125573)

All manufacturers have to pay these costs, so they don't lose competitiveness. It just makes the handsets a bit more expensive than they would otherwise be - and as a result it's the consumer that suffers. They have to pay more for their phone.

There won't be a single manufacturer that can't compete due to these costs. They're the same for everyone. Just like the physical components, this is just a part of the bill of parts of a phone. And if a phone manufacturer doesn't pay for those patents, they can't sell their phone in a market where those patents are valid.

Re:The industry doesn't suffer (0)

Anonymous Coward | about 2 months ago | (#47129395)

As I said in another post. There are two parts to virtually every patent pool license. There is a unit cost, which pretty much matters to no one (except perhaps the customer), it's just a tack-on to the unit price for the final device, and there is a membership fee, in the range of $5k~ $500k /year, and it's not just one fee, it's one fee for each pool, and the bigger pools demand larger amounts.

The purpose of these membership fees is to exclude innovators and makers from the marketplace, because when you're starting out, it's hard enough to raise the $20k to $50k you need to develop your prototypes and initial production run, but virtually nobody can save the $2-$5M they need to pay all the membership fees.

So most makers just ignore the issue, which works right up until their products are successful in the market and that letter shows up in the mail explaining how you now owe them over $5M in penalties, and how you can settle by selling your now successful company to them for only $50k, and if you fail to comply with either the $5M penalty (and you still don't have that kind of cash), or the buyout, they will litigate. If you go to litigation, you will lose, as you've clearly broken the law, you will file for bankruptcy, and the outstanding lien against you means they get to collect all your IP and any patents you filed yourself, which they can now add to their pool or sell to another pool.

Welcome to business in the 21st century.

Seriously? (0)

Anonymous Coward | about 2 months ago | (#47125701)

Just make an open source phone... No royalty to pay there.

Re:Seriously? (0)

Anonymous Coward | about 2 months ago | (#47127231)

But you can't create one in the shape of a rectangle. Creating any smartphone that is the shape of a rectangle requires paying a royalty to apple.

Go Republic! (1)

Bugamn (1769722) | about 2 months ago | (#47125965)

We should cut their heads and use royalty free phones
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