
Intel and Samsung Gang Up on Qualcomm, Backing FTC Monopoly Suit - xbmcuser
https://www.bloomberg.com/news/articles/2017-05-12/intel-to-add-its-support-to-ftc-lawsuit-against-qualcomm
======
rgbrenner
I see a lot of comments where people are missing the point of the suit.

These are standard essential patents for LTE and CDMA baseband processors.
They were added as part of the standard, and in exchange for that, Qualcomm
agreed to license them to competitors under FRAND (fair, reasonable, and non-
discriminatory) terms. They arent doing that.

This article has good descriptions of the behavior Qualcomm is being accused
of: [https://www.fool.com/investing/2017/01/18/regulators-
accuse-...](https://www.fool.com/investing/2017/01/18/regulators-accuse-
qualcomm-of-3-shady-practices.aspx)

~~~
beaner
Honest question: why is anything that is patented ever made to be part of a
standard?

~~~
tjalfi
Patent license fees are not necessarily onerous. The original Ethernet patent
is a good example. The license fees were low - $1000 [0] and it became a de
facto standard. Token Ring was a competing network technology with
considerably higher license fees [1]. Patent owners for subsequent Ethernet
standards started out with similar terms but then started shaking down
licensees [2].

[0]
[https://books.google.com/books?id=qTkEAAAAMBAJ&lpg=PA52&ots=...](https://books.google.com/books?id=qTkEAAAAMBAJ&lpg=PA52&ots=..).

[1]
[https://books.google.com/books?id=OFCXnqlSFKwC&lpg=PA709&dq=...](https://books.google.com/books?id=OFCXnqlSFKwC&lpg=PA709&dq=..).

[2] [https://www.ftc.gov/news-events/press-
releases/2008/01/ftc-c...](https://www.ftc.gov/news-events/press-
releases/2008/01/ftc-c..).

Edited to fix formatting

~~~
vmarsy
Your [2] link point "ftc.gov/news-events/press-releases/2008/01/ftc-c..." (see
link address) which just shows the press releases page.

~~~
tjalfi
Good catch! It turns out that all of the links in my post are broken. I copied
some of the content from a previous post
([https://news.ycombinator.com/item?id=14127727](https://news.ycombinator.com/item?id=14127727))
and the links were mangled as a result.

The correct links are below.

[0]
[https://books.google.com/books?id=qTkEAAAAMBAJ&lpg=PA52&ots=...](https://books.google.com/books?id=qTkEAAAAMBAJ&lpg=PA52&ots=a4x-Qa75TK&dq=ethernet%20patent%20xerox&pg=PA52#v=onepage&q=ethernet%20patent%20xerox&f=false)

[1]
[https://books.google.com/books?id=OFCXnqlSFKwC&lpg=PA709&dq=...](https://books.google.com/books?id=OFCXnqlSFKwC&lpg=PA709&dq=sodorblom%20patent&pg=PA709#v=onepage&q=sodorblom%20patent&f=false)

[2] [https://www.ftc.gov/news-events/press-
releases/2008/01/ftc-c...](https://www.ftc.gov/news-events/press-
releases/2008/01/ftc-challenges-patent-holders-refusal-meet-commitment-
license)

------
sverige
>“Intel is ready, willing, and able to compete on the merits in this market
that Qualcomm has dominated for years,” Intel said in a posting on its
website. “But Qualcomm has maintained an interlocking web of abusive patent
and commercial practices that subverts competition on the merits.”

>Samsung claims its in-house chip unit is artificially held back by Qualcomm’s
unwillingness to license its technology.

I don't know the details of the patents in question, but I assume they are
hardware patents. In any event, the idea of either Intel or Samsung
complaining about some other company subverting competition is hilarious. But
I guess that's how the game is played at this level.

~~~
dave_sullivan
> the idea of either Intel or Samsung complaining about some other company
> subverting competition is hilarious. But I guess that's how the game is
> played at this level.

Agreed. I think this is what's happening:

Big tech companies have realized they need to expand into other markets (intel
and samsung being prime examples). The only markets left that are big enough
are monopolies protected by patents, with Qualcomm being a prime example.

Entirely new markets are less interesting because they're not big enough. Even
with massive growth, it will take too long for them to become big enough. A.I.
is a maybe, but that _market_ is hardly proven. The money in A.I. might be in
reforming companies from the inside instead of selling products to those same
companies.

There's going to be more money in invalidating patents and moving into the
industries that suddenly opens than there is in actually benefitting from
patent royalties. Winning the war on patent trolls would speed this process
up.

Once people realize that companies that derive a large percentage of their
income from patent portfolios are just big dead rotting corpses waiting to be
dismantled, the world will be a better place.

~~~
tooltalk
No, that's not what's happening here.

While Qualcomm holds a lot of wireless patents and they are entitled to make
money for what they have contributed, they also agreed to declare their
patents as part of the ETSI CDMA, LTE standards. This is beneficial for
Qualcomm because now everyone HAS to use and license their patents, so they
have guaranteed income. But, at the same time, they are also required to
license their patents at fair and reasonable terms regardless of who licensees
are.

Qualcomm violated their FRAND obligations in two very blatant ways. First,
they REFUSED to license their patents to competing baseband makers, like
Intel, Samsung, and other baseband makers. KFTC last year also found out that
Qualcomm barred Samsung from marketing and selling their own AP/baseband chips
in certain market (US) for some 20 years. So it also runs a foul of US anti-
trust/anti-competitive laws.

If Qualcomm wants the kind of legal patent monopoly enjoyed by pharma's for
instance, they need to keep their patents proprietary, and not declare them to
SSO's. Qualcomm is trying to force everyone to license their tech as SSO's
standards, then break every rule they agreed to uphold to maintain their
dominance.

~~~
dave_sullivan
Sorry, I'm not sure how what you said contradicts what I said (as in "No,
that's not what's happening here"). It's certainly useful, specific
information, but it doesn't negate my broader point.

------
wyldfire
I think that the biggest issue for "fairness" in the "FRAND" in the Apple v
QCOM case will be whether or not "royalties based on the price of the finished
device."

QCOM will probably make the case along the lines that "we designed the engine
that powers your F1, we are the reason that your product performs as well as
it does." They sincerely believe that their multitude of patents is much of
what is making smartphones successful.

AAPL will probably make the case that since they purchase the electronics from
Foxconn (or someone similar), that those devices should be considered the
goods on which the royalty is based. That their finished good that they sell
in retail stores is the result of their OS/software and their product's image
cultivated over decades. Their press release has used a different analogy from
the one above I imagined for QCOM -- that "Qualcomm charges a different price
for the couch depending on which house it's sold in."

The ruling from the Korean trade commission is probably what Apple saw as the
chink in Qualcomm's armor.

I can honestly see it from both sides. Qualcomm holds patents in many domains
that allow them to exploit their position. They were awarded those patents
because they sincerely did innovate in this area. CDMA alone is huge (although
that initial basis may have expired or be expiring soon). I see Apple's side
-- they can charge their customer vast markup because of their status as a
luxury brand.

~~~
mitchty
Apple is pretty much in the right on royalty based on device cost is crazy.

Even more extreme example. Imagine you're Rolls Royce and want to make your
next car have a permanent cell connection. Does 2% of the cost of a car at say
500k sound "reasonable" any longer?

It should be the component or at best overall component in a larger design,
not the design itself. As it stands final device cost just seems like a liver
punch for no real reason than "because".

But thats just my view of things, I'm curious if anyone can argue for a fixed
% of final device cost for things that start to get costly as being "fair and
reasonable". I'm having a really hard time coming up with one outside of its
good for qualcomm's bottom line.

~~~
aey
Except that using an alternative technology (gsm/tdma) would make their phone
laughable. A windows phone with LTE would outsell an iPhone without :).

Qualcomm is correct to argue that their patents are critical to the device
functionality, so they should get a chunk of the profits.

Apples market cap went up by 5 Qualcomms since they started selling the
iPhone, so they clearly get the lions share of profits. It's hard to argue
that the pricing is unfair.

~~~
ralfd
But People are not buying an iPhone because of LTE, as almost every other
phone has that too, but because of the Apple brand, app ecosystem, lock-in,
ease of use, design, manufacturing quality, marketing, etc etc ... all that is
value Apple provides, not Qualcomm.

FRAND stands for "fair, reasonable, and non-discriminatory terms". How is it
not discriminatory to charge companies, who operate in different market
segments, different amounts for the same needed part?

~~~
aey
The whole point of granting a patent is that it's a monopoly. I think it can
be argued that the amount of time the patent is valid for is not optimal for
maximizing the most social gains over all possible futures, but I think it's
greater then 0.

Yes, people buy apple products for lots of reasons, but would apple have made
50% of Qualcomms market cap in profits from iPhone each year if it was a gsm
device? Qualcomm can argue that it's pricing is Fair and Readonable since it
does not inhibit Apple from making a mountain of money. There is nothing out
of the ordinary for charging people a different price (unless it's because
they are a protected class, but that's a separate issue)

------
heisenbit
The issue at the heart of it is what can be charged for the standard
essentials patents which must be licensed in a fair, reasonable and non
discriminatory manner (FRAND). Qualcomm committed to these rules and got in
return its patents written into the standard i.e. a monopoly. That is the way
the wireless and a lot of other industries have worked - like it or not. What
is at the heart of the matter is whether Qualcomm lives up to the FRAND rules.

In its Amicus Brief Intel argues
([http://blogs.intel.com/policy/files/2017/05/Intel-Amicus-
Bri...](http://blogs.intel.com/policy/files/2017/05/Intel-Amicus-Brief-
FILED.pdf)) especially against the no-license no-chip policy:

> The Complaint focuses, instead, on Qualcomm’s policy of conditioning its
> chipset sales on the OEM agreeing that handsets using another vendor’s
> chipsets be licensed on the terms Qualcomm dictates. But selling Qualcomm
> chipsets to an OEM plainly does not “assist” that OEM in producing a handset
> that uses another vendor’s chipset making Qualcomm’s policy unnecessary to
> avoid “assisting” supposed infringement that Qualcomm is no part of.
> Qualcomm “assists” an OEM’s sale of handsets using other vendor's chipsets
> only in the sense that Qualcomm could devastate an OEM completely by cutting
> off its supply.

Imagine Intel insisting that buyers of AMD's chips are following Intel's
licensing terms. Qualcomm uses its standard essential patents as power levers.
The pricing structure reflects that and is now so out of whack with what is
happening elsewhere that Apple now balked. The way Qualcomm yields it power is
at the heart of not adhering to FRAND rules.

And I somehow doubt that Intel and Samsung gang up here. It was probably a
friendly call from a dear customer that got the ball rolling.

------
shmerl
Qualcomm are known to abuse patents, and claim "that's just how we do it"
argument to justify their aggression. That's what they did with attacking Opus
codec with completely bogus claims. So I don't feel sorry for them even a bit.

~~~
ChuckMcM
[known to abuse patents] ... as are Intel and Samsung. So it feels to me like
reading a book where you don't really care about _any_ of the characters.

~~~
jessaustin
That's probably the right way to look at any legal dispute? Good precedent and
the rule of law are always more important than the parties involved...

~~~
ChuckMcM
> Good precedent and the rule of law are always more important than the
> parties involved...

I don't disagree, just don't expect much, if any, empathy for either the
plaintiff or defendant.

------
jsjohnst
As much as I want to laugh and mock as it's Intel/Samsung pressing this
further, I sadly must agree, Qualcomm's stranglehold on the cellular market
has hurt the industry for far to long.

------
sspiff
I find it funny how Intel claims it wants to compete on merrit in a market
locked by Qualcomm, where this is an almost exact replay of the tricks they
pulled in the late 1990s to mid 2000s.

------
jumpkickhit
Is that why every new phone this year has the Snapdragon 835?

I notice the Galaxy S8 has Samsung's own in Europe and Asia, but in the USA
it's ole' snappy 835 just like everything else.

~~~
axaxs
From what I remember, Exynos doesn't do CDMA...which may or may not be patent
related. Hence using SD in the USA.

~~~
dogma1138
That's correct, and the reason is QC patents.

------
bitmapbrother
>Intel is ready, willing, and able to compete on the merits in this market
that Qualcomm has dominated for years

I would have more sympathy for Intel if they were able to compete fairly in
the x86 market. I can't help but feel amused when a company that partakes in
monopolistic practices in one market starts complaining about being the victim
in another. However, in the case I think Intel is the lesser of two evils, but
they're still bedfellows.

~~~
microcolonel
The difference here is that Qualcomm agreed (along with other contributors)
ahead of time to license these exact patents to LTE implementors in a fair,
reasonable, and non-discriminatory manner: that is, to charge license fees
which do not exceed their value in Qualcomm's own products.

Intel never made any agreement to any consortium that they would do anything
like this, they applied fairly for patents on the considerable number of
geniune inventions and design decisions which go into their silicon and ISA.

Many of these patents have long expired, and even when they weren't expired,
manufacturers such as IBM, AMD, Texas Instruments, Harris Semiconductor, UMC,
Acer, SGS Thomson, Cyrix, Rise Technology, Transmeta, IDT, VIA, and DM&P
Electronics manufactured 80386, 80486, 80586 (pentium), 80686 (pentium pro),
and Core competitors.

x86 being co-monopolized by AMD and Intel is a recent phenomenon, and I think
it has more to do with the fatigue of trying to compete with AMD and Intel at
making chips with probably the most complicated and unscalable ISAs to
implement efficiently.

So in addition to seemingly breaking the agreement they made, they are being
more predatory than most prominent patent licensors who didn't need an
agreement to behave more fairly than they do.

------
mtgx
Here are more details from Korea's anti-trust case against Qualcomm:

[http://www.essentialpatentblog.com/2017/01/korea-ftc-
propose...](http://www.essentialpatentblog.com/2017/01/korea-ftc-proposes-
sanctions-qualcomms-sep-licensing-practices/)

It's too bad the KFTC recently seems to have decided to remove all cases from
its site from the past three years [1], because I got to skim through its
recent anti-trust case against Qualcomm, and what Qualcomm seemed to be doing
was horrific (significantly worse stuff than what Intel was being accused of
about a decade ago, as I recall).

[1]
[http://www.ftc.go.kr/eng/bbs.do?command=getList&type_cd=54&p...](http://www.ftc.go.kr/eng/bbs.do?command=getList&type_cd=54&pageId=0302)

------
AdieuToLogic
Qualcomm makes a non-trivial amount of its revenue from licensing its patent
suite _in toto_ to companies participating in this space. So when a player
wants/needs some of it, they have to pay for all of it.

And Qualcomm has hundreds of IP and patent lawyers employed full-time (not
from an external firm, but as FTE's) to enforce same. Not to mention the
continued investment they do in R&D required to grow their patent portfolio.

So while Intel and Samsung are not to be taken lightly, neither should be the
ferocity with which Qualcomm will defend its IP revenue stream.

------
faragon
Do Intel and Samsung license their patented stuff in more fair terms than
Qualcomm? I guess that Intel and Samsung want to get radio IP license for
cheap (e.g. LTE stuff), and that's OK. BTW, can Qualcomm or Mediatek get x86
and OLED IP/patens for cheap, too? I would love Mediatek x86-compatible SoCs
for 5 USD, and high quality 6" OLED screens for 15 USD.

~~~
ecopoesis
OLED and x86 aren't covered by FRAND, LTE is. When you push to make your
patented tech part of a standard, you also agree to license it reasonably.

~~~
faragon
Then, could you explain me why Mediatek can not sell x86-compatible SoCs for 5
USD?

~~~
AlphaSite
Because it's not a standard?

~~~
faragon
x86 is a de facto standard.

~~~
wyldfire
The term "standard" in this context means "governed by a standardization body
like 3GPP, etc." This is significant because the FRAND limitation comes not
from legal restrictions on patents but from these standardization bodies
themselves. "Yes, QCOM, you made a far superior air interface for radios. In
recognition of your superior design, we will use your patents as our standard
but only if you agree to license it to anyone on 'fair' terms."

~~~
faragon
As "fair" != free/gratis, I assume this is just a price discussion between
Intel/Samsung and Qualcomm. So what is interpreted as "fair" for Qualcomm, it
is not for Intel/Samsung. Result: if the FRAND limitation doesn't set explicit
margins, this is going to get ugly for Samsung and Intel.

~~~
dogma1138
No, FRAND means that the licensing terms are fixed, equal and open to all and
cannot be used to gain a competitive advantage.

~~~
faragon
Then, who is right, Qualcomm saying they're honoring the agreements, or
Intel/Samsung? Both can not be right.

~~~
tooltalk
Qualcomm is most likely wrong and has been found guilty in at least three
different courts. The FTC has been a bit slow in keeping up with other
regulators. Qualcomm does have quite a bit of political and lobbying clout in
the US -- ie, Qualcomm is a domestic company whereas most device makers are
foreign.

------
rodionos
> no coherent theory of competitive harm and no allegations of the type of
> conduct that the antitrust laws are designed to address

This line of defense from Qualcomm would serve Google just as well. No
competition - no competitive harm, hence all is well.

------
oarla
What does backing the existing lawsuit mean? From the article, I don't see
that they have filed their own suits. Isn't this more of a media stunt to show
Qualcomm as the bad guy here?

~~~
rgbrenner
they filed an amicus brief:

[http://blogs.intel.com/policy/2017/05/12/intel-filed-
amicus-...](http://blogs.intel.com/policy/2017/05/12/intel-filed-amicus-brief-
support-ftcs-complaint-qualcomm/)

[http://blogs.intel.com/policy/files/2017/05/Intel-Amicus-
Bri...](http://blogs.intel.com/policy/files/2017/05/Intel-Amicus-Brief-
FILED.pdf)

------
dis-sys
After playing the exact same game on x86 related patents for decades, Intel is
now complaining that Qualcomm is doing something similar?

~~~
libertine
Exactly... so, couldn't this just backlash at them, and at others, if this
ends up succeeding?

For example, other CPUs architectures, GPUs, Memory ... like, everything
that's pretty much set as standards?

~~~
jessaustin
Intel didn't participate in any standards-publishing process in which they
pushed x86 in exchange for FRAND. Qualcomm did.

------
DuskStar
Non-AMP link: [https://www.bloomberg.com/news/articles/2017-05-12/intel-
to-...](https://www.bloomberg.com/news/articles/2017-05-12/intel-to-add-its-
support-to-ftc-lawsuit-against-qualcomm)

~~~
sctb
Thanks, we've updated the link from
[https://www.bloomberg.com/amp/news/articles/2017-05-12/intel...](https://www.bloomberg.com/amp/news/articles/2017-05-12/intel-
to-add-its-support-to-ftc-lawsuit-against-qualcomm).

~~~
marklubi
Can we get a less click-bait title as well?

The two companies filed amicus briefs, they didn't join the lawsuit. The
current title implies that they joined in.

------
obstinate
I'm curious: why would Qualcomm be obligated to license its chipsets to
Samsung in furtherance of Samsung's goals of competing with Qualcomm? Can't
Samsung just design its own chipsets? I'd love to have this explained to me.
Presumably there's a reasonable explanation for this expectation, but it
doesn't sound reasonable on the surface.

~~~
klagermkii
Samsung has designed their own chipsets (Exynos series), but Qualcomm will
only grant a patent license for them to use their chipsets as part of their
own phones. They won't allow Samsung to sell Exynos chips to be used by other
companies.

~~~
aey
Samsung just doesn't want to pay the licensing fee. TI has no problems selling
arm phones.

Apparently the r&d costs in this space are higher then lawyer fees. Otherwise
why wouldn't they dump some money into r&d and get some patents of their own
to cross license with Qualcomm.

~~~
sofaofthedamned
TI don't do mobile chipsets anymore, do they?

~~~
aey
That's true. Forgot they exited the market. mediatek has no problems selling
arm phones. Qualcomm has only 50% of market share in that space and there are
plenty of other competitors. Unlike the x86 server market.

Samsung, Intel and Apple have enough cash and tech clout to crush Qualcomm
into dust if they really wanted to compete on r&d.

Throwing a few million at a lawsuit is just a negotiation tactic.

~~~
threeseed
You're still missing the point though.

Qualcomm would still be likely to participate in any future standard and would
likely still have contributing patents. If they aren't going to license it now
under FRAND then why would they do so in the future ? Whether Intel, Samsung,
Apple et al contribute more to the standard is irrelevant.

Also Mediatek and Qualcomm have their own patent sharing agreement:

[https://www.mediatek.com/press-room/press-releases/joint-
pub...](https://www.mediatek.com/press-room/press-releases/joint-public-
statement-by-mediatek-and-qualcomm)

~~~
aey
How do you determine FRAND?

My opinion is that since apple is making 40b a year on iPhone sales, 50% of
Qualcomms market cap a year, then Qualcomm is charging Apple a fair and
reasonable price. If qualcomm chose not to be part of the LTE standard, those
patents would still be enforceable, and they could charge whatever they want,
like they did with wcdma.

I think legally FRAND is defined ambiguous enough that many kinds of pricing
schemes are acceptable, so there is nothing illegal with qualcomm charging a
percentage of device cost.

My point on bringing up MediaTek was that if Apple wants a discount, they can
cross license with Qualcomm, like other companies have. Intel can offer
Qualcomm it's fabs, or x86, or server patents. Qualcomms pricing has not been
so unfair or prohibitive as to prevent small or large players from making a
mountain of profits from the cellular device market.

I own stock in both Qualcomm and Apple, so I feel like they are both wasting
money on lawyers instaead of engineers :).

------
saosebastiao
Lol...if you have not one but two competitors, both of which have market caps
in the 12-digit range, complaining about some other company's (one with a mere
11-digit market cap) market domination, that isn't a monopoly, that's called
competition. And if their complaint succeeds, that's not called capitalism,
that's called crony capitalism.

~~~
skybrian
According to the article, their would-be competitors are legally blocked from
competing. That's the opposite of competition.

~~~
aey
They can spend some money on r&d and build a patent portfolio to force
Qualcomm to cross license.

~~~
bhc
Intel and Samsung specifically did that by creating WiMax as a competing
standard for LTE, but look what happened.

[https://www.theverge.com/2017/1/17/14303910/qualcomm-
alleged...](https://www.theverge.com/2017/1/17/14303910/qualcomm-allegedly-
bribed-apple-wimax-iphone-ft-complaint)

~~~
aey
Well, standard != tech. They wanted to roll out an entire new network based on
some flaky tech, instead of focusing on making a better radio.

In 10 years LTE is going to be to slow, and Qualcomm is busy developing
whatever is going to replace it. if Intel wants a piece of that pie they need
to do some r&d.

