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Comment by GeekyBear | Hacker News Reader

The article doesn't really mention the argument that Apple is making in court.

They are seeking a judgement based on the legal concept of patent exhaustion.

https://www.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S...

If Apple buys a cellular modem from Intel, for instance, and Intel has already paid Qualcomm to use their standards essential parents to manufacture those cell phone modems, then patent exhaustion holds that Qualcomm cannot force Intel's customers to pay to license those patents all over again.

Until a judge rules on this, you really can't say that Apple owes Qualcomm anywhere near that figure.

There is more information on the FOSS patent blog:

http://www.fosspatents.com/2018/10/patent-exhaustion-keeps-q...

Edit: I think this FOSS patent blog entry from last month does a better job of laying out the basic issues.

http://www.fosspatents.com/2018/09/apple-foxconn-et-al-want-...

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I wouldn't trust FOSS patents and the author Florian Mueller as far as I could throw him. He has a long history of being a paid shill, lying about it, and being flat out wrong.

(Paid by oracle) http://www.groklaw.net/article.php?story=20120419070127103

(Paid by microsoft) http://techrights.org/2012/08/18/vile-lobbyist/

(Paid by apple? I can't find other/primary sources to back up this claim though it does seem likely.) https://mrpogson.com/2012/08/21/apples-paid-shillconsultant-...

(More examples of him being wrong) http://www.groklaw.net/article.php?story=20120820111527257

Refuting legal arguments takes time and expertise I don't have. He's good at his job, and I have no knowledge about this case. So while I put no faith whatsoever in his analysis I can't tell you how it is wrong, and yes this is an ad hominem.

I didn’t spend time to read all articles related to him. But I read his blog from time to time notably because of his Oracle vs Google coverage. While he may not be impartial (and who really is?) he impressed me quite a few time notably when he was consistently stating against all odds and other analysts that ruling against copyrightability of Java API would be overturned on appeal.

He was right, and even if at time everybody was mad because it hurt Android. I think this ruling was ultimately a good thing for FOSS.

He was also one of the first to criticize half-FOSS approach of Android. Whereas today everybody seems to regret that we still lack a popular real FOSS OS for smartphone.

One can only wonder now if Firefox OS or another could have superseeded Android should Google reinterpretation of Java copyright had been deemed unfair sooner.

PS: sorry for this long rant about your ad-hominem. Next time I’d better simply downvote.

I'm strongly of the opinion that that is a case of a stopped clock being right twice a day. If you say every argument Oracle makes will go in favor of Oracle, and Oracle wins an argument, of course you will have predicted it.

You have to remember that Oracle mostly lost that case, and he was consistently predicting they would win. The copyright portion was a sideshow to the patent portion (originally) and only became a focus when they lost the patent side of things.

Either way, I appreciate the reply.

PS:

For those interested, there is still a possible supreme court appeal pending for the copyright side of the case. I'm not too familiar with supreme court scheduling but I think we should find out if cert is granted (the supreme court will hear the case) in March or April. Google files by January 25th, Oracle briefs in February (30 days after Google, though it's possible they will get an extension), Google files a reply brief (~10 days), then Cert review occurs. https://www.supremecourt.gov/search.aspx?filename=/docket/do...

The supreme court only grants cert in ~1% of cases, so assuming they deny cert this then goes back to the district judge for yet another trial on damages and probably new motions for attorney's fees. It wouldn't surprise me to find that one (or both) parties find something to appeal about that damages trial too.

This case started way back in 2010, the justice system moves very slowly...

Thank you! I still remember when news sources always quoted him as a "patent expert" during the Oracle vs Android/Google battle and it was so obvious he was as far from a nonpartisan expert as one can be.

Reading the techrights post right now. Thankyou for posting this.

You're sourcing Techrights to denounce someone else? And Groklaw was run by a completely anonymous person who was suspected of being paid by IBM and Google.

Groklaw was not paid by google, court filing by Google: http://www.groklaw.net/pdf3/OraclevGoogle-1237.pdf

Groklaw was not paid by IBM, court filing by IBM: http://www.groklaw.net/pdf/IBM-621-E19.pdf

Groklaw was run by Pamela Jones, a paralegal. This can be verified by checking the footer on every page on Groklaw, or alternatively the above IBM court filing.

You will have to be more specific about your techrights complaints. I'm not aware of any issues with the site, but I admit that unlike Groklaw I do not have much knowledge about their integrity.

You can find many alternative sources saying that Mueller was paid by Microsoft (and also that Mueller was paid by Oracle), here is one: https://gigaom.com/2011/10/18/419-is-patent-expertblogger-fl...

So, what you say about exhaustion is a correct explanation of the doctrine.

However, unless my searching capabilities are failing (sorry, it's 170 pages), they nowhere claim that intel is paying qualcomm.

Instead, the only viable claim for exhaustion they really make is around exhaustion of patents in qualcomm chipsets bought by apple.

That is probably right. But not a significant amount of this money (if any, i didn't look what qualcomm claimed hard enough. I wouldn't put it past them but it would be stupid of them)

The majority of money is precisely about modems they buy from intel.

If intel was paying qualcomm, it would definitely appear in the response as an exhaustion argument I can't find it.

This is probably why bloomberg doesn't cite it - the exhaustion issues they do cite are a complete sideshow.

I'm really losing faith in bloomberg. That's a huge detail to leave out of a story like this.

Bloomberg reporters have a incentives model¹ which encourages incorrect stories. This isn't the only example; they still haven't retracted the supermicro hardware hack story even though there is no evidence and it's denied by all the parties.

[1] https://www.businessinsider.com/bloomberg-reporters-compensa...

They may or may not have stopped this practice: https://news.ycombinator.com/item?id=18164117

The businessinsider article dates from 2013 and I can't find a source discussing their current practices.

This is bad, but come on! Any reporting has an interest in being exciting and juicy. If it's not for markets it'd be for ratings. And while one can argue that inflated ratings don't cost you your investment money in the way the effect on the markets does, it can still have big impact on the debate and the discourse in the US, where we're all feeling the pain at least as hard, in this age.

Jeez. This type of false narrative creation (especially impacting financial markets) seems like it should be illegal. With journalistic integrity out the window for the sake of attracting an audience, I could imagine why some group of traders would want to intentionally feed Bloomberg false information or "nudge" them to publish a story knowing they could significantly profit from the resulting reaction.

welcome to media :D they are all in it to make money!

To quote Qualcomm's FY2018Q3 earnings release with respect to Apple:

http://files.shareholder.com/downloads/QCOM/6406790406x0x982...

Beginning in the third quarter of fiscal 2017, GAAP and Non-GAAP results have been negatively impacted by our dispute with Apple and its contract manufacturers (who are Qualcomm licensees). We did not record any QTL revenues in the first nine months of fiscal 2018 or the third or fourth quarter of fiscal 2017 for royalties due on sales of Apple’s products. We expect the actions taken by these companies will continue until these disputes are resolved. QTL revenues in the third quarter of fiscal 2018 included $500 million paid under an interim agreement with the other licensee in dispute (which dispute was previously disclosed). This represents a partial payment for royalties due after the second quarter of fiscal 2017 by that other licensee while negotiations continue. This payment does not reflect the full amount of royalties due under the underlying license agreement. We did not record any revenues from the third quarter of fiscal 2017 through the second quarter of fiscal 2018 for royalties due on the sales of the other licensee’s products. If we do not reach a final agreement with the other licensee, it may not make any other payments or may not make full payments under the underlying license agreement, which may result in increased legal costs and will negatively impact our GAAP and Non-GAAP results.

“Contract manufacturers” seems like a very particular choice of words to describe intel here.

If Intel is manufacturing an Apple design as a contractor, Intel’s licenses don’t matter and it’s Apple who’s on the hook to pay royalties. If Apple is buying an off-the-shelf Intel product, it’s Intel’s licence terms that matter.

Contract manufacturers here means Foxconn and Winstron alike.

No, no, no. Intel doesn't have a license with Qualcomm. In recent decisions made by regulators in the EU, South Korea, Taiwan, etc, Qualcomm was accused and fined precisely for their unwillingness to license their IPs to competing baseband makers (ie, Intel). The USFTC is looking to punish Qualcomm for the same offenses and enable Qualcomm's competitors to take license from Qualcomm (see http://www.fosspatents.com/2018/09/federal-trade-commission-...). Wrt Intel modems, the exhaustion doctrine likewise doesn't apply.

I'm no patent lawyer, but from a layman perspective, how is this reasonable at all? This seems equivalent to buyers of second hand books being forced to pay royalties to the original author.

Cases similar to that certainly exist. In the UK you can owe royalties up to 4% when buying a piece of art on the secondary market, for example.

I'm also no lawyer, but it's worth pointing out that there are plenty of publishers (and not a few authors) who will argue that corner - they certainly think it reasonable.

Thank YOU, explains the context: "Apple challenged the patents for validity and non-infringement, but its key contention is that Qualcomm is illegally charging smartphone makers twice for its intellectual property– once when it licenses its cellular patents and a second time when it sells modem chips used in smartphones. The legal concept is called patent exhaustion. http://www.sandiegouniontribune.com/business/technology/sd-f...

Otherwise would be like paying a sales tax at each transaction through the chain.

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