How a $2.4bn acquisition by Qualcomm might undermine the IEEE’s controversial patent policy 27 Oct 15
Qualcomm’s acquisition this summer of CSR would at first glance seem to have few implications for the patent market. The deal, which closed in August, saw the tech giant buy the much smaller British chipmaker for $2.4bn in a move that should strengthen Qualcomm’s position in the Internet of Everything sector. But in completing the deal it has also given the San Diego-based company a possible way of working around the new patent policy which was confirmed by the IEEE Standards Association (IEEE-SA) in February but which Qualcomm and several other companies have said they will not licence their standard essential patents under.
That’s because six years ago CSR signed a blanket letter of approval (LoA) agreeing that it would licence at that time and in the future its standard essential patents (SEP) relating to the 802.11 standard (the standard which covers WiFi technology). That meant that CSR committed itself to the IEEE-SA’s patent policy as it stood in 2009. Qualcomm, through a licensing deal it has put in place with its new acquisition, has now tied its own WiFi SEPs to CSR’s blanket LoA meaning that it can continue to licence under the old policy which is seen by many as more favourable to patent owners.
The IEEE-SA’s new policy has proved controversial in part because it limits the availability of injunctive relief for an SEP owner and shifts the basis for royalty payments so that they relate to a patent’s contribution to a standard rather than the value of an overall device. The process by which the new policy was agreed has also been heavily criticised for allegedly failing to take into account the input of some companies. Along with Qualcomm, Ericsson, Nokia and InterDigital have all said that they will refuse to licence under the new terms.
Although the new policy has the backing of a groundswell of companies and was approved by majority votes at every stage of the IEEE’s vetting process, Qualcomm’s actions place serious question marks over the policy’s ongoing viability. In a September memo to the IEEE, Qualcomm explained its position following the CSR deal:
Qualcomm does not contend that all of Qualcomm’s 802.11 Essential Patent Claims automatically became subject to the CSR LoA simply because Qualcomm acquired CSR. Qualcomm and CSR have entered into an agreement whereby CSR has the right to licence certain Qualcomm patent claims including Qualcomm’s Essential Patent Claims for 802.11ah. Upon the execution of that agreement, those patent claims become subject to the CSR LoA.
Qualcomm’s position therefore seems pretty clear, enabling the company to continue to licence its patents relating to the IEEE’s various 802.11 standards under the previous policy. But it also means that the three other companies who have opposed the new policy and others, could enter into a license agreement with another company that has a blanket LoA signed prior to the new policy coming into effect. So far there’s no indication that Ericsson, InterDigital or Nokia have put such an agreement in place but it seems safe to assume that they’re looking at the situation very closely.
For the IEEE-SA, Qualcomm’s acquisition of CSR and subsequent licensing deal places serious question marks over the standards body’s relatively new policy. In an email addressed to David Law, Chair of the IEEE-SA’s Patent Committee, and David Ringle, the IEEE-SA’s Patent Administrator, which was sent to an IEEE listserv earlier this month, Cisco’s Gil Ohana called on the Patent Committee to carefully consider the full ramifications of Qualcomm’s position. Acceptance of it, Ohana pointed out, “would create significant uncertainty among participants in IEEE-SA standards development and implementers of IEEE-SA standards, uncertainty that IEEE-SA should quickly address.” The Patent Committee is due to meet next in December.
Cisco has been one of the key supporters of the new policy. Speaking to the IAM blog earlier today, Ohana stressed that this dispute remains largely limited to WiFi - “99% of the standards at IEEE are doing just fine,” he said.
He then added: “The rules changed. Companies fought very hard for or against the change but the time to debate the wisdom of the new policy, or lack thereof, has passed.” That might be true but Qualcomm’s agreement with CSR has, for now, shifted the nature of the debate.
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