The following articles have been created as part of GHB Intellect’s IP Blog. Here you will find articles that outline current topics in the intellectual property industry like new technologies, patent laws, and IP service insight.

Apple and Qualcomm Update– 5G Implications

By now you’ve most likely heard about the Apple vs. Qualcomm legal battle. Since 2011, Apple has sold iPhones with Qualcomm chips inside that enable cellular network connection. Qualcomm has been the exclusive chip provider to Apple. Apple and Qualcomm have had royalty disputes over these chips since 2016 and on April 1, 2019, both parties agreed to end all patent litigation. What does this mean for Apple, Qualcomm and the future of 5G?

Apple vs. Qualcomm

In the first quarter of 2019, a German court ruled that Apple could no longer use Intel modems due to violations of Qualcomm’s licensing agreement. Essentially, Qualcomm made the argument that Apple must continue to pay a percentage of iPhone revenue in return for the use of Qualcomm intellectual property. Apple, on the other hand, argued that Qualcomm did not have the legal right to charge heightened royalties for its technology. Qualcomm and Apple had an agreement stating that Apple would exclusively use Qualcomm chips between the years 2013 and 2016. This included a condition that Apple could not cooperate with regulators or competing chip producers like Intel. In return, Qualcomm would pay Apple a $1 billion annual rebate.

Apple then became dissatisfied with Qualcomm taking such a large chunk of revenue, (plus the cost of the physical chips themselves) so the smartphone company proceeded to allege anti-competitive practices. Their case alleged that Qualcomm’s exclusive patent for Apple’s baseband processors posed a risk to the competitive balance of the smartphone industry.

In the fallout, Apple refused to pay patent royalty fees, Qualcomm refused to pay the annual $1 billion rebate, and Apple switched to Intel as a chip supplier. Apple sued Qualcomm for $1 billion in the United States, and $145 million in China. Qualcomm then filed countersuits in Germany and China. Qualcomm won the legal battle, leading to a massive stock price increase. Shortly after Apple lost, Rubén Caballero, the engineer “leading Apple’s charge into 5G,” left the company. Read more about Caballero’s abrupt departure here.

How 5G is Involved

Qualcomm is currently one of the true leaders of 5G technology. The company has extensive power when it comes to 5G intellectual property. More specifically, Qualcomm has crucial patents for handheld chip technology that enables 5G smartphone connection. This presents a huge royalty opportunity for Qualcomm. Furthermore, if Apple chooses Intel as their chip supplier, iPhones may not have access to 5G for a while, as Intel has recently dropped out of the 5G race. If Apple continues working with Intel exclusively, it will be an industry laggard with respect to 5G.

What are 5G patent royalties projected to be? Ericsson, for example, will reap upwards of $2.50 per 5G handset license. Nokia bumped up their royalty rate to $3 per handset sold. It is obvious to observe why companies owning 5G intellectual property are excited about the deployment of 5G network deployments.

How 5G has Impacted the Market

  • Qualcomm-The settlement with Apple led to Qualcomm’s share price surging up 69%. It is currently selling for 15 times next year’s earnings estimates.
  • Intel-The recent announcement that Intel is abandoning 5G efforts does not look good for the company. Their stock price has fallen over 15% in the past month.
  • Skyworks Solutions-Skyworks is influential in the radio frequency chips market. Demand for these should increase as handhelds adapt to 5G networks. Trading has been flat recently, but this could change.

The Future of 5G

It will be a common occurrence for businesses in the 5G sector (and other sectors) to misinterpret IP laws and regulations. As we’ve seen with Apple and Qualcomm, misunderstanding IP royalty principles can be devastating to the bottom line. 5G technology is bringing about new verticals and problems that have never come up before. Fair and legal monetization of 5G technology is not a simple manner. If accomplished however, the benefits are seemingly infinite—as we’ve seen with Qualcomm. Do you require consultation on 5G or IP related topics? GHB Intellect specializes in IP development, management, and monetization. Contact us today!



Is Reverse Engineering Legal?

Reverse engineering is a precise form of product teardown that can be the basis for many intellectual property cases. The process can be applied to products, systems or components from mechanical assemblies to biological, chemical and organic matter. In IP, the legality of the reverse engineering process is a frequently debated subject. Non-disclosure agreements, end user license agreements, and anticircumvention can act as legal barriers to reverse engineering. Some laws like the Digital Millennium Copyright Act plays a vital role in legally allowing software reverse engineering to occur.

Does Reverse Engineering Comply with the Law?

Reverse engineering has traditionally been a legal method of acquiring trade secrets under certain conditions. The product must be acquired through “fair and honest means.” Trade secrets cannot be protected through these basic purchasing means. An example of this is buying a product on the open market. The Restatement of Unfair Competition states that “The owner of a trade secret does not have an exclusive right to possession or use of the secret information. Protection is available only against a wrongful acquisition, use, or disclosure of the trade secret.” What defines a wrongful acquisition, use, or disclosure? This occurs when an agreement is breached, (can be implicit or explicit) or when a trade secret is obtained through “improper means.” Trespassing and deceit are examples of improper means.

Digital Millennium Copyright Act

This act was established in 1998 with the purpose of removing Digital Rights Management copyright infringement. An exception exists in the Digital Millennium Copyright Act, which allows reverse engineering to occur for the purpose of creating or improving software inter-operability. Here are the four exceptions in the DMCA, which allow for reverse engineering in specific circumstances:

  1. “Notwithstanding the provisions of subsection (a)(1)(A), a person who has lawfully obtained the right to use a copy of a computer program may circumvent a technological measure that effectively controls access to a particular portion of that program for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability of an independently created computer program with other programs, and that have not previously been readily available to the person engaging in the circumvention, to the extent any such acts of identification and analysis do not constitute infringement under this title.
  2. Notwithstanding the provisions of subsections (a)(2) and (b), a person may develop and employ technological means to circumvent a technological measure, or to circumvent protection afforded by a technological measure, in order to enable the identification and analysis under paragraph (1), or for the purpose of enabling interoperability of an independently created computer program with other programs, if such means are necessary to achieve such interoperability, to the extent that doing so does not constitute infringement under this title.
  3. The information acquired through the acts permitted under paragraph (1), and the means permitted under paragraph (2), may be made available to others if the person referred to in paragraph (1) or (2), as the case may be, provides such information or means solely for the purpose of enabling interoperability of an independently created computer program with other programs, and to the extent that doing so does not constitute infringement under this title or violate applicable law other than this section.
  4. For purposes of this subsection, the term ‘interoperability’ means the ability of computer programs to exchange information, and of such programs mutually to use the information which has been exchanged.”

Non-Disclosure Agreements

If a company informs you about un-patented trade secrets under an NDA, then you can not reveal that information to the public. If disclosed, this would qualify as patent infringement. What if the company patents the trade secret? Once this occurs it is no longer a secret, therefore, reverse engineering is unnecessary due to patent disclosure.

End User License Agreements

In proprietary software, an end user license agreement is a legally binding contract between a software manufacturer (licensor) and a user. (purchaser) It effectively establishes the user’s right to use the software. Reverse engineering a software product with an end user license agreement is strictly prohibited. These agreements can cancel out the effects of the Digital Millennium Copyright Act exception; achieving interoperation with an end user licensed software can be difficult.

Anticircumvention

What if a company uses anticircumvention devices to protect against reverse engineering? Section 1201 of the DMCA states that a technologically protected trade secret circumvention for the purpose of reverse engineering is strictly prohibited. Companies that have secrets they intend to keep confidential will employ layers upon layers of coding protection to hinder reverse engineers. Read more about DMCA Section 1201 of Title 17 here:

https://www.copyright.gov/1201/

GHB Intellect Specializes in Reverse Engineering Issues

Are you confused about a legal reverse engineering conflict? Leave the hard work to intellectual property experts so that you can prioritize and focus on other areas that you specialize in. Contact our full-service intellectual property consulting office to take you through the necessary steps regarding reverse engineering legality.

Common Intangible Asset Valuation Methods

Measuring a company to determine business asset valuation can include various aspects. One section typically includes a company’s intangible assets. Intangible assets lack physical property yet can provide competitive advantages. Examples of these intangible assets include trademarks, patents, copyrights, equities, securities, contracts and more.

Understanding Expert Witness Conflict of Interest

Although it is on the rare side, there are situations that may cause a dismissal of an expert witness due to conflict of interest. When in litigation, it is imperative to have subject matter experts with proper technical expertise, academic credentials, accomplishments, reliable background and personality match. Our litigation support will know when to alert opposing parties of a conflict or source proper expert witnesses.

What is the Purpose of Product Analysis?

The purpose of product analysis is to provide manufacturers with the deliverables necessary to understand and perfect the product. The analysis ensures that the product is market ready, reaches the intended target market and achieves the desired results.

What are Common Law Trademark Rights?

Trademarks were established to distinguish the sources of goods from on to the other. Federally registering your trademark with the USPTO will allow you to strengthen and protect your rights. 

V2X Market Forecast: Opportunities, Competition and Policies

How is V2X communication transforming the high-tech & transportation sectors? Vehicle to Everything (V2X) IP and R&D promises self driving cars, improved safety, environmental benefits and reduced congestion.

Inside the Smartphone Teardown Process

Why would an engineer or manufacturer perform a smartphone teardown? Product teardowns are essential to reverse engineering & benchmarking. We take a look at a recent iPhone X teardown and how this info may be used in IP Consulting.

Sprint and Ericsson IoT Partnership

Sprint and Ericsson have announced their plans to develop a virtualized core IoT (Internet of Things) network & operating system. How will this impact IoT intellectual property?

Patent Infringement Examples

Simply owning a patent will not alert you of patent infringement, it is up to the patent holder to bring a patent infringement litigation case to the unauthorized party in federal district court. How can you protect yourself from patent infringement and how can you identify it once it’s taken place.