[A2k] WSJ calls for compulsory license (or non-enforcement of exclusive rights) of Broadcom patents on cell phone chips

[James Love]

My blog entry on this case is here:

http://www.keionline.org/index.php?option=com_jd-wp&Itemid=39&p=34
ITC allows some infringing Qualcom chips to be imported, bans others

Below is the WSJ editorial that calls upon Susan Schwab, head of
USTR, to overturn an injunction on importing infringing chips used in
cell phones.   In this case, the WSJ sees the enforcement of the
exclusive rights of the Broadcom patents as a very bad thing, for
innovation by U.S. firms that need the infringing chips in newer cell
phones.

"Nobody, including Broadcom, actually makes competing chips in the
U.S., so an import ban is tantamount to a total ban . . . anyone
who's shopped recently for a cell phone knows that the future arrives
fast in that industry, with new models coming all the time. The ITC
ban is in effect a bar to innovation by these U.S. companies."

Jamie

http://online.wsj.com/article/SB118134776605229702.html

REVIEW & OUTLOOK
Patent Bending
June 9, 2007; Page A8

Paging U.S. Trade Representative Susan Schwab: Please call us on your
cell phone. And better do it fast because cell phones may soon be
harder to come by thanks to one of the dumber rulings ever by the
U.S. International Trade Commission.

By a 4-2 vote on Thursday, the ITC decided to ban the import of any
new cell phone model produced with certain microchips made by
Qualcomm. ITC Chairman David Pearson dissented on grounds that the
ban was antithetical to the public good, which is certainly true. But
the import ban is effective immediately, and this means that
President Bush, through Ms. Schwab, has just 60 days to set the
ruling aside before it becomes permanent. There's an overwhelming
case for doing so.

Businesses Battle Over Patent Laws

The ITC's power to ban foreign-made, patent-infringing products goes
back to the infamous Smoot-Hawley Tariff of 1930 -- which ought to be
a hint that this is a bad idea. The fear was that American
intellectual property would be stolen by foreign firms, which would
use U.S. patents to produce goods overseas without paying royalties
and then ship those products to the U.S. The law was never intended
to substitute for domestic patent-infringement suits in federal
courts between two American companies, which is the story here.

The patent holder in this instance is California-based Broadcom,
which has sued Qualcomm for infringement. Broadcom owns several
patents relevant to the production of certain cell phones sold by
Sprint, Verizon, Alltel, as well as T-Mobile and AT&T. In other
words, pretty much every large cell phone operator in the country
sells at least some phones that contain the allegedly infringing chips.

The ITC tried to soften the blow of its ruling by grandfathering
existing models and applying the ban only to future models. This was
presumably a nod to the extraordinary breadth of the ban: Nobody,
including Broadcom, actually makes competing chips in the U.S., so an
import ban is tantamount to a total ban. However, anyone who's
shopped recently for a cell phone knows that the future arrives fast
in that industry, with new models coming all the time.

The ITC ban is in effect a bar to innovation by these U.S. companies
-- a fact recognized both by Chairman Pearson in his dissent, and by
the administrative law judge who originally heard the case and
refused to issue a broad ban in October 2006. Moreover, Broadcom is
already suing Qualcomm in federal court over these very same patents.
There is thus no need for the ITC to muscle in, except to expand its
own bureaucratic turf in the patent field. The ITC's separate process
was created only as a way to deal with patent infringers who were
beyond the reach of U.S. courts.

This case is part of a larger legal patent quagmire that now has
Congress entering with its own reform proposals. Uh, oh. So far, the
proposals are a jumble of good and bad ideas, and that's before the
boys on Capitol Hill start mulching in earnest. Everyone from Big
Pharma to federal judges and small inventors is up in arms about
something in the House and Senate twin bills. The only people not
howling seem to be the lawyers, who no doubt assume that any big
reform will require years of litigation and millions of billable
hours before anyone is sure what in the name of invention it really
means.

Our own sense is that the patent system needs two things above all:
better patents and less litigation, and the two are related. The U.S.
Patent Office needs to raise its standard of patent quality, so that
patent-holders and potential licensees both know that any patent is
likely to be valid and upheld by the courts. Better patents also mean
less costly litigation, because a patent that is both of high quality
and clear purpose is much less likely to go to trial than one that is
dubious, or too broad, or of uncertain application.

Better patents depend most of all on a Patent Office that gives its
examiners the right incentives -- which means rewarding them for
issuing quality patents rather than disposing of patent cases. The
courts can help too, and recently they have been. Last month's
Supreme Court decision in KSR v. Teleflex put down a marker on the
"obviousness" of inventions that ought to be relevant to patent
examiners who are considering whether to grant an application.

If Congress really wants to help, it could start by refusing to let
companies like Broadcom use the ITC as a legal backstop at the same
time they're suing in federal court. In the meantime, let's hope Ms.
Schwab uses her power to overrule the ITC in this case and save
American cell phone companies and consumers from needless harm.

------------------------------------
James Packard Love
Knowledge Ecology International
james.love@keionline.org
Wk +1.202.332.2670, US cell +1.202.361.3040, Geneva Cell +41.76.413.6584