Qualcomm sued for not being competitive enough

Electronics owner not happy with alleged inflated prices

A putative class action lawsuit filed on March 16 in federal court charges that Qualcomm has an unlawful monopoly in baseband processors (also called modem chipsets).

David Kreuzer, a resident of Illinois, owns an Apple iPhone 6, Apple iPad Mini 2, and Samsung Galaxy S6, each of which has a broadband processor.

Kreuzer claims that he and others with similar equipment have to pay inflated prices for each cellular phone and cellular device having Qualcomm's processors. He charges that Qualcomm, among things, fails to license patents on non-discriminatory terms, refuses to license certain patents to competitors, and enters into exclusive arrangements with customers, including Apple.

Qualcomm controls the market for Code Division Multiple Access (CDMA) chipset technology — initially having 90 percent of the market, and still controlling 80 percent, charges the suit.

Qualcomm has battled suits charging it with monopoly before. Two years ago, it paid $975 million to China when charged with antitrust violations. Early this year, Apple sued Qualcomm, charging it violated China's Anti-Monopoly Law.

Qualcomm did not reply to a request for a response to the Kreuzer suit.

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Interesting that the US does not manufacture products much any more; instead we produce IP, intellectual property. Hollywood (movies), Nashville (music), Silicon Valley (software) and San Diego (biotech) are vastly more profitable. One killer (oops, poor choice of word) drug discovery could produce another Irwin Jacobs here in San Diego.

Fighting over IP has increased in proportion to the great rewards. Attorneys love the complexity of patents and copyright law. The US and many other countries are gradually coordinating their IP rules at the behest of and for the benefit of large corporations. These corporations often patent trivial product changes that would be obvious to people in the field, but they are charmed as they move through the patent approval process. On the other hand, the patent of an individual inventor or protection for the author of a creative work is at the mercy of powerful forces who can take what they want.  

swell: The patent situation is a mess, and nowhere is it messier than in Silicon Valley. Best, Don Bauder

I agree with swell that the existing patent system serves mostly lawyers and large corporations.

Frankly, I'd be in favor of some pretty major changes, including

  1. Patent royalties should only be able to be collected by a company actually selling something using the patent (no patent trolls, no non-practicing entities).

  2. Rather than allowing suits to be filed in a variety of locations, like patent troll friendly East Texas, there should be a few limited jurisdictions where patent lawsuits can be filed.

  3. Start limiting the number of patents per year. Maybe 100,000 total per year.

ImJustABill: I don't know that we could limit the number of patents per year -- or limit the number of patent lawsuits -- but limited locations for filing suits might work. Best, Don Bauder

"One killer (oops, poor choice of word) drug discovery could produce another Irwin Jacobs here in San Diego."

Consider that UCSD and taxpayers paid for the technology that Qualcomm feeds off. But do the taxpayers get any benefit? No, the profits go to Jacobs. This happens around the country- universities do the research, private parties take the profits.

Our biotech companies are typically associated with UCSD and other universities. When they do come up with a fantastic new drug, who will be the beneficiary- the university, the taxpayer, or some individual who will reap billions?

swell: Absolutely. What you are describing is socialization of the costs and privatization of the gains. It happens all the time, particularly in biotech. There have been reform attempts, such as an enforced lowering of the price of the drug, or letting the government in on a percentage of the founders' stock, but nothing has been satisfactory. Your tax dollars produce a drug, and then you pay outlandish prices for that drug, while the founders and the venture capitalists rake in all the money. Best, Don Bauder

Mike Murphy: I don't know what chipsets are in the cheap Chinese knockoffs. Best, Don Bauder

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