Patents - a note

Monday, May 7, 2007

Patents protect the intellectual property of any company, big or small. It is also a major source of revenue for some of them. Before we jump into the details of RAN1, it is important to re-inforce the importance of IP and where it fits into the bigger scheme of things.

Patents can be broadly divided into transmitter-side and receiver-side patents. Transmitter-side patents are high-risk high-reward patents. They form the basis of any wireless standard if they can be squeezed in. The best patents are those whose claims can be shown to be part of a standard. So if someone implements this, then they naturally infringe and this leads to royalties and other means of compensation. Since a standard primarily decides the transmitter, signal design and basic control structure while leaving receiver side design issues to the vendors, patents on such topics form essential IP for any such standard. Companies, strive hard to "stuff" their IP in thereby giving them some leverage while taking the standard forward. This gives vendors a huge competitive advantage and higher profit margin. On the other hand, a lot of smart ideas on the transmitter side never see the light of day due to the lack of consensus.

Receiver-side patents are more of a niche area. Though most basic receiver architectures are a given once the transmitter is standardized, there are always ideas that always push the limits of performance under these constraints. The burden of proof, however, is on the inventing company and it is very difficult if not impossible to get any particular receiver structure adapted by the standard. The closest any company can get is to specify the minimum requirements such that their receiver would have a differential performance making it attractive to the service providers. But as one can see, the flaw in this approach comes from the fact that the minimum specification by itself is a matter of comfort and convenience. Besides, these patents have a value if they can show disruptive performance over existing architectures that can give anyone vendor a competitive advantage. Again, as mentioned earlier, many players are not in the market based on performance but more on manufacturing capabilities and mass production. This makes their case that much more difficult.

Another means of sorting patents is based on whether they are design or architecture patents. Design or system level patents are considered of most value just because the concept itself is considered irreplaceable if standardized. On the other hand, architecture or implementation patents are of value only to the extent that it makes a business case to use them as against developing alternative implementation means of a given context. For example, if it takes $100 Million to develop a basic receiver component circumventing some IP in the market, while the asking price for that portfolio is only $50 Million, the decision is fairly a no-brainer pending issues such as IP contamination etc.

This back-ground should lead us to a better understanding of what happens in RAN1.

Posted by Vijay Nagarajan at 3:29 PM  

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