Weekly IP Newsletter of the World 1

In the world of patents 

Qualcomm gets hit by multiple lawsuits Seems like everyone was out to get Qualcomm last week. Qualcomm stock is down 19% for 2017 as I write this. 

a.Qualcomm's "no license, no chips" policy 

b.Refusal to license SEPs to competitors 

c.Qualcomm's deal with Apple for exclusivity in exchange for lower rates 

This lawsuit will sound weird to regular readers of the newsletter who'll remember FTC's strong support for patent owners while releasing the updated guidelines. It seems like a lot has changed at FTC within the week. FTC Chair Edith Ramirez announced she would be resigning the weekend before and rumor has it that FTC Commissioner Maureen K Ohlhausen is likely to succeed her and has been appointed acting Chairwoman. Maureen was the dissenting commissioner in the 2-1 vote against Qualcomm and called the action "based on flawed legal theory." 

Qualcomm also is no stranger to antitrust issues as it has experienced them in China, S Korea, Taiwan, and EU. 

d.USFTC charges them with monopolizing key semiconductor devices The FTC verdict is three-prong focused on 

e.Apple sued Qualcomm in San Diego & China. The two companies do not have a direct licensing agreement today, so Qualcomm licenses Apple's suppliers. Apple, however, is one of Qualcomm's biggest customers and makes up 40% of their revenue as per George Davis of Qualcomm. 

Tim Cook's commented on it during their Quarterly report - "It's somewhat like buying a sofa, and you charge somebody a different price depending on the price of the house it goes into ... I don't like litigation, and so if there's another way, then that would be great, but at this point, I don't see it." 

Qualcomm's Derek Aberle pointed out in their Quarterly report, "Qualcomm has per unit running royalty caps ... licensees were not paying running royalties as a %age of the device above certain net selling price ... Charging royalties as a %age of device is fair and consistent with the fact that lower price devices can be used & rely upon less of the licensed technology than more expensive fully featured devices." 

f.A class action lawsuit from consumers claiming Qualcomm's policies led to higher prices for smartphones 

g.Lundin Law asking investors if they want to join a class action suit 

h.USITC begins a probe on 17 companies for graphic processors and DDR memory controllers related patents of ZiiLabs
Qualcomm's lawyers must be having some busy nights & weekends, but to me it's easy to see some green shoots and say "this too shall pass". What's more worrisome is the declining annual revenues from 2014 and rather flat operating income. Qualcomm like Apple (iPhone) & Google (Search) needs another big hit product category. 

Licensing 

a.They now have 120 new licenses in the last two years after their investigation with China's NDRC 

b.QTL (licensing) revenue are now at 1.8 Bn $ for the quarter, up 13% year on year due to the China growth 

c.The same terms (NDRC) were made available to Apple but rejected by Apple 

d.Qualcomm signed over 120 licenses in 2 years in China In their Quarterly report, Qualcomm highlighted some interesting insights 

e.Microsoft saw a 25% decline in licensing revenue due to a decrease in licensed units and license revenue per unit 

f.Ericsson saw an 11% decline in licensing revenue and now makes 630 Mn $ in licensing 

g.Samsung & Kudelski partner to license co-developed TVKey technology 

h.Finjan sues its licensee Avast for acquiring AVG 

US IP 

a.FinTech patents are much harder to get post-Alice Bilski blog highlights the same in a simple chart for technology area 3690 

b.The US still leading by a margin in attracting migrant inventors A new study on Global Talent Flows reviewed WIPO data between 2000-10 and found that the US saw 194,600 immigrant inventors (patent holders) i.e. similar to 20K per year. China, India, Germany, and the UK were ultimate losers of talent. The US, in fact, has more immigrant inventors than all other countries combined.

c.Federal hiring freezes worries patent attorneys on patent quality . In the absence of new examiners, the PTO might not be able to improve patent quality. 

d.PTAB can't go after state university patents as they claim "sovereign immunity." 

e.Nobody knows if Michelle Lee is still going to be the USPTO director. She's apparently the acting director currently. 

f.Blackstone IP acquired by Houlihan Lokey 

Asia IP 

Trademarks are respected more than patents in China In report reviewing 2015 litigations; It was highlighted that majority of the IP cases in Beijing are trademark cases

Not only are there more trademark cases filed, the success rate for trademarks is much higher, and they also bring in higher damages

These damages are still pretty small compared to damages available in more mature markets 

b.China considers setting up a national IP court in Beijing 

c.LeEco filed over 4000 patents in China last year 

d.IPBridge plans to expand in ASEAN region 

Europe SEPs 

European Commission released a study on SEPs. It has some fascinating insights e.g. 

a.70% of worldwide SEPs are declared to ETSI. 

b.68% of SEPs are licensed under FRAND terms, and 65% at reciprocity principle. 

c.There is a definite lacking of transparency on what is essential 

d.Telecommunication Standards are only standards with a diverse global patent footprint

e.SEP patents are filed in more geographies i.e. 28 vs. 16 for control group 

f.Qualcomm has the most number of declared SEPs, while Huawei has the most unique families. Qualcomm, however, leads in having the metric of most patents cited by other SEPs

g.Google, Intel & Apple are top buyers of SEPs while Motorola, Interdigital & Nokia are top sellers

In the world of tech 

Facebook is the biggest winner from the mobile revolution Mobile analytics company Flurry recently shared app-use analytics. It shows clearly that Mobile is still predominantly a "communication device." or a "social device". 

Another common factor across social, business, shopping, sports, etc. is "video" which has seen a huge rise in consumption thanks to video codecs like H.265, VP9, etc. This should explain why Draco (covered below) is necessary for the next generation of platforms.

But until then it is Facebook who has the most to win from the mobile platform. No wonder Facebook had a spectacular quarter bringing in 8.81 Bn $ last quarter 5.84 Bn for the same quarter in 2015. The ARPU jumping by 50% in US/Canada in Q4. The average user in US/Canada is now worth about 62$ annually. My hunch was that a lot of was due to US election spending, but Sheryl Sandberg clarified that political ad spending was not even in the top 10 categories of ad revenue.

Regardless, Facebook has now become the fastest growing company over the last five years.

And clearly the winner of the "mobile revolution" with 84% of its revenue coming from mobile. Facebook has also done extremely well in fast-following other mobile competitors like Snapchat and incorporating their features into Instagram & Facebook apps. Outside the US, Alibaba & JD.com also see over 80% of their revenue come from mobile.

Google 

a.Google open sources Draco A compression library for 3D graphics. AR, VR and Autonomous cars will rely heavily on 3D graphics and compression for the same will be enormous challenges as data volumes for these go through the roof.

A quick view of the patents from Dolcera's PCS system reveals that 3D compression landscape is still up for anyone's grabs:

b.Google shows its Infrastructure Security Design Things are becoming increasingly competitive in the Cloud space and its causing players like AWS, Google, etc. to explain more on how they prevent against issues like DDoS, unauthorized access, etc. Google is trying to tackle the same by providing a detailed overview of their infrastructure including things like multiple layers and custom chips for encryption -

Earlier this year at IAM's IPBC conference I raised the question of "black boxing" of tech as things begin to hide behind APIs and Cloud Servers in the Cloud/IoT environment. With more of the security infrastructure becoming public and things like custom chips going into data centers "detectability" will make a significant switch in the coming years from a patent perspective.

Semiconductor Inustry defies forecasts grows by 1.5% in 2016. The industry was expected to contract for the year. The top 25 chip vendors did much better as they rose by 7.9%. Players like Qualcomm & SK Hynix were hardest hit in revenue terms

Apple has its biggest quarter yet Apple services now make as much money as Macs. Apple also is now sitting on 246 Bn $ in cash!

India's PayTM moves into asset management The mobile payment app has some 170 Mn users in India and now will allow users to have savings accounts which they can deposit into by paying cash to participating retailers. PayTM is backed by China's Alibaba. It seems like Asia will be leapfrogging the West in mobile wallets and digital currency. 

Microsoft plans to spend over a billion $ every year on Cybersecurity There are roughly 348,975 Cybersecurity job openings in the US at the moment. 

China locks the Internet down harder thickens its firewall targeting VPNs and orders registration of App stores to track proliferation of apps 

Starbucks wants to you pre-order coffee using Alexa or their in-app voice features 

Telecom Giant Avaya declares bankruptcy 

Amazon gets into paid search

In the world of auto 

Electric 

a.Ford's SuperBowl ad also shows a similar effort with Ford trying to realign itself as a Mobility company 

b.Tesla's S100D (starting at 93,700 $) increases range to 335 miles. Tesla is also "rebranding" itself to Tesla dropping the "motors" part from "Tesla Motors" to show focus on electric and clean technologies 

c.Faraday Future claims it accelerates faster than gravity & Tesla 0-60 in 2.39 seconds vs. Tesla P100D's 2.4 seconds

d.Chinese EV Giant BYD wants to be in the US in 2-3 years

Autonomous 

a.China wants 10% of cars to be self-driven by 2030 Baidu feels its AI with nVidia hardware is going to help it be a leader, hints at potentially working with Tesla too. 

b.Mercedes-Benz joins Uber's self-driving fleet. Mercedes will also join Car2Go's car-sharing platform 

c.TomTom bought Berlin-based Autonomous 

d.Tesla gets the clean chit in fatal car crash 

Connected 

a.Volkswagen starts putting 5G in its cars 

b.Voice Assistant will dominate cars before they reach every house

Shared 

a.The company is leaving Taiwan amidst mountain of fines 

b.And In the US, Uber saw significant backlash over not participating in a taxi ban. #DeleteUber quickly started trending, and Lyft saw huge gains. As a result to become the most downloaded travel app in iOS app store. 

c.Uber also got into trouble with FTC and had to settle for 20 Mn $ over exaggerated claims in promotional material to attract drivers 

d.Ridehailing for children is a 50 Bn $ market 

e.Uber is now responsible for 52% of all Enterprise ground transportation in the US . the company is the most expensed vendor with 6% of all enterprise travel expenses as per Certify. However, Uber's growth is not without its woes. 

Robots are coming. The automotive manufacturing process is a critical consumer of robots. 2016 saw robot sales go up 17% in the auto industry. Shipments to Automotive suppliers in North America grew by 25%. Assembling & Spot Welding are the key applications of use in Auto Industry for Robots. 

China is now 1/4th of world's logistics market. With a strong push from the local eCommerce industry China's logistics market has now surged to 2.2 Trillion $. The global market, in contrast, is 9 trillion $. There is now even a freight train from China to London. (Aah trains - The old school autonomous vehicles!) 

Changes in how cars are sold, as Walmart enters Car sales business and Ford Credit wants to make a visit to the dealership a thing of the past. 

More Flying Cars . This time it's the Airbus CEO telling us that they will have a prototype by the end of this year. They're coming!!

Major Fundings & acquisitions 

Snapchat files for a 3 Bn $ IPO. I will dig through the S-1 and talk more next week. 

Cisco acquires AppDynamics for 3.7 Bn $ 

Microsoft acquired Donya Labs for 3D data optimization SDK Simplygon, Microsoft also acquired Canada-based Maluuba to bring machine learning to speech 

Google buys Fabric from Twitter 

Koubei raises 1.1 Bn $ (2.07 Bn total) to help optimize the life of its Chinese searchers 

Verily (formerly Google Lifesciences) raises 800 Mn to digitize human health 

Tricentis raised 165 Mn for automated software testing 

Ring raised 109 Mn for home security solutions 

Zoom raised 100 Mn (145.5 Mn total) to do video conferencing better than Citrix & WeEx 

Xueba100.com raised 100 Mn (120.5 Mn total) for helping students do their homework in China 

ClearMotion raised 100 Mn $ to make car rides less bumpy!! (I couldn't figure out what this company does). 

Soundhound raised 75 Mn $ for Audio AI