IP is becoming a joke in the semiconductor industry with ‘patent trolls’ trying to gouge royalties by claiming the infringement of dubiously relevant patents.
There is an industry consensus that patent law, here and in the US, is being abused, and that legal reform is necessary. How long will legislative reform take? Too long, for sure.
In the meantime, the industry will have to find ways to protect itself from patent trolls, because it’s too late to turn back the clock.
“Chips are so complex that you have to buy in IP to make them. 20-30 per cent of the total cost comes from buying IP”, says Dr Dwight Decker, Chairman of the Global Semiconductor Alliance and Chairman of Conexant.
“Between 60-80 per cent of every chip produced today consists of third party IP”, says Warren Savage, CEO of IPExtreme, “it's simply no longer economically feasible to design chips without IP. We are addicted and withdrawal is not an option.”
Savage bemoans the rapidly escalating rate of patent filings, the rapidly declining standard of patent awards, and the rapid growth of patent trolls who lie in wait for unwary technology users and try to claim royalties.
If the trolls are allowed free rein, the industry could grind to a halt. “There must be a million patents behind a cellphone”, points out Broadcom’s CEO Scott McGregor, “what happens if anyone who owns one of these thinks he can shake down the industry by charging 3 per cent royalty on a handset?”
What can the industry do pending legislation? One way to go is that shown last week when seven wireless infrastructure suppliers, Alcatel-Lucent, Ericsson, NEC, NextWave Wireless, Nokia, Nokia Siemens Networks and Sony Ericsson agreeing terms for fair cross-licensing of IP they collectively own in building new LTE equipment and standards.
This kind of arrangement won’t flush out determined trolls waiting below the parapet for their moment to pounce, but it will show up who is acting in good faith, and who isn’t.
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