It was fitting that on a day when Qualcomm signed deals with China’s leading smartphone makers worth $12 billion, the company’s licensing chief Alex Rogers was talking to an audience of the patent world’s great and the good about the eastward drift of the smartphone industry and the growing respect for IP rights in the world’s most populous country.
Rogers was speaking at a patents in telecoms and the Internet of Things event in Washington DC, thousands of miles from Beijing where the company’s CEO was on hand to reveal the headline deals with Xiaomi, Oppo and Vivo. The DC event was organised jointly by UCL and George Washington University, and was run under Chatham House rules, except for Rogers’ speech, which was on the record. In his comments to the audience of company IP executives, academics, current and former members of the judiciary, private practice lawyers and other advisers, Rogers outlined the degree to which future growth in the smartphone industry lies in Asia, and with China’s largest device manufacturers such as Huawei, Oppo and Vivo. “This is not a US-centric business,” he emphasised.
To underline the move to Asia, Rogers referred to comments from Chinese leader Xi Jinping at the opening of the recent 19th National Congress of the Communist Party of China, which underlined the country’s shift to an innovation economy backed by R&D investment and a strong IP system. “So, if you didn’t get the message it’s all over China and it has been for years – an innovation economy and innovation-driven development and to focus, pursue and develop IP rights,” Rogers remarked.
The Qualcomm licensing chief predicted that China would be a huge player in 5G technology at a time when the country is developing an increasingly sophisticated IP system. “They’re poised to roll out 5G as soon as the spec hits,” he stressed. “And China has organised its court system to better protect intellectual property – there have been incredibly significant changes over the last few years - and so they’re taking up IP protection in a very active way.”
Rogers then showed a slide with an anonymised comment from an Asian-based figure in the telecoms industry which highlighted a commonly held view overseas that the US was shooting itself in the foot with how the courts, legislators and some major IP owners have been treating the country’s patent system.
What the comment was getting at, Rogers said, is that: “The way in which the US is treating its patent system is going to create an opportunity for us to take a leadership position with respect to ownership of intellectual property.” It’s a message that certainly chimed with Rogers himself. “I don’t disagree, I think he’s right, I think we’re contributing to this,” he insisted.
China is perhaps Qualcomm’s most important market contributing more than half of the company’s revenues. But it has had a rocky time there and in several other Asian countries, including Taiwan and South Korea, where its licensing practices have been placed under the microscope by authorities. Using antitrust laws to regulate IP rights, Rogers argued, is a concept that the US has exported. He pointed to the ripple effect that a Department of Justice letter approving controversial changes to IEEE’s patent policy had on overseas authorities a few years ago.
Given the bruising that Qualcomm has received from antitrust bodies, Rogers not surprisingly spoke out against competition law’s encroachment on IP. “I’m baffled why, given the success of this industry, we think it’s a good idea to tell antitrust lawyers, “here you take control” - that makes no sense to me,” he said.
Rogers stated that the trend he sees is that “other countries and regions are competing to own the fundamental intellectual property and if they own it then they’ll re-enforce the value of IP rights”. But, he continued: “If they don’t own it, then they’ll use the tools that we’ve created here in the US to avoid paying for it or to pay less for it. We create things in the US and they’re used against us.”
While a good chunk of his speech focused on Asia, Rogers did not directly address Qualcomm’s ongoing litigation with Apple (or, for that matter the recently announced takeover offer from Broadcom). But he did refer to what he called an imbalance in the smartphone world between implementers and innovators, or the small group of companies that own the lion’s share of standard essential patents in the wireless sector. “That’s ok, that’s good,” he asserted. “As long as you don’t break the system because there are implementers that are national champions, they might act in their own short-term self interest in changing the system - not necessarily a good thing to do - and you have to be careful of that if you’re a court or you’re a policymaker.”
As Qualcomm’s licensing practices remain firmly in the spotlight thanks to the Apple litigation and another case brought by the Federal Trade Commission, it seems certain that Asian authorities are watching very closely.