Why Qualcomm’s legal battle matters to a multitude of companies
I recently wrote about the decision of the US Court of Appeals for the Ninth Circuit to uphold Qualcomm’s appeal against a district court judgment in the case brought by the Federal Trade Commission (FTC). Since then the FTC has resolved to appeal that decision. This feels like the last chance for the FTC, with the odds against success.
Indeed, I believe that the Ninth Circuit decision was a positive development for the wider tech industry. A system that protects the intellectual property rights of the innovator while ensuring fair and healthy competition is critical. The Ninth Circuit made the same observation, stating that “innovation is essential to economic growth and social welfare” and that “an erroneous decision will deny large consumer benefits”.
This would be a compelling argument at any time, but in 2020 it feels particularly relevant. The importance of technology and connectivity has never been more apparent than when facing the social, commercial, economic and, most importantly, health-related consequences of Covid-19. Technology is playing a central role in how we’ve responded and adapted to this crisis, spanning everything from healthcare provision and research to ensuring a degree of continuity at home and at work. Had the pandemic hit a decade ago, we’d have been considerably less prepared. And through technology we can ensure we’re better prepared for the future.
This context is likely to shape the next decade and beyond when it comes to technology investment. Although other dynamics such as increased regulation will inevitably remain in focus, governmental, commercial and public attitudes to technology have been permanently changed. Technology and connectivity are deemed critical now in a way that wasn’t widely recognized at the start of the year.
How the tech industry responds to the pandemic and balances elements such as security and privacy will be a critical in determining the long-term impact. The industry was in large part to blame for the dot-com bubble of the late 1990s. Wall Street was the source of the problem in 2008. In 2020 both industries have the opportunity to be part of the answer.
But for technology to deliver, the right environment must be in place. It should foster a healthy balance between competition, innovation and protecting intellectual property rights. All these elements are critical. Businesses must be able to compete on a level playing field while also knowing that innovation will be nurtured and protected through a system that respects the process of intellectual property development and monetization.
This environment is critical in the mobile communications industry because the research and innovation needed for a new generation of connectivity often starts some 10 years before a standard is completed. Companies involved in the process are working with no guarantee that their intellectual property will be relevant or what the final standard will look like.
To put this in context, Ericsson, Huawei, Nokia, Qualcomm and Samsung, to name but a few, all spend more than 15% of their annual revenue on research and development, with Qualcomm and Nokia spending about 20%. This is why the ruling from the Ninth Circuit is so important. It ensures that investment to develop technology can continue with the assurance that the resulting innovation will be protected to the benefit of consumers. In my view, it’s a virtuous cycle that results in continual investment.
5G is at the start of a multiyear journey. It has some 10 years of development ahead of it in the same way that 3G and 4G did. Planning has also started for 6G. It might feel like an overly enthusiastic industry getting ahead of itself, but the standards that will define 6G need research and development today. The industry’s efforts will build on 5G and advances such as millimetre-wave connectivity, looking to frequency bands beyond 100 GHz to enable ever-higher capacity, throughput and lower latency once the huge challenge of propagation is overcome.
None of this can occur without a clear and predictable environment for technology development. This is why the dismissal of the FTC case is important. Its significance goes far beyond one company in San Diego. It affects a multitude of companies in several industries that are innovating to create benefits we’ll come to rely on in years to come.