ITC kills smartphone innovation with Apple decision

The US ITC yesterday declared against Apple [AAPL] in a FRAND-related case bought by Samsung -- and while I'm certain there's a few Phandroids laughing, they shouldn't be, because the decision will stifle innovation in the smartphone space far more than any "rounded corner" decisions ever have, or ever will.

[ABOVE: Tokyo in 2010 as iPhone 4 went on presale.]

Another word for stupid?

You see, what the ITC has done with this stupid decision is to undermine the principle of industry standard technology deals as they relate to standards that underpin mobile innovation

This is because the decision means any company can refuse fair license of any patents deemed essential to industry standard such as 3G. The nature of these FRAND deals is that these technologies are supposed to be licensed without prejudice to all who need them.

Apple's argument is that by insisting on a royalty of 2.4 percent for use of the patent Samsung acted in a way that stifles competition. This argument may not have been accepted by the ITC, but it is the same exact argument that has seen Samsung face an anti-trust investigation in Europe.

More ignorant, prejudiced or partisan Android fans are probably happy at the decision, but the writing is on the wall in the event it is upheld. It warns of complete breakdown across the mobile industry, as the decision enables firms who own technologies implemented within industry standards to use licensing conditions as anti-competitive tools.

What next?

The decision opens the floodgates for all manner of technology firms to pursue competitors in order to put the brakes on product development and design. After all, what if every firm that owned patents included within the 3G standard should suddenly decide it wanted a 2.4 percent royalty from every Samsung device that used 3G?

There are many, many patented technologies included within every industry standard. If each of these technologies demanded a 2.4 percent royalty then who suffers? You do -- in order to fork out these prejudicial royalties handset prices will inevitably rise.

There's another point to this (stupid beyond belief) ITC decision: It means that every mobile device maker will now be looking to implement industry standards in a more limited way. They will not choose to fully implement key technologies in order to reduce their exposure to lawsuits from competitors eager to chase them out of Mobile Town.

Armed with this ITC decision, Samsung can now attempt to demand unreasonable royalties from every other 3G device manufacturer, threatening an import ban if they fail to comply.

This will have the effect of stifling innovation, while also giving technology patent holders a stranglehold on innovation.

That's also bad for consumers.

Who wins, really?

The only winner in this insanely stupid drama is hard to determine. After all, is there anything now to stop other FRAND patent holders from slamming similar injunctions on the world's biggest device maker, Samsung?

Of course there isn't.

So who gains?

In this particular matter it isn't Apple that has gone thermonuclear, but Samsung.

The Korean firm has self-destructively put into action a set of forces that threaten to intensify the competitive landscape, raise device prices, and stifle innovation.

The decision is utterly ridiculous and should be construed as a worrying development by anyone who might be interested in next-generation mobile technologies.

It also distresses me that a vocal and insistent selection of people will immediately go into denial to this argument, instead declaring it a victory for their favourite foreign multinational.

I'm shocked, frankly, as this decision serves to undermine the basic principle of agreed industry standards, which is that technologies involved in these standards be licensed on a "reasonable and non-discriminatory" basis.

Without that consensus then the whole model on which major innovations such as LTE, 3G, WiFi or Bluetooth are based is blown out the water.

We're left in a dreadful situation in which the only hope for mobile device users everywhere is that US President Obama shall overturn this ridiculous declaration.

Well done, ITC. Well done, Samsung. You just undermined innovation to the detriment of consumers on every platform.

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Copyright © 2013 IDG Communications, Inc.

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