Apple vs Otis, FRAND vs FLOSS

I was pointed at Apple vs Otis in the UK Courts. This is an NPE suing Apple for its non-permitted use of a standards essential patent. The court backs Otis and is now assessing a fair licence agreement. Apple say that if it considers it unfair, they’ll with draw from the UK. There is, of course, a post Brexit dimension to this as the British Courts seek to establish a new market for British lawyers since they can no longer practice in Europe. Here are some more links and notes.

  1. The case is also covered at The-UK’s supreme court has sided with a texas patent troll that Apple must pay US 7 million and Apple has threatened to leave, from a site called patentlyapple.
  2. FRAND And The Clash Of Industries by Simon Phipps, 2016 … he saw this coming.
  3. https://www.kilburnstrode.com/knowledge/technology/standard-essential-patents
  4. https://shipglobalip.com/blog/what-is-a-standard-essential-patent-sep-
  5. https://en.wikipedia.org/wiki/Reasonable_and_non-discriminatory_licensing
  6. https://news.bloomberglaw.com/antitrust/lenovo-advances-antitrust-attack-on-interdigital-3g-4g-patents

The full story needs something on economies of scale and anti-monopoly theory in the context of welfare economics i.e. the monopoly needs to be regulated because otherwise it will reduce supply to raise prices. Both of which are bad.

  1. Richard Posner’s, The social costs of monopoly and regulation 1974, looking at his wikipedia page suggests that he believes that patent/copyright term protection terms should very depending on the cost to innovate vs the cost to copy; the IP Kat comments. He  considered drugs & code at different ends of the spectrum.
  2. See Salvador & Signorino, on Adam Smith and Monopoly, a landing page from wiley,
  3. “Monopoly Prices” on my blog, my essay on monopolies’ landing page, it looks at profit maximisation, supply and demand and the nature of competition. It does not look at underproduction, nor on the lost social costs in building and defending the monopoly.
  4. https://davelevy.info/free-the-right-price-for-software/ on my blog, another note on FLOSS and its compelling economics. I used my son’s copy of Beggs, Fischer and Dornbusch to revise the welfare economics and here is a slide share from them on monopoly and competition.

Apart from the deadweight loss and the costs to maintain and defend the monopoply there may also be social benefits that accrue through external economies of scale which might require subsidy of purchase. I found, Economies of scale, at Investopedia, which say little about network externalities andDemand-side economies of scale at wikipedia. Let’s note that the number of network goods has grown since the ’60s although they weren’t recognised as such then.

I also found, this white paper, “Competition, Consumer Welfare, and the Social Cost of Monopoly by Lee & Brown” which ought to be relevant; from the abstract, “the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality.”

It also needs something on the history of the UK’s engagement and disengagement with the EU’s Unified Patent Court. I think there was certainly some economic patriotism going on there, and not just from the British.

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