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  • Marta Beckwith

Building a House

We have spent some time recently working on our house which got me thinking about how standards are akin to blueprints for a house.  Blueprints help a builder put a house together, but they do not specify every detail that ultimately needs to be completed to create a finished house.  Often, these details are omitted on purpose because they are not necessary to build the house or because clients want to vary those details based on preference or budget.  Sometimes, a significant detail is left unspecified to be filled in based on local rules and regulations or based simply on local custom.  Sometimes an important detail has been forgotten or is unclear in the blueprints and so must be filled in or interpreted by the builder.  The type and quality of materials used during construction may vary as will the builder’s knowledge and experience.  Consequently, even with the same set of blueprints, different builders will construct slightly or sometimes significantly different houses and the cost of a house built from the blueprint will be different based on location, lot size, types of finishes, quality and type of materials, builder costs and other items that are not specified in the blueprints.


Standards are very similar.  They are essentially blueprints from which companies can build products that perform certain functions in specified ways.  But, even at the most basic level, e.g. the semiconductor chips in which most telecommunication and networking standards (including 3G, 4G/LTE, 5G and Wi-Fi) are implemented, the end product varies, sometimes significantly, based on which company is making the chip and on what else they include in the chip.  For example, years ago, chip companies made chips that did only one thing.  That meant that manufacturers had to buy separate chips for each application – a Bluetooth chip if they wanted their product to be compliant with the Bluetooth standard, a Wi-Fi chip if they wanted their product to be compliant with the Wi-Fi standard, and a cellular chip if they wanted their product to be compliant with the cellular standard.  Most telecommunications and networking products also used separate CPUs, memory chips, power management chips and often had separate graphics chips, chips to implement ethernet (IEEE 802.3), USB and the list goes on and on.  


But then, around a decade or more ago, some chipmakers started making chips which implemented both the Bluetooth and Wi-Fi standards in a single chip.  More recently, system-on-chips (which implement most or all of the required components in a single chip or a single module) have become common.  So now, you can buy a single chip or small module that combines most of the functionality needed for a particular type of device.[1]  As one would expect, chips that use the Wi-Fi blueprint (e.g. implement the 802.11 standard) can vary significantly in price based on what additional, non-Wi-Fi components they include.  A combined WiFi/Bluetooth chip typically costs more than a WiFi only or Bluetooth only chip (but usually less than the total cost of having two separate chips). 


Further, chipmakers[2], like builders, can vary greatly in the quality of their chips.  A high end chip with a better design and higher quality manufacturing can have faster processing power and better reliability than a lower end chip even though both implement the same standard(s).  All else being equal, faster, more reliable chips tend to have higher prices than slower, less reliable chips that implement the same standards. 


And of course, these chips can be incorporated into a myriad of different end products ranging from a “dongle” (which apparently you can buy for as little as $2.98)[3] to a BMW (which, as one would expect, costs a great deal more)[4]


Like a house built from a standard blueprint, the cost of the final standard-compliant product varies depending on the things that are NOT specified in the “blueprint” but are added by the “builder” or chosen by the customer.  But here’s where things start to diverge.  There’s a whole host of people who argue (and a number of courts that have accepted the argument) that the cost of the blueprints should vary depending on the final cost of the product itself. 


So, for example, according to those who advocate this belief, the maker of a combined Bluetooth/WiFi chip should pay more to use the WiFi standard than the maker of a WiFi only chip, even though the combined chip is more expensive only because it also includes Bluetooth. The maker of a BMW which merely incorporates a WiFI chip should pay more to use the WiFi standard than the maker of a dongle which includes possibly the same WiFi chip, even though the higher cost of the BMW is based on the value of the other inventions (e.g. it's a well-built car), name recognition of the BMW brand and the like.


Imagine if we applied this to house plans.  You would purchase your blueprints and then after your house was built, the blueprint designers would contact you and demand you pay them more money because you hired a better builder, bought a more expensive lot on which to build the house or used higher quality materials to build it or to finish it.  Or imagine that it is 2020 again and suddenly the cost of your building materials, and so the cost of the final house, has skyrocketed because of global supply chain issues.  Even though you already are paying more than you originally intended to build the house, the blueprint designers want you to pay them yet more money because the cost of construction has gone up based on events beyond your control.  


In each of these circumstances, none of the higher cost of the final product relates to what the blueprint designers created.  And yet and yet and yet, when you replace the term blueprint with the term standard and the term house with the term product, somehow, some way, some people advocate that it is reasonable for companies to pay more money for the same blueprints depending on the cost of the final end product, even though the cost of the final product is based on inventions, manufacturing, materials and the like which is not specified in the standard and not invented by the SEP holder. 


This makes absolutely no sense.

 


[2]       These days, most chip companies design but do not manufacture their own chips.  Most chip companies outsource their manufacturing to semiconductor fabrication companies.  When I use the term “chipmakers” I intend to include the companies that design and manufacture their own chips as well as those that design chips but outsource manufacturing. 



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