The LG suit against Quanta for patent infringement was originally turned down by a lower court, then overturned (in LG's favour) on appeal, but the supreme court in the US has agreed to hear the case. The heart of the case is whether Quanta are liable to pay for
LG intelectual property that is included in the Intel chipsets that Quanta use. If you want to know more detail you can find it in some of the links. Its a
The first big deal of this case is that it potentially opens up yet another way for patent trolls to profit from other peoples hard work. The patents in question are not developed by LG (although LG has a history of producing some very good research of its own) but were originally
developed by the long defunct Wang and acquired by LG at some stage. They have a license agreement with Intel to use that technology when they build their chipsets which has a set of conditions attached. When Intel sell these chipsets as individual components then that is not technically covered under the license so the liability must pass onto Intel's customer.
There is a lot of semantics involved in this as the end system board works in exactly the same way it would if Intel put it together, however providing the chips individually allow Quanta to custom design board layouts to fit the profiles their customers want. Essentially if LG prevails in this case it will flag as legal putting conditions of sale on a patent license. That would allow a patent holder huge power they do not currently have in setting conditions on their licencees. By allowing the patent holder to retain control of use after it leaves the first purchasers hands then any further link in the chain would need to negotiate conditions with the patent holder.
To give an example, LG could dictate to Intel which geographic regions they could sell in or which companies they could sell to. Given that LG are a computer manufacturer themselves they could influence the competitive market. If a small local computer manufacturer wanted to make their own customer computers, or custom boards for systems control, they would have to negotiate with all the holders of the patents Intel holds. Realistically all these factors would be negotiated away, but the increase in power means the patent holder is able to negotiate a higher amount of return, which eventually means higher costs for everyone else down the chain.
The second big deal about this is that Quanta is the target. There are many other computer vendors and contract manufacturers they could have gone after. Even though Quanta is very large, its main speciality is notebooks. A large proportion of the notebooks you have used in your life would have been
manufactured by Quanta under contract from companies like Dell, HP, Apple, Toshiba, Gateway, Sony, etc. LG also have a PC division that includes a
notebook range that is not currently sold in the US. They do a lot of OEM work to the same vendors Quanta does, mostly in the removable drive (e.g. DVD) and monitor space. Given the scale of Quanta it would be very hard for them to compete for the notebook ODM business though. If they can manage to increase Quanta's costs they may just be able to open the market up enough for them to become a second player.
Having a second major laptop ODM could be good for us, but to get it in this way would open yet another avenue for patent trolls (and major companies that occasionally act like them) to increase costs for consumers to no good end.
