Why IP Must Be Defended

A few years ago I was having breakfast with Jim Hogan at our favorite place to meet in Los Gatos. I was CEO of Polyteda and Jim was Chairman so we always had plenty to talk about. This time, however, the talk had turned to protecting a company’s intellectual property (IP). Jim had brought up the topic in the context of the looming legal battle between Sonics and Arteris. Unfortunately, I steered the conversation back to my EDA roots and the Cadence-Avant! legal battle. I would have learned more if I had just listened. Semiconductor IP is not quite like software IP as there are different methods of protection, such as mask works, and patents may be easier to spot in circuits than in code.

Recently Tela Innovations, where Jim Hogan is on the board of directors,filed two actions against a group of companies who are in the mobile phone industry alleging that these companies had illegally used Tela’s patents in their products. I was surprised by the initial reaction of some in the EDA community remarking that Tela was suing its customers. Some sites have since edited or even removed some of their earlier comments. The simple fact is that if you are an IP company and you have evidence that some company is using your IP without proper licensing you MUST defend your IP. It is obvious in other industries where stores prosecute shoplifters, so why would IP be any different? They’re not yourcustomer if they are stealing from you.

Why do I use a strong term like “must”? Well, think about all the obligations that the company has; or, as board members and executive think of it – think of all of your stakeholders. First, you have an obligation to your investors. They put money into the company on the promise you were going to build something of unique value. For an IP company your patent portfolio represents a significant chunk of your company value and that value is partially owned by the investors. You must protect them. Secondly, you have paying customers to whom you sold a license to your IP. If you let others use it without paying for it is that fair to them? You also have your own employees to protect. If the company fails because the IP becomes free to use by anyone with the temerity to use it without paying for it then the employees may lose their jobs and the employee stock options become worth less (or worthless) as well. Even the community the company operates in will be damaged if the company is not there to continue to provide benefits to that community. For those that believe in karma, you may also feel that cosmic justice plays a role as well.

Tela’s filing with the U.S. International Trade Commission (USITC) alleges that various corporations including HTC, LG, Motorola Mobility, and Nokia have imported products which infringe seven of Tela’s patents. A similar action was also filed in federal court in Delaware. Tela can hope for a somewhat quick resolution from the USITC because that body is in place to stop trade practices before the violators gain much benefit from their actions. But, the companies Tela is bringing the actions against have a lot resources and no doubt the ability to drag this out some if they choose. Presumably, Tela is in a strong enough position to fight this battle a long time if necessary.

I cannot declare that Tela is right or that Tela will be victorious. I have not had the chance to read all of the filings and supporting evidence. The documentation is substantial so passing judgment now would be like voting on the voluminous Obama Care healthcare act without actually reading it. Hmmm… well, uh, anyway my heart tells me that Tela certainly believes it is correct in taking this action. Besides my longtime relationship with Jim Hogan, I believe in the character of others at Tela (Scott Becker, Drumil Ghandi, etc.) whom I worked very closely with at Artisan Components.

I have a background in semiconductor IP having worked at TriMedia Technologies and Silicon Architects in addition to working at Artisan Components. I also was a co-founder of Tangent Systems, which is where part of the code stolen by Avant! from Cadence originated. I am sensitive to protecting a company’s IP. If Tela’s allegations are indeed accurate the whole of the IP industry, and probably the EDA industry as well, needs to have Tela prevail, and sooner rather than later. Otherwise, many more alleged thefts will occur.