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April 30, 2009

On the Make

Apple is trend setting again: following the model of Qualcomm, and more recently, AMD, into design house and patent provocateur, leaving the nasty risk of manufacturing to cost-conscious Asians. Apple has been hiring semiconductor engineers for many moons, building a cadre for designing next-generation chips. No fabrication intended. The only hard-shell cover for innovation is patent protection.

According to the Wall Street Journal, Apple has recently hired away some top AMD engineering personnel, and has loads of listings on Internet job boards for chippers, who among other things, would be "testing the functional correctness of Apple developed silicon."

A year ago, Apple bought fledgling P.A. Semi, which Steve Jobs explained as a way to acquire expertise for increasing sophistication for iPods and iPhones. Earlier this month, Apple had its table at a job fair for soon-to-be erstwhile employees of Spansion, a bankrupt memory chip company.

Chip fabrication is a high-stakes, huge capital game. AMD recently spun off its fabrication capability, to run leaner and meaner against Intel, who complained mightily that AMD couldn't transfer its patent cross-license pact with Intel to the new company.

The eye on the ball for every product company is a sharp focus on intellectual property. America long ago lost its manufacturing edge in the world, except for those particularly nimble companies, top-drawer performers in manufacturing IP. The creativity that spawns patents is America's best hope for economic vitality. If only the high courts and Congress come to that realization....

Posted by Patent Hawk at April 30, 2009 8:59 AM | Patents In Business

Comments

Perhaps the World of Apple article might help:
http://news.worldofapple.com/archives/2009/04/30/apple-building-team-to-design-own-chips/

Note "Besides a desire to beat rivals to market with new features, Apple's shift is also an effort to share fewer details about its technology plans with external chip suppliers, say people familiar
with the moves."

and

"People familiar with the situation say Mr. Jobs told P.A. Semi engineers last April that he wanted to develop chips internally and didn't want knowledge about the technology to leave Apple. Mr. Jobs is on medical leave and was unavailable for comment."

Keeping their technology plans secret by eliminating external suppliers may not be compatible with patents other than for defensive (MAD) purposes.

It's about competitive advantage in terms of time to market without telegraphing intent. Makes you also wonder how interested Apple will be in integrated circuit production assurance features
to prevent counterfeiting.

Posted by: Dio Gratia at April 30, 2009 2:17 PM

"Keeping their technology plans secret by eliminating external suppliers may not be compatible with patents other than for defensive (MAD) purposes."

Exactly. They can't keep their best inventions secret for longer than 18 months if they patent them.

Perhaps Apple has read the tea leaves and no longer trusts the patent system...and is resorting to trade secret.

Posted by: anon at April 30, 2009 3:50 PM

Think.

Trade secret is a good place to start, to let technical development ripen. But commercialization requires patent protection, or reverse engineering blows the cover.

"Apple has read the tea leaves and no longer trusts the patent system" is naive and uninformed as to how companies operate.

Posted by: Patent Hawk at April 30, 2009 4:52 PM

Clearly Apple got off to a solid headstart with the iPOD and iPhone. They used off-the-shelf silicon in these products and the competition is closing in on them rapidly. When everyone uses silicon solutions from Marvell, Broadcom, Intel and others they have no differentiation. Their feature set is defined by their COTS provider. Apple is looking to define and differentiate their products from the fast followers by developing their own silicon and then agressively enforcing their intellectual properties.

Posted by: Guy Fielder at May 3, 2009 4:04 PM

There's an article 'Trading in Secrets' on law.com

http://www.law.com/jsp/iplawandbusiness/PubArticleIPLB.jsp?id=1196280082042

wherein the difficulty in getting patents due to recent changes by the courts and the patent office affecting patent allowance rates is seen as a risk to the fall back of using trade secrecy. The disclosure timing of failed applications could threaten time to market advantage of existing ideas or inventions applied or aggregated into new products for new markets made possible by incremental breakthroughs in cost, level of integration or availability (and these conditions describe what makes things like iPhones possible pretty well). While what can be protected by patent undoubtedly will be, new market innovation (as opposed to technical innovation) can benefit from trade secrecy allowing the early penetration or even creation of new markets. If their competitors are as well schooled in the arts the slightest hint might serve to point out the obviousness of aggregation of existing technologies applied to new markets. Apple is adapting to the present intellectual property climate as undoubtedly are other companies.

Posted by: Dio Gratia at May 4, 2009 2:01 PM