Questions about the patent system

[watercooled]

So, the legal side of tech isn't a strong point of mine, and for the most part I'd sooner just ignore it rather than get frustrated with the apparent injustices.

A couple of points I'd like to understand better are, firstly, say a company (using the recent AMD suit as an example) wants to design and market a new mobile processor, in some cases I imagine they wouldn't actually be aware they were infringing on certain patents, and given the sheer complexity and scale of things like processors, how are they supposed to know that some design aspect is actually patented? Am I correct in thinking that rather than going in guns blazing with a lawsuit, companies (or at least respectable ones) would start off by sending a letter to the suspected infringing company asking for royalties, and only if that fails they would escalate it?

Also, I often wonder about how certain royalties are charged, and how many end up having to be paid? Beyond a point, and again with things as complex as processors, it's hardly a stretch to imagine a design theoretically infringing tons of patents, with patent holders demanding royalties left, right and centre - in this situation, how does it not get out of hand to the point of the demanded royalties actually exceeding the cost of the product?

With some design aspects, it seems like it would be prohibitively hard for the patent holder to even realise their patented idea was being used in a product, e.g. a certain cell library in a processor would, I imagine, be very difficult to prove without a ton of forensic work or industrial espionage (in which case I doubt the evidence would be admissible anyway).

And lastly, I imagine all this convolution over royalty rates, who is actually paying who, etc is part of the reason for the secrecy surrounding the deals - much like a lot of business information it sounds very sensitive as knowing another company has stuck a better deal than you would likely result in big arguments.

Thanks for reading, and hopefully someone can enlighten me!

[kalniel]

1) They pay patent attorneys to check - it's not simply a case of not wanting to use something someone else of patented, they check anyway because basically they try to patent all IP routinely anyway - the process of doing that will reveal if a covering patent exists (in theory).

2) Depends which is most beneficial for the company aims - asking for license fees might be, but going guns blazing for an injunction might be better too.

3) You try to reach an agreement, but if it fails you can ask a court to set a reasonable fee. Patents aren't meant to prevent use, just make sure they are compensated for reasonably.

4) Yes, except see point 1 - if they're not using your patent, they are usually using something else that you'd expect to find a patent trail for. I can only think that wouldn't apply in extremely fast moving fields such as perhaps F1.