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My Thought on the Patent War

By on August 21, 2011 in Posted In: iPhone

Google LogoApple?s domination of the Smartphone and Tablet market has led to an arms race for patents.  Recently Google paid $12.5 billion for Motorola Mobility.  This acquisition should allow Google to build their own Android Smartphones.  More significantly, they also get to own Motorola?s 24,000 plus patents.

Arming yourself with patents has become an effective way to snap at competition.   Correspondingly, the big boys are increasing their use of patents to fight it out in the Smartphone and Tablet industry.

Using Patents to Slow Sales

Early in August 2011, Apple won in getting an agreement from Samsung Electronics to stop the sale of newest version of its Samsung Galaxy Tab in Australia until a patent lawsuit in the country is resolved.

Using Patents to get a piece of the pie

As early as 2006, Creative, the Singapore based Tech company whose only call to fame was creating the Sound Blaster sound card sued Apple for infringing on a patent and got $100 million out of it.

CUPERTINO, California and SINGAPORE ? August 23, 2006 ? Apple® and Creative Technology, Ltd. today announced a broad settlement ending all legal disputes between the two companies.  Apple will pay Creative $100 million for a paid-up license to use Creative’s recently awarded patent in all Apple products.  Apple can recoup a portion of its payment if Creative is successful in licensing this patent to others.  In addition, the companies announced that Creative has joined Apple’s “Made for iPod” program and will be announcing their own iPod® accessory products later this year.

In early 2011, Nokia got a nice settlement from Apple over a variety of alleged patent infringements. Nokia claimed that the iPhone was infringing on 10 patents Nokia holds on the integration of GSM, UMTS and wireless LAN.  The result?

Apple has also agreed a one-off payment of around £700 million – to cover the 108 million iPhones sold since its launch in 2007 – and an estimated eight Euros for every iPhone sold.

Notice that in these 2 examples, only a limited amount of patents were cited.  Compare this to Google?s arsenal of 24,000 patents and you get the point.  This can be a profitable game.  Of course there is no doubt that this was caused by an earlier acquisition of Nortel?s patents by a consortium led by Apple.

On June 27, 2011, the Company (Apple), as part of a consortium, participated in the acquisition of Nortel’s patent portfolio for an overall purchase price of $4.5 billion, of which the Company’s contribution will be approximately $2.6 billion.

The consortium included Apple, RIM, Microsoft, EMC, Ericsson, and Sony banded together to buy 6000 patents that related to wireless, wireless 4G, data networking, optical, voice, internet, and semiconductors.

This is going to get Uglier

The big boys have the creative and financial muscle to file and own patents, irrespective of whether they use them or not.  This has led some tech pundits (and developers) like Lukas Mathis to say:

It is simply not possible to create any non-trivial piece of software that doesn?t violate hundreds of patents. As a result, you can?t release software without putting yourself into a position where you might suddenly lose all of your money.

Essentially, thanks to the patent system, you can be put out of business at any time, for no good reason.

This is bad news for budding tech entrepreneurs and the great age of innovation that we live in ? unless of course the innovator is Apple, Google or any big tech name.

It no longer makes sense to take great ideas and create, sell and support software products. Instead, at modest expense and low risk you can obtain software patents covering your ideas in all their variations. Then just sit back and wait.

Robert O’Callahan

My Thought

In this particular aspect, I think that the patent system has failed society as a whole.  The system was made to protect and reward innovation, not restrict it.  Left in the hands of resource rich tech companies and their highly paid lawyers, the patent system has become a game of Monopoly where the big boys reserve all the available properties.  In the end there will be no place for anyone else to join in the game without having to pay for it some way or other.

Barring any major changes in Patent law, I do not see a good outcome on this.  Like I said, this is going to get uglier.

About RG. Chew

RG. Chew is a pundit on all things related to the tech industry and enjoys keeping taps on the fast pace of technology today. He is constantly trying to bring a fresh look (or relook) into the latest tech news and happenings for his readers
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  • ViewRoyal

    “I think that the patent system has failed society as a whole. The system was made to protect and reward innovation, not restrict it.”

    Patent laws may not be perfect, but what laws are?

    But to say that patents restrict innovation is just plain wrong. Patents protect a company’s inventions (including intellectual property) from being stolen by competitors.

    If there were no patent laws… THAT would restrict and stifle innovation. After all, who will want to spend years and millions of dollars to invent something, only so that your competitors can use your invention freely (without having invested a dime or a minute to develop it).

    The innovator would quickly go out of business, while those that did not innovate would profit from using their competitors’ innovations at no cost to them.

    Inventing anything would be a losing proposition if your competitors were allowed to use them freely.

  • John

    I think we all agree that patents are good. The problem is that in recent years the patent office has lowered the bar as to what is patentable. It used to be that there was a requirement that things be novel and not obvious to be patented. That seems to have been replaced with simply something not yet patented.

    Because of the wording of patents and their number there is no way a small developer can know ahead of time if a new product violates patents.

    I don’t know how they’ll put the toothpaste back in the tube, but it would be good to go back to a time when granting of a patent was relatively rare. Granting a patent for the laser, a new antibiotic, the transistor and integrated circuits; great. Granting a patent for Amazon’s one-click; not so great.

  • Ralph

    I think you have your consequences backwards.

    Think about it. If anything invented can be slavishly copied with close to nil investment the guys who benefit are large companies.

    How would new or small guys get anything to market?

  • R Chew

    Thank You for sharing your valid views.

    Yes, Patents are meant to protect and promote innovations from being copied, and in itself its truly a good thing.

    This is especially true for industries such as manufacturing and pharmaceuticals where there is a “catalog” of listed patents so as to avoid infringement.

    However, in the software industry, there are few defining boundaries that tell us which areas are out of bounds. Compounding this, software more than often, builds on what can be interpreted as previous works.

    This makes for a dangerous game of Russian Roulette for mid-small size developers, where the loser will face the unpleasant task of dealing with lawsuits upon or prior to any success of their product.

    In itself, patents – being a good thing – when held in massive amounts by a few powerful parties can be undesirable, in my view this is more detrimental for smaller developers.

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