The Patent Game

  • Posted: 22 June 2011 02:33 PM

    I have mixed feelings about what is happening with the current patent litigation. (As many of you know, I am a recovering Attorney, but I have no experience in Patent law, which is considered a specialty.)

    1) The Patent system is definitely broken. Unlike others who feel this way, I have no ready solutions at hand. Part of me things we should just chuck the whole system. It’s not working anyway, so take away the artificial barriers and let it be a technological race with the fastest being the winner.

    On the other hand, saying that the patent system doesn’t work probably sounds ludicrous to the thousands upon thousands of companies that are bringing in millions upon millions of dollars in patent licensing revenue. Tossing out the patent system, or even trying to fix the patent system, may cause far more damage than good.

    2) MAD: Mutually Assured Destruction. Not long ago, MAD was the Patent strategy that prevailed. The consensus thinking was that everybody had patents and that if you sued someone else they would just sue you back no matter who “won” everybody would end up losing due to years of court costs, uncertainty and eventual patent license fees.

    3) Take No Prisoners. Apple seems to be taking a very aggressive stance on patents. They are suing a lot of people for a lot of things. On the one hand, it’s exciting to see them aggressively defending their patents. On the other hand, see MAD, above. They are poking a stick at every bear they see. One of them might just wake up and swat them hard.

    I bring all this up because Apple was granted a powerful and powerfully broad patent today. This could be the cudgel that Apple uses to beat back the competition. Or it could just escalate the war on patent to new, maddeningly confusing and unsatisfactory heights. Who knows. But based on Apple’s recent patent litigation history, I expect that we’ll be seeing some brand new suits or some amended suits any minute now. Counting 3….2….1…..

    Apple iPhone Patent a Huge Blow to Rival Smartphone Makers

    Damon Poeter

    Apple has been awarded its long sought-after patent on the iPhone. Intellectual property experts say it’s so broad and far-reaching that the iPhone maker may be able to bully other smart phone manufacturers out of the U.S. market entirely.

    ...there’s one thing patent experts consulted by PCMag agree on?Apple has been awarded an incredibly broad patent that could prove to be hugely problematic for other makers of capacitive touch-screen smartphones.

    Apple’s patent essentially gives it ownership of the capacitive multitouch interface the company pioneered with its iPhone, said one source who has been involved in intellectual property litigation on similar matters.

    What’s more, the patent seems broad enough in scope to cover virtually any mobile device with an interface that incorporates the finger movements used to operate Apple’s touchscreen devices, the source said.

    That means tablets that are similar to Apple’s iPad, and media players with iPod Touch-like interfaces could also be targets for Apple’s legal team.

    Unless this patent becomes invalidated, it would allow Apple to stifle innovation and bully competitors.”

    I think I could say that about most every patent. And that’s a big part of the problem.

    If Apple does decide to play hardball and squeeze out rivals rather than set up cross-licenses, the source said, it’s entirely possible that a court could find it in the public interest to scrap the patent rather than allow a monopoly on what has become a defining interface for an entire category of consumer devices.

    Isn’t that the whole point of patents? To give one a legalized, if temporary, tech monopoly in reward the inventor for creating and then sharing that technology?

    I’ve got nothing but questions. Perhaps you all have some answers (or at least some wildly uninformed opinions!) to share with me.

         
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    Posted: 22 June 2011 02:42 PM #1

    I don’t know the answers to your questions, but I suspect that one reason Apple keeps a large chest of cash is to be able to respond financially when they need to settle one of these patent lawsuits (as they did recently).

         
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    Posted: 22 June 2011 03:04 PM #2

    I say license it to all for an hefty fee.

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  • Posted: 22 June 2011 04:04 PM #3

    I think the more interesting patent is Apple’s Gestures for touch sensitive input devices referenced in the iPhone patent.

    Lots of claims about multi-touch along with intuitive user interfaces (inertia, wheels, zooming, virtual keyboard, etc.)

         
  • Posted: 22 June 2011 04:36 PM #4

    Although I have had some experience with patents I am far from an expert.  That out of the way, this could be a game changer.  The patent seems to read not only directly and broadly on what Apple is practicing, it reads directly on what Apple’s competitors apparently have copied.

    The patent was filed in 2007 and has been in the patent office long enough to have been pretty thoroughly vetted.  It would be interesting to see the jacket and look at the potential prior art the PO cited, and the counter-arguments raised by Apple.  In my mind the biggest question is whether there is any relevant prior art that they have missed.

    There has been a tendency in this industry to ignore patents under the assumption that they will either turn out to be invalid, or that that when push comes to shove a license would become available.  IMO this is stealing intellectual property and really is no different morally than counterfeiting software and DVD’s.  But that’s me.

    Assuming that the patent holds up I can’t see Apple getting a permanent injunction against using their technology in phones.  Too much of an uproar.  A fifteen dollar per unit license fee sounds reasonable to me.  This would probably sink a few of their rivals but leave the market open to competition.

    As far as Google is concerned, they mostly do not manufacture phones so I don’t believe they would have to pay directly.  Maybe they can be accused of aiding and abetting.  I would think that the cell phone manufacturers would try to get them to pay at least part of the cost.

    As a side issue, I get the impression that Google plays fast and loose with other people’s technology, and if I am right I would not be unhappy if they have to pay for it.

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  • Posted: 22 June 2011 04:57 PM #5

    Of what benefit is the touch screen without the software?

    Google should be a defendant. Or licensee.

    [ Edited: 22 June 2011 05:50 PM by danthemason ]      
  • Posted: 22 June 2011 05:48 PM #6

    I do not believe that the market understands the importance and value of this patent. This is potentially huge. HUGE!

    I presume the correct business move will be to license the technology rather than prohibit it’s use.

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  • Posted: 22 June 2011 06:32 PM #7

    jeffi - 22 June 2011 08:48 PM

    I do not believe that the market understands the importance and value of this patent. This is potentially huge. HUGE!

    I presume the correct business move will be to license the technology rather than prohibit it’s use.

    You may be right, Jeffi, I don’t know.

    The people over at ThisIsMyNext think that this patent may be more focused and less of a big deal that it’s being made out to be:

    Apple granted patent on webpage scrolling behaviors, media granted patent on crazy

         
  • Posted: 22 June 2011 07:16 PM #8

    FalKirk - 22 June 2011 09:32 PM
    jeffi - 22 June 2011 08:48 PM

    I do not believe that the market understands the importance and value of this patent. This is potentially huge. HUGE!

    I presume the correct business move will be to license the technology rather than prohibit it’s use.

    You may be right, Jeffi, I don’t know.

    The people over at ThisIsMyNext think that this patent may be more focused and less of a big deal that it’s being made out to be:

    Apple granted patent on webpage scrolling behaviors, media granted patent on crazy

    The claims are rather focused but they appear to cover what Apple actually does, and also what most, if not all, Android users do in practice.  Unless the patent is overturned it appears that android phones are infringing.  As such, Apple is due some sort of compensation.

    It probably is true that there are other ways to accomplish the same thing, but in the meantime they infringe.  Other ways of moving pages are probably more cumbersome.  I suspect that it would be easier to license than provide a product that would be more inferior, especially for tablets.  Potentially a very big win for Apple.

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    Posted: 22 June 2011 10:25 PM #9

    Fal, as a lawyer you know a bunch of lawyers are meeting now to fight over what they think this actually says. rolleyes

    To me the first iphone was ground breaking and artful. The UI was so different than what had ever been tried that Apple has suffered greatly from companies basically copying the design. Samsung has a phone out that practically looks exactly like the 4. I actually saw a phone in Jamaica that on the outside looked exactly like a 4, but when you turned it on it was obvious that it wasn’t.

    I say “release the hounds”. :-D

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  • Posted: 22 June 2011 11:02 PM #10

    I still remember Steve saying, ‘and boy, have we patented it’ (or something very similar) during the 2007 introduction. I always wondered why there were no suits being launched, so I guess this is the reason.

    It sounds like this could be big, is the tiny coverage and lack of market reaction because the market thinks this patent will not be enforceable and will not generate real royalties that both provide revenue as well as improve iPhone’s competitive position? Or, are just waiting for a delayed reaction?

         
  • Posted: 23 June 2011 12:55 AM #11

    cranium - 23 June 2011 02:02 AM

    I still remember Steve saying, ‘and boy, have we patented it’ (or something very similar) during the 2007 introduction. I always wondered why there were no suits being launched, so I guess this is the reason.

    It sounds like this could be big, is the tiny coverage and lack of market reaction because the market thinks this patent will not be enforceable and will not generate real royalties that both provide revenue as well as improve iPhone’s competitive position? Or, are just waiting for a delayed reaction?

    The patent law is broken but not so broken that Nortel’s patents have value.  MacRumors is running an update to the aforementioned story that suggests Apple may not have won such a big victory.

    http://www.macrumors.com/2011/06/22/apple-wins-wide-ranging-patent-on-iphone-user-interface/

         
  • Posted: 23 June 2011 01:20 AM #12

    mbeauch - 23 June 2011 01:25 AM

    I say “release the hounds”. :-D

    This speaks to the lawyer in me in a very real and profoundly disturbing way.

    Oh, what the hell! Sue them all, damn it, sue them ALL!

         
  • Posted: 23 June 2011 01:39 AM #13

    n00ber question…..why the heck is this news not in headlines? I would expect news like this blow up AAPL stock.

    The way I see it, “All your base belong to us”

    As PC Mag said, “It’s like owning a patent on water in Africa”...lol

         
  • Posted: 23 June 2011 01:55 AM #14

    >>The people over at ThisIsMyNext think that this patent may be more focused and less of a big deal that it?s being made out to be:

    The people at Thisismynext are full of it.  This is huge.  A finger scroll is the essense of modern touch interface (along with tap, and pinch to zoom.)

    Let’s see..
    1. wall street ignores the iPhone launch, leaving apples stock at $78/share in 2008/209
    2. wall street dismisses iPad launch, leaving Apple stock in 200’s last year
    3. wall street does not react to iClound announcement, stock goes to $310.
    4. wall street ignores patent award on touch - stock is still at $320

    Thank you, wall street, for the opportunity.

         
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    Posted: 23 June 2011 12:46 PM #15

    Patents are a government granted monopoly. They are not a birthright, they are a privilege granted by the government and enforced by its courts. They need a market price, pure and simple. Another of the many ideas I’ve seen for patent reform is to impose a tax on the patent, perhaps 10% of revenues generated by the covered invention. If you fail to disclose use of your patent in a product (and this avoid the tax), the patent can be challenged and revert to the public domain. Yeah, you’d need some kind of accounting board to specify how to assign portions of covered patents to revenue stream, and it should be an accounting challenge for patent hoarders. Placing the patent in the public domain eliminates the tax burden of applying it. So the higher the tax, the more incentive companies have to market a product on its own merits rather than using the threat of courts against competitors.