Tech patent
wars: a lose-lose situation
Apple vs
Samsung, Microsoft and Google... Are patent lawsuits out of control? Who wins
and who loses? Eric Mack examines what’s at stake
These days, mobile-technology patents and
lawsuits go together like bread and butter. Previously, patents primarily
served to help companies protect their intellectual property; now. Apple, HTC,
Microsoft and smaller companies are using patents as leverage, suing one
another in an attempt to gain the upper hand. The trend, experts say, is
quickly spinning out of control, and hurting consumers when it comes to
mobile-gadget choices and prices.
Mobile-handset-related lawsuits are up
25 percent year on year since 2006, according to Lex Machina, an intellectual
property litigation firm. Blame for this increase lies with the technology
landgrab involving mobile companies that are eager to get a slice of the
billions of pounds at stake in the fast-growing mobile arena, said David Mixon,
patent attorney for Bradley Arant Boult Cummings.
“It may not be how the patent system
was envisioned to operate, but this is the way that the business has evolved
among these tech giants - because there’s so much money at stake, and it’s so
competitive, and the marketplace is changing so rapidly,” said Mixon. “Everybody
is desperate to secure any kind of competitive advantage that they can in the
marketplace.”
What is a patent worth?
Microsoft upped the Android-patent
ante recently drawing up its 10th patent-licensing deal with China-based
handset maker Compal Electronics. It already has inked deals with Acer, HTC,
Samsung and six other Android handset manufacturers, charging each for using
its patents in their smartphones, although Microsoft is struggling to get its Windows
phone 7 platform to compete against apple and the Android army, its Android
patents are estimated to earn the company $444m in 2012 in licensing
agreements, according to Goldman Sachs. Those numbers are based on projected
royalties of $3-6 per device.
The mobile industry: Lawyering up
When someone doesn’t pay Microsoft, or
any other mobile patent holder, the lawyers roll up their sleeves. Hundreds of
patents are buried in smart phones. Not only are a phone’s camera, chips, and
other outs patented, but so too are specific features, such as the ‘swipe to
unlock’ function on the Motorola milestone. The method an iPhone uses to
receive email, and the structure underlying in-app purchases (like those that
allow you to buy game levels inside a mobile app).
Such phone functions are at the heart
of patent lawsuits affecting mobile firms large and small. For example, a
company called Lodsys asserts that it owns the sin-app payments’ patent, and it
has taken dozens of third-party iPhone app developers to court, demanding
compensation.
When patents are your business
Florian Mueller, a patent expert and
analyst, and writer of the Foss patents blog, thinks Lodsys represents what are
known unflatteringly as ‘patent trolls’. Mueller said that Lodsys is going after
app developers - particularly small developers - unfairly, exploiting a patent
that it may never use itself just to make money.
Those small developers a rent able to
defend themselves properly, and often they find it easier to pay licensing fees
or penalties rather than battle it out in court. “Even a basic analysis of an
infringement assertion, no matter how spurious it may be, costs them huge
amounts of money by their standard, Mueller said.
Lodsys bristles at the notion that
it’s doing anything unethical. In a blog post, Lodsys defends itself, stating
that it’s simply protecting technology it rightfully owns and seeking
undisclosed compensation from app developers that have made money off the back
of its patent.
However, Lodsys’s patent claim is just
the tip of the iceberg - the patent wars are raging. Oracle is suing Google
over the use of java in Android. Apple is suing HTC, claiming that its phones
copy the phone. And Microsoft is suing Barnes & Noble over its Nook
e-readers and the way the devices allow users to tab between screens.
Stifling innovation?
Patent battles are undoubtedly costing
the wireless industry billions of pounds - an expense that companies end up
passing down to the consumer, indirectly.
But just how much all this patent stockpiling
and legal feuding is stifling innovation is hard to quantify. Mueller points
out that the amounts of money that big-name companies such as apple and Google
are spending on patent warfare are relatively small.
HTC America president Martin Fichter
disagrees, however. At a recent mobile future forward conference in Seattle, Fichter
complained that patent battles distracted wireless companies, as they waste a
lot of time and energy litigating instead of developing new technologies and user
experiences, according to a GeekWire report. He said that the wireless industry
needs to “stop itself from wasting all this energy that should go into putting
better technology into people’s hands.
In other words, when a company is too
busy looking over its shoulder and worrying whether someone is ripping off its
patents, customers lose out.
The patent wars get worse
Fichter is speaking from experience.
In September, HTC acquired several patents from Google and countersued apple,
alleging that the company had violated four of its patents. It claims that
apples Mac, iPhone, iPod, iPad, iCloud and iTunes violate a patent that allows
the devices to upgrade their software wirelessly.
Many industry observers see the fight
between apple and HTC as a prelude to a larger battle between apple and Google.
The late Steve Jobs famously called the Android operating system a rip-off of
the iPhone. Apple has yet to sue Google directly, deciding to go after Android
proxies instead.
In august, apple prevented Samsung
from selling its Android-based Galaxy Tab 101 tablet and its Android-based
Galaxy S smartphone in parts of Europe including - briefly - the UK. Apple has
convinced both a Dutch and a German court that Samsung is in breach of its
patents.
Goode, with relatively few mobile
patents at the beginning of 2011, paid $l2bn to acquire Motorola, adding 17,000
patents to its war chest by including the (now-defunct) patent for the original
mobile phone. At the time of the acquisition, Google said the Motorola patents
would help it build a stronger patent portfolio and deter intellectual property
lawsuits.
Experts say the current patent wars
are following a familiar pattern of new technologies. In the early days of the PC,
for instance, computer makers often slugged it out in court, fighting over
patents. The wireless industry will likely follow a similar patent-lawsuit
trajectory.
