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  • Haven’t We Had Enough Patent Lawsuits?

    July 20th, 2012

    I find it more and more difficult to read about the daily patent soap opera being played out around the world. First Apple wins this case, and loses another. A British judge recently instructed Apple to run ads stating that Samsung's tablets didn't copy the iPad. This decision evidently comes in the wake of a recent decision that Samsung didn't infringe on any Apple patents. Of course, other judges in other countries ruled that they did.

    Now I have to tell you that this legal by-play is quite confusing. While some of the patents seem to contain fairly clear details about what's covered, some of the inventions are extremely arcane. You have to think that a small company would be forced to hire expensive patent attorneys to make sure they aren't infringing on someone's intellectual property. But this isn't easy to decide regardless, which is why we have this company suing that company, and there seems to be no end in sight.

    I read a published report the other day indicating that Apple and other companies spend more money on legal fees, and patent licenses, than on R&D. With Apple, it's just a drop in the bucket regardless, but smaller companies could sink when they are inundated with such expenses.

    The most troubling issue is just figuring out which, out of thousands and thousands of patents, may cover what appears to be a new innovation from a company's product developers. And since so much of it is subject to legal interpretation, you are lost in gray areas that, in the end, very likely discourages a lot of innovation. At the very least, companies are forced to file patents defensively, not because the invention will ever see the light of day in a real product, but because it might, and they don't want to be caught flat-footed. Apple appears to do that quite often, witness the news about various patent filings that seldom show up in real products.

    Even then, you can see where even the largest companies are often on the losing end. Apple had to make a big settlement with Nokia over patent rights. In the early days of the iPod, Apple also had to write a big check to Creative Labs that covered patents supposedly infringed on with Apple's best-selling music player.

    Now surely Apple didn't intend to violate those patents, and I do not think they just took a chance hoping it would turn out all right. More than likely, teams of attorneys examined each and every element of the iPod's design to determine whether existing patents were covered, and, if so, to prepare to license those patents. But they missed a few. With Nokia, it was very much about industry-standard patents and fair licensing fees.

    As some of you may know, many companies who build smartphones and tablets powered by Google's Android OS have to pay through the piper to Microsoft for various and sundry licenses. Some suggest that Microsoft may earn more than Google from Android, which would be a curious situation. Indeed, if that's the case, Android license payments may also deliver more revenue to Microsoft than licenses for Windows Phone. Now that IS weird!

    In his final years, the late Steve Jobs threatened to go thermonuclear over Google's alleged infringement of Apple patents for Android. In defending themselves against Apple's lawsuits, such companies as Samsung and HTC are, in a sense, serving as proxies for Google. One key reason that Google bought Motorola Mobility was not to acquire a failing mobile handset and tablet maker, but to get ahold of a large patent portfolio that also included a number of industry standard inventions.

    Now some suggest that maybe the patent authorities are being a far too lax in rewarding patents to applicants for inventions that, well, seem a little too generic or even obvious. Amazon, for example, owns the one-click ordering system. You have that same system in use at Apple's online store and elsewhere, but in every case, those companies had to sign up with Amazon to license the rights.

    I don't pretend to be a lawyer, and I don't play one on radio and TV, but I have to wonder why Amazon won the one-click patent in the first place. The fundamentals seem far too generic that it's hard to believe that any single company can claim to have been there first.

    There is now a new patent law in the U.S., the America Invents Act (or AIA), which is supposed to fix some of the problems. But there is a curious provision where a patent is granted not necessarily to the company who uses it first, but the company who files first. In other words, AIA moves from "first to invent" to "first inventor to file," which surely is going to create a mad rush to file something, anything, as soon as possible, and let the patent agency sort things out.

    Unfortunately, it seems the "first inventor to file" provision favors large companies that will have teams of layers in readiness to rush applications as soon as the basics of a new invention are documented. A smaller company that doesn't have a large legal staff at their beck and call may suffer, even though they were there first.

    Some suggest that such things as software shouldn't even be granted patents. I do not, however, want to get into the whys and wherefores of that. However, it is clear to most of you, I am sure, that the current patent system, and even the revised version, will do little to stem the growing number of lawsuits. It's troubling to think how many really smart inventions are never finished because of all the red tape. Is that what businesses and governments really want?



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    3 Responses to “Haven’t We Had Enough Patent Lawsuits?”

    1. dfs says:

      Software is and should be regarded as intellectual property, and as such should always remain copyrightable. Some patent infringement suits are no doubt well motivated (remember the movie about the guy who invented variable-speed windshield wipers?) and should be given a fair hearing in court. These things having been said, it is clear that there's a lot of corporate gamesmanship going on involving frivolous lawsuits, and even some suits being filed by scam artists who are pursuing no legitimate business and exist only to file such suits. Sooner or later the courts ought to run out of patience with such nonsense and simply throw out suits when they are transparently of these latter kinds. That's one way to put an end to the Patent Wars. Another, as I gather, is that it is permissible to take out patents on very vague tech concepts. It seems to me that could easily sit around dreaming up possible technical devices and concepts and take out patents on the general idea involved even if I hadn't the slightest clue how to implement it. Then, if anybody ever did manage to put the idea into practice, I could sue them. The obvious way to end this is for the patent office to demand a higher degree of specificity.

    2. mreed says:

      You got it right when you focused the light on a patent examination system that rewards 'claiming everything under the sun' and encourages lawyers to write patents that even the inventor can't understand.

      But on the questions about "First Inventor to File" vs. "First to Invent", it turns out that First to File actually helps the little guy, and _may_ help improve quality.

      The old system, called First to Invent, meant that you could do your work in secret, polish it up, and then head to the patent office when you had everything just right. This meant that even if some large company popped out with a product while you were finishing yours, you could still go to the patent office and file a claim, and get the reward for "inventing first".

      But this system had both ethical, and practical problems.

      On the ethical side, is it really fair that you, inventing in secret, never showing anything to investors but not "abandoning" the idea, could suddenly lay claim to an invention that someone else independently invented and get paid for it? The fact that you invented it first is nice, but by doing it all in secret you contributed nothing to the world - and you didn't add a single bit of knowledge to the work done by Inventor #2, who happened to get his/her product to market.

      Remember that the purpose of the Patent system, broadly defined in Article I Section 8 of the Constitution as "encouraging progress" is really about trade offs. I put my idea into the public so that others can learn from it and build upon it, and in exchange I get a time-limited monopoly to make money off the idea if I choose.

      I could choose not to patent and just keep it as a trade secret, but then I risk the fact that if someone figures out how I did it (without inside knowledge of course) I have no chance of getting paid.

      On the practical side, small businesses almost never win claims of "first to invent". Lets say Inventor #1 is a small company, working hard to get a product to market with a great idea, they have all the pieces together for their patent claim, but before they file it, Big Company XYZ files several patents (or brings a product to market), including one that could cover #1's invention.

      Inventor #1 reviews Big Company XYZ's filing, looks at who they cite, and realizes "hey, I was working on this long before they even started!" Inventor goes to his lawyer together they file an "Interferences" claim. Under this process, Inventor #1 must show detailed, accurate and verifiable records of every little step in the invention process - notebooks, napkin scraps, you name it.

      The problem is, Big Company XYZ is a whole lot better on record keeping than Inventor #1, who often kept ideas in his head until they were juuuuuust right. Big Company XYZ's mounds of paperwork overwhelm the little guy, and he goes down to defeat.

      This isn't a made up scenario. Former Patent Commissioner Gerald Mossinghoff did a study of Interferences claims and found that, overwhelmingly, the little guy got beat by the big guy including times that it was likely the little guy was actually first. Because it's not about what you know, it's about what you can prove.

      In the end, we are better off with First Inventor to File. Yes, some small inventors will need to change how the patent, yes, there will be small inventors that lose the race to the patent office. But overall, we'll have fewer "surprise!" patent claims, and hopefully, a more orderly and logical system.

      Gene Steinberg Reply:

      @mreed, Great points. But again, the rush to file to be first may just result in lots of junk flowing into the patent offices. Will it make the situation better? I don't think we'll know until this has had a chance to play out over the years. The real problem is granting patents for inventions that aren't all that innovative in the first place.

      Peace,
      Gene

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