By Greg Mills
The tech news has had a lot of stories regarding patent enforcement suits lately. Apple is plaintiff in a number of suits against almost every other electronic device company out there. The smartphone war is being fought in both the market place and in the court room.
You have certainly noticed the notation something like US 7,554,332 or Patent Pending on many of the products you buy. Those numbers are US patent serial numbers as some aspect or design element of the product has been found by the US Patent Office to be not obvious and both novel and useful. US Patents have evolved over the years, but, actually, the right to patent novel inventions is specifically provided for in the US Constitution.
The US government has the sole authority to issue US patents. The US Patent office wades through hundreds of thousands of patent applications each year. A lot of patent applications are denied, and a patent is never issued for the invention as the PTO (Patent and Trademark Office) has found that the invention actually was invented earlier by someone else. Another reason patent applications are bounced is because of obviousness.
Obviousness is in the eye of the beholder. Sometimes what seems obvious when you hold it in your hands was not so obvious when the inventor struggled to create the new product. Sometimes the invention is so breathtakingly elegant that it seems like anyone skilled in the trade could have created it. But if they didn’t create it and someone who was working on the problem did create it, there may be a dispute over the obviousness of the invention.
I saw a chart showing who was suing whom in the smartphone business. It reminded me of a bowl of spaghetti and meat balls. The scramble to innovate and patent smartphone technology has been amazing. The billions of dollars at stake have pitched Apple, Google, Microsoft, Nokia, RIM, HTC, Samsung and a host of other companies into a mud wrestling pit where those with the most patents tend to win.
A trend has emerged where the actual authority to enforce US Patents, the US Federal Court System has become so bogged down, the players have turned to another venue to effectively enforce their US Patents. The US International Trade Commission has the power to stop the importation of any product that infringes upon any valid US Patent. The ITC moves much more quickly than the Federal Courts but has no power to award damages or to actually invalidate patents that were erroneously issued by the US Patent Office, in the first place.
It takes at least a couple of years and often much longer to work a patent through the PTO. It takes even longer to take a patent infringement suit to trial in a Federal Court. The time it takes for inventions to be protected and enforced is so long, the technology is often obsolete by the time a Federal Judge bangs the hammer down on his desk. Then the appeals start which takes years and hundreds of thousands of dollars to press. The patent system is indeed broken. The quality of patents issued is also disturbingly flawed, quite often.
Patents once issued are only a license to sue to protect what was patented in Federal Court. The US International Trade Commission has developed a much faster method of enforcing infringement if the resulting product is imported. Since the cost of making things in the Untied States is normally prohibitive compared to the likes of China, most everything is manufactured somewhere else around the world. Even US companies like Apple are subject to the International Trade Commission as nearly everything they sell is imported from the country where it was assembled.
Findings of infringement by the ITC can make or break a company long before a Federal Law suit can be heard. The way if seems to work is that companies file complaints against each other and the ITC staff sorts the complaints out using the same logic that the US Patent Office and the Federal Court use, but on a much faster track. With an order to stop importing a product that infringes on a valid patent, the actual stopping of the import of offending products at the dock may be followed later by a similar finding by the Federal Courts and an award of damages.
Often the best way to settle patent disputes is to agree on a royalty rate and damages for prior importation and then both companies go on. Sometimes the companies will cross license each other on patents they both need to freely import their products. Having a large patent portfolio is very helpful in the horse trading and royalty settlement game. You can play hard ball and not accept a royalty forcing infringing products to be banned. Apple is unlikey to license its technology unless they are forced to cross license patent rights. HTC is very worried right now.
Google, with its Android OS, has a remarkably small patent portfolio and that is why they were so disappointed when Apple and the rest of the gang won the recent Norvel Patent auction by out bid them. Apple intends to beat Android in the ITC and the courts and compete in the market place with innovation. The competition between giants companies with billions of dollars to throw around has jacked up the value of patents remarkably.
Companies that are patent rich and cash poor are now offering their patent portfolios to cash rich companies. Look for Apple to buy both patents and companies that own relevant technology rights as the smartphone legal saga goes on. The slate computer market is also going to foster serious spats that have already been filed but not heard yet. I would not be surprised to see Apple buy Kodak, for example.
When you hear sour grapes from HTC that Apple isn’t playing fair by suing, instead of ignoring the ovious infringement of valid Apple patents and not just duking it out in the market place “man to man”, you can feel their sense of impending doom. Even Google, when they lost the Norvel patent auction publicly stated that the patent process is broken. I agree, but you have to work with the system that is in place and Apple is doing that.
That is Greg’s Bite for today
