Blame Congress, Not Apple, for Patent Woes

By

apple_patent_20090100384_iphone_contacts_app_variable_row_height

 

Apple is mixed up in all kinds of patent issues. As a result, the company has been accused of unfairly trying to kill Google’s Android platform, and of being a “patent troll.”

But such criticism is misplaced. First, the accusations are false. Second, the real blame should be reserved for the US Congress, which has the power to fix our broken patent system, but year after year fails to do so.

Don’t Blame Apple

Apple is currently embroiled in a patent battle with Korean electronics giant Samsung. It started when Apple filed a lawsuit against Samsung in April. Apple claimed that Samsung’s Galaxy line of phones and tablets infringed on iOS device patents in 16 specific ways and  “slavishly” copied the “look and feel” of the iPhone and iPad.

Samsung, which is a memory chip supplier to Apple, countersued in several countries.

Apple actually won an agreement to stop selling Galaxy tablets in Australia until the dispute is settled. And the US International Trade Commission has agreed this week to look into Apple’s claims.

Apple and Samsung are currently the world’s two largest makers of smartphone handsets.

Apple also sued Taiwanese electronics maker HTC for infringing on two patents involving techniques for two basic software operations (not look and feel), and won a preliminary ruling from a judge in California.

What’s interesting about the case is that while Apple sued HTC, the technology in question exists in all Android devices. As a result, some have expressed fears that Apple could shut down Android. But these fears are overblown. The most likely outcome is that Android handset makers would have to pay Apple a licensing fee, or Android will be re-designed to avoid the patents.

Patents almost never result in smart phones being pulled off the market. The best-case scenario for the patent holder who successfully sues is a licensing deal. One stellar example is that Microsoft makes more money from Android than it does its own Windows Phone product. Android handset makers have to pay Microsoft to license some of its patented technology.

These lawsuits have also prompted some to accuse Apple of being a patent troll. But in both cases, and unlike many patent lawsuits in technology, Apple is defending its own inventions and designs against companies it claims have copied or imitated them.

In the case of the Samsung lawsuit, Apple is trying to prevent the commoditization of designs that copy Apple’s. Because Apple’s iPad is the only successful touch tablet on the market, dozens of companies are clearly trying to get as close to the iPad in look and feel as possible. If Apple doesn’t challenge these attempts in court, then all touch tablets on the market will resemble the iPad, at least superficially, which would enable competitors to profit from Apple’s design and engineering work and investments.

And in the HTC case, Apple is pointing to methods used in Android that it claims infringe on its own patents.

This is exactly the purpose for patents. There’s nothing trollish about it.

The US Constitution clearly spells out the purpose of patents: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

A patent troll is any person or company that stockpiles patents in order to make money from lawsuits, rather than products. A typical troll company doesn’t actually design, invent, manufacture or sell anything — they just acquire patents, then sue companies in order to profit from the settlements. Others, such as Nathan Myhrvold’s Intellectual Ventures, does actually invent patentable ideas (but has so far failed to productize any of them), and also buys patents.

Apple is the opposite of a troll. The company invests incredible resources into original design and unique engineering. It then manufactures and sells products based on this internally generated intellectual property.

But even trolls shouldn’t be blamed for the patent problems.

Don’t Blame Patent Buyers and Sellers

A legal system that fails unless people are virtuous is a bad legal system. Trolls are an inevitable product of the system, which allows almost any idea to be patented, allows those patents to be bought and sold on the open market, then challenged and defended in the courts.

Patent trolling is legal and profitable, and therefore is going to take place. The problem is that the system allows it.

The system also allows something akin to trolling, which the purchase of patents solely for protection.

In recent months, multiple companies have engaged in bidding to acquire huge patent portfolios from the likes of Nortel and InterDigital, mostly around mobile technologies. Investor Carl Icahn is pressuring Motorola to sell off its portfolio of some 17,000 patents.

The biggest patent portfolio on the market right now is the one that could be sold by InterDigital. Both Apple and Samsung are among the potential buyers. If either of them gains ownership, which could cost some $5 billion, the buyer will be in a position to hammer the other for patent infringement.

Smart phones are patent nightmares because they have so many patentable parts. Every single smart phone in existence today theoretically violates hundreds of patents. There is no way to build a smartphone without technically violating patents.

This is why companies want to buy up as many patents as they can: Patents are weapons. And the buying of patents is part of a global arms race. If your competitor buys patents by the truckload, you have to, too, because the ability to countersue is a deterrent.

Because of the current patent system, the relative price of any company’s products is dictated in part by patent holdings. Patents can force rivals to pay fees — Microsoft is demanding $15 for each Android phone sold — and also free a company from having to pay fees to rivals.

So for a consumer electronics giant like Apple to avoid the purchase of other companies’ patent portfolios is the same as voluntarily raising prices on its customers and lowering the prices of competing products. Why would any company choose to do that?

Blame Congress

Everybody knows our patent laws suck. They harm, rather than help, innovation. They damage the economy. They give the United States a disadvantage in the global marketplace.

Patents are allowed to be too broad. Software is patentable just like “hardware inventions,” with almost every line of code potentially patentable.

Non-expert judges have to rule on patent cases without enough help from experts.
The biggest effect of the broken patent system is that companies, inventors and engineers waste far too much time generating idiotic patents just to protect themselves, time that could be better spent doing more inventing.

The second biggest problem is that the ability to buy and sell patents like they’re oil futures disadvantages smaller inventors. A startup seeking to build a new kind of smart phone would have no chance against the Apples and the Googles and the Microsofts of the world, as they would be crushed by patent litigation or licensing fees.

If you listen to the critics, the fault lies with Apple, as well as Microsoft, Google and all the other companies that own, buy, sell and license patents. Or you’d blame the patent trolls for trying to make money from current patent law.

But the real blame lies with the US Congress, which knows the patent system is broken but is too busy posturing for news cameras and fighting ideological wars to fix it.