In America, filing for a patent is simple, and a patent is often approved by clerks with no actual knowledge of the technology in question. That makes it all too easy to file for frivolous, overly broad patents… then sue other companies for massive pay outs when they unknowingly infringe.
You don’t need any more information to recognize that the entire patent system is completely broken than to just mull over the fact that Apple is being sued over the iPhone’s camera by a small company made up of exactly two lawyers and six staff members whose entire business is patent infringement. And Apple is likely to pay.
The firm, St. Clair Intellectual Consultants, Inc. (or SCIPC), doesn’t actually manufacture hardware: instead, they purchased the rights to the patents of a small digital camera start-up, and now sue people who infringe. The patents SCIPC purchased were ridiculously broad: they cover technology that allows digital cameras to store images in different formats.
That’s right: any digital camera in which you are capable of changing the format of the stored image violates SCIPIC’s patents. That means every digital camera infringes SCIPIC’s patents. Right now, though, they’ve got the iPhone squarely in their sights.
In a patent system that wasn’t hopelessly broken, a patent like this — even if approved — would quickly be overturned for being overly broad. But SCIPC has won a series of heavy payouts from leading manufacturers in the past, including $3M from Fujifilm, $25M from Sony and $34.7M from Canon. It doesn’t end there: six other companies have also settled with SCIPC for a total of more than one hundred and twenty million dollars, with SCIPC’s two layers taking home 35% of each payout.
It would be nice to see Apple throw all of their legal weight at these patent trolls, but my guess is that they will settle. Their past success in getting judgments from companies like Canon and Sony has got to be worrying to Apple, and on their part, SCIPC seems to choose the amount for which they are suing to be digestible by big companies. Paying $21.5 million to SCIPC is more than they should get, but it’s a mere drop in the pool of Apple’s iPhone profits. Apple can afford to pay to make the headache just go away.