In the tech industry, it’s a compliment when one company sues another for copyright infringement—it means the suing company sees its competitor as a threat.
But many people feel things have gotten out of hand, especially in the highly competitive and innovation-dependent mobile device market. Apple is suing HTC. HTC is suing Apple. Apple is suing Motorola. Nokia is suing Apple. And, of course, Apple and Samsung are suing each other, all over the globe.
Apple struck a big blow recently against Samsung, it’s closet rival in the mobile smartphone and tablet market, by getting the new Samsung Tab and certain phones banned in Australia, Germany and the Netherlands. The two are in court in Asia as well.
Many people blame patent law for what they consider overzealous infringement suits and a dysfunctional system overall. They say patent offices worldwide provide patents to vague, low-quality ideas and ideas that are too similar to others, making lawsuits inevitable.
The Organization for Economic Cooperation and Development (OECD) just released a report that illustrates the problem—
“The quality of patent filings has fallen dramatically over the past two decades,” the OECD said. “The rush to protect even minor improvements in products or services is overburdening patent offices. This slows the time to market for true innovations and reduces the potential for breakthrough inventions.”
And then there’s patent trolls. A derogatory term, patent troll refers to a company that licenses patents it never intends to develop—also known as a non-practicing entity (NPE).
These companies rush to patent as many ideas as possible, with the hopes that they can either sell or sue over the patent later on—rather than actually inventing, this is how they make money. Hence the derogatory “troll” moniker. They’re favorites with the Silicon Valley crowd (sarcasm).
According to CNNMoney citing a Boston University study, patent trolls cost innovators $500 billion between 1990 and 2010, based on innovators’ stock performance following lawsuits by NPEs. The study reported that the average lawsuit cost innovators $122 million.
Patent trolls have claimed they protect small innovators who sell them their patents. Some of them have said that they’re innovators themselves. But the Boston University study debunked that notion, according to CNNMoney.
Only 2% of NPE profits went to the small innovators they purportedly protect, and R&D expenses at the “innovating” NPEs only accounted for 2% of the $500 billion in revenue lost between 1990 and 2010.
President Obama just signed a new patent law that decides patents based on who files first rather than who created first, which brings the U.S. in line with how most other nations do it. According to Gizmodo, the law will supposedly make the whole process faster and more efficient, but it won’t affect patent troll lawsuits.
So, unfortunately, it looks like the Apple vs. Samsung drama will continue. Apple is set to unveil the iPhone 5 next week. Samsung, still reeling from having its new tab and smartphones banned, is seeking an injunction to block sales of the iPhone 5.
In any case, it’s always interesting. Dysfunctional, but interesting…
