The tech patent war: We’re all paying for it

patent lawsuit infringement wars legal

The courts are alive with the sound of patent lawsuits as the big boys of tech face off, armed to the teeth with piles of patents and armadas of lawyers. While many companies bite the bullet and agree to licensing agreements or out of court settlements, some of the biggest names around have decided to duke it out in the courts. Like it or not, the patent war seems to be escalating and it’s beginning to affect us all. What is war good for? Absolutely nothing.

Who benefits from patent disputes? Lawyers certainly do, but they aren’t alone. Microsoft, for example, is raking in millions in revenue from licensing agreements it forced on Android device manufacturers. In the end, we, the humble consumers always ends up holding the bag. Costs don’t evaporate. You can bet the cost of legal fees and licensing agreements is passed along to us.

All out patent warfare

Not a week goes by now without a new front opening up in the patent war. Lately, Nokia warned Google about the Nexus 7 and it seems like only yesterday that Samsung failed to lift the Galaxy Tab ban after an Apple lawsuit. An import ban on some Motorola devices begins today as well.

For the last few years, all the tech giants have aggressively pursued bulk numbers of patents on everything you can imagine, amassing patent stockpiles by purchasing them from failing companies. We’ve been living through the cold war of the tech industry. If the big players could align themselves into pacts and share patents to avoid an outright victory for anyone then surely going to war in the first place would be crazy, right? Maybe not.

Older tech giants like Apple and Microsoft struck first. Though they have different goals and strategies, both have ruthlessly attacked Android manufacturers like Samsung, Motorola, and HTC. As tech veterans, they have the deep pockets needed for a long term war, but their targets have shown that they’re happy to fight fire with fire. Now everyone is firing off lawsuits, bogging down the entire industry in a hugely expensive quagmire of a patent war.

Patent lawsuits over smartphones

Microsoft is strutting around like a patent mafia, demanding protection money from a string of Android manufacturers. Rather than fight in the courts, licensing agreements are the aim. Thanks to licensing deals with LG, HTC, Samsung, Acer and many smaller companies, Microsoft makes more money from Android than it does from Windows Phone.

Apple isn’t interested in licensing deals. It simply wants to destroy the competition because it believes everyone is copying the iPhone and iPad. So far, Apple lawyers have gone “thermonuclear” (as Steve Jobs put it) on any perceived infringement and shrugged off negotiations in favor of court. Apple vs Samsung has been the heavyweight clash of the patent war so far and while it looks like Apple is winning, Samsung certainly won’t lie down and admit defeat. Apple also sued Motorola, HTC, and many others. Most of them counter sued. 

Google belatedly entered the arena to protect its many Android partners by looking to secure some patents. The company was all set to sweep up a bunch of Nortel patents for $900 million when a consortium including Apple, RIM, and Microsoft outbid Google and got the package for $4.5 billion. Google responded by buying Motorola Mobility for $12.5 billion. Motorola is engaged in legal battles with Microsoft and Apple.

As if all that wasn’t enough we have Nokia suing Apple, RIM suing Kik, Kodak suing Apple and HTC, patent company NTP suing everyone, the list just goes on and on.

Can we drop the innovation lie?

Surely it’s time that we dropped the “patents are good for innovation” lie. The opposite is clearly true, especially in the software world where developers can be shaken down and even put out of business by the threat of patent lawsuits. This idea that no one would research or develop anything if they couldn’t patent it and make enough profit doesn’t hold up. Does anyone honestly believe that we wouldn’t have the light bulb or the iPhone without patents?

The open source movement has recognized the barrier that patents create and proven that more innovation results from an open source approach. We wouldn’t even have iOS or Android without open source development. It can be profitable too. Take a look at Facebook’s recent Open Source release.

The system is broken

Even accepting that patents are a good thing, the problem isn’t the fundamental idea of a patent. The problem is that the current patent system is hopelessly broken. Too many patents are being granted (nearly 225,000 in 2011 alone). The US Patent & Trademark Office is hopelessly backlogged and thousands of patent applications are flooding in each week. Inevitably some patents (or a lot of patents) slip through that probably shouldn’t.

Getting a patent approved costs money. On average it costs thousands of dollars and so the process clearly favors companies with money to spend. Even if you have a patent you still need the cash to prosecute any infringement and equally if a patent lawsuit is threatened against you then you need the cash for a defense. It’s often simpler to just agree to cough up a licensing fee.

The ability to buy patents seems to fly in the face of their original purpose. If patents are designed to protect and reward the innovators of something new then why can they be bought and sold at all? Why should we uphold the rights of someone who bought a patent in order to sue people? Even if you believe patents are a hard-earned reward for inventors and research dollars you must admit that the principle is now being abused.

Let’s call the whole thing off

What if we just scrapped patents altogether? Would society fall apart at the seams? Would capitalism implode? Patent defenders complain about a modern attitude or expectation that everything should be free but some of us find the idea that you can secure a bunch of patents and then impose big licensing fees equally offensive. The system is being exploited by companies with the means to do so and it is being used to enrich an already rich minority.

The average person in the street would probably agree that if you spend ten years developing a new method of refrigeration that’s more cost effective than existing methods then you should get a monopoly to enjoy the benefits for a limited period. That’s effectively what a patent is. I also think the average person in the street would agree that you shouldn’t be able to patent something like a swiping finger gesture to unlock a smartphone.

So we do need patents for some things but let’s limit those things.

Death toll rising

Returning to the Apple and Samsung theater of patent war, we can see the damaging end result of legal battles, that’s no doubt why such a large percentage of patent infringement lawsuits settle out of court. Their determination to fight their competitors on any front they can find is extremely aggressive. Apple isn’t really looking for a licensing agreement; its execs are trying to kill a competitor by any means possible. If you want to enjoy the things that Apple managed to secure patents on then you have to buy them from Apple. Seeking an outright ban on competing devices seems to be completely at odds with Tim Cook’s claim that he’d “prefer to settle.” If that were really true then he’d take a leaf out of Nokia’s book and make grumbly noises about settling and then follow Microsoft’s lead and offer terms that competitors can accept. Either way all this fighting means higher costs for manufacturers.

For consumers this patent war is eliminating choice, hurting competition, and leading to higher prices. Apple’s victory against Samsung over universal search on the S3 seems like a perfect example, the feature will now be stripped away so that sales of the device can’t be blocked. It’s tough to see any positives coming out of patents these days. Perhaps Microsoft and Apple will make out okay, but in the end, we seem destined to suffer for it.

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