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Apple vs. Nokia vs. Google vs. HTC
Lanxon writes "Wired has published a lengthy investigation into the litigation underway among some of the world's biggest cell phone manufacturers, and what it means for the industry of patent lawsuits and patent squatting. 'According to a 2009 report by PricewaterhouseCoopers, from 1995 to 2008 non-practising entities [patent trolls] have been awarded damages that are, on average, more than double those for practising entities. Consider Research In Motion's 2006 payout of over $612 million to Virginia-based patent-holding company NTP, to avoid its BlackBerry network being shut down in the US. As part of the settlement, NTP granted RIM a licence to use its patented technology; it has subsequently filed lawsuits against AT&T, Sprint Nextel, T-Mobile, and Verizon.'"
How long before "Non-Practicing Entity" goes from harmless-sounding euphemism to sinister dysphemism, the way terms like "Ethnic Cleansing" have?
I agree that Nokia vs. Apple/Apple vs. Nokia isn't a Mexican standoff but that Nokia probably owns the far more fundamental mobile patents. However, the problem that Nokia has in this is that its most fundamental patents in the mobile space are part of GSM and other standards. That fact doesn't expropriate Nokia but at some point they could come under pressure that those are patents that should be made available on RAND (reasonable and non-discriminatory) terms. Then Nokia could argue that it is, in Nokia's view, not at all unreasonable to ask Apple for a cross-licensing deal because otherwise Apple could exclusively control some of the more recent technologies (multitouch etc.) while Nokia (and similar vendors) would be expected to grant licenses to their patents only because they're part of older standards definitions.
Apple faces the typical problem of a late entrant: even if you obtain some patents on new technologies, you still need the underlying old technologies and those patents are generaly still valid, given that patents expire only after 20 years (except for a failure to pay renewal fees, which won't happen if the patent holder is Nokia and the patents are valuable). That's why in an area of incremental innovations patents may not be even remotely as helpful to innovative late entrants as many people are led to believe.
In terms of waster pistol vs. aiming a cannon, I think this also applies to the Apple/HTC situation and HTC's announcement of yesterday that it's now (counter-)"suing" Apple.
I'm 100% with you. Of course, I'm wondering what the standard for demonstrating active development would be? Also, who would be checking to see that they're actually doing something with it?
Clearly, we couldn't take the company's word for it. If they did decide to waste money by pretending to do development, it would at least introduce some risk to the trolling company in terms of cost. Also, faking records would be quite interesting to the SEC.
If we can answer these questions, we could finally stop bitching about patent trolls and try to do something about it... Like getting in the ear of our lawmakers, and trying to get them to realize how bad this is for the economy. The finishing move would be: Bad economy -> The more likely you'll not see the other side of the next election.
That's insane. That would remove all protection from the traditional lone inventor who comes up with something useful and wants to sell it to the big companies. In effect you'd be saying that you can't invent anything unless you plan to sell it yourself.
must be producing something that uses it or actively developing something that uses it
Two problems:
The patent system relies on the ability to discriminate between entities with valid patents, and entities without valid patents. This is the fundamental issue - whether this is even possible. Even assuming that it is possible, there are still problems.
I don't mean to downplay the problem that patent trolls / non-producing entites represent, but they're a feature not a bug of the patent system, as Carlo Piana, a European lawyer specialized on Free and Open Source Software matters, recently said on Twitter. The proponents of this kind of patent system simply want trolls to exist, even though they will from time to time have problems with them themselves.
But a troll just wants to make the money. It's a hold-up situation if you face a troll, but if you cough up the money, he'll leave you alone and focus on the next victim. Even though $600 million is a huge amount, RIM (the BlackBerry maker) not only survived but actually generated huge levels of profits ever since.
By contrast, if Apple decides that no one else should use certain multitouch and other functionality, then only those with a really massive patent arsenal ("mutually assured destruction"), which is what Nokia may indeed have, will be able to solve the problem through cross-licensing. But it's economically practically impossible to solve the problem by offering Apple a check because the strategic value of maintaining a certain competitive advantage is so valuable to the market leader that smaller players can't solve the problem by paying. So if Apple insists on its rights, it can tell vendors such as HTC to stop providing certain functionality, period. Unconditionally. No negotiation. Cease and desist. The only chance then may be that if you can prove a dominant position, antitrust law could be used to achieve compulsory licensing. In Apple's case, that would be very difficult to say the least...
Again, I don't mean to downplay the problem with patent trolls, but in order to ensure that incremental innovation can take place for the benefit of consumers, it's key to watch what the large patent holders are doing, starting with the biggest patent bully on the block, IBM, but also looking at everything else that's going on.