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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.'"
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.
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.