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.'"

Comments

So...

[fuzzyfuzzyfungus]

How long before "Non-Practicing Entity" goes from harmless-sounding euphemism to sinister dysphemism, the way terms like "Ethnic Cleansing" have?

Hardly a mexican standoff

[dgr73]

The article describes the Nokia Apple patent suit/countersuit situation as a mexican standoff. This has been discussed ad nauseum already here on slashdot and I think it's hardly that. Unless you call one person pointing a water pistol and another aiming a cannon a mexican standoff.

Assuming both sides claims are deemed to have merit and both refuse to pay licensing fees, Nokia has to think of another implementation for some GUI elements, hardly a gargantuan task. However, if Nokia wins, Apple has to reinvent mobile technology, then get all the networks to support their new implementation.

Re:Hardly a mexican standoff

[FlorianMueller]

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.

Re:Hardly a mexican standoff

[Steve Max]

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.

That's the point: Nokia offered to license the patents under RAND terms to Apple (the same terms they offer other companies, including those that don't have so many GSM-related patents such as Samsung/LG/HTC), and Apple refused to pay. This is the reason Nokia sued: Apple wanted to use their patented technologies without licensing them.

Article missed latest front: HTC 'suing' Apple

[FlorianMueller]

The Wired article on mobile patent lawsuits was, quite apparently, written just before the latest front was opened: HTC yesterday announced that it is now "suing" Apple.

However, at a closer look it becomes clear that HTC didn't file a lawsuit in the traditional meaning of the word, which would mean that they take Apple to a court of law. It is only a complaint with the US International Trade Commission. By contrast, Apple (in March) sued HTC in an actual court of law plus lodged a complaint with the International Trade Commission. Only lodging a complaint is rather weak. Fortune/CNN lists the five patents in play and points out that it's only a complaint, not a suit filed with a court, and is not impressed.

On my FOSS Patents blog I comment on developments concerning patents and Free and Open Source Software, and I see the squabble over video codecs as a closely related issue. In both cases, Apple is on the side of the large patent holders and Google favors "open" alternatives. Android is a Google-backed project, and as I explained in a three-part sequence of blog posts on video codecs, Google so far backs Theora and it might now try to establish VP8, after open-sourcing it (which may happen very soon), as a codec standard. Apple, however, backs MPEG LA's H.264 (even though Apple is only a small contributor to the MPEG patent pool; for an example, Apple contributed only one patent out of 1,135 to the H.264 pool).

There's nothing more unpleasant for a proprietary/closed-source vendor to deal with than free/open-source competition. Patents then come into play and can tilt the scales in favor of entrenched proprietary/closed-source players. Sometimes it's sufficient for the major patent holders just to ensure that the "free" alternative won't be completely free, neither completely free as in free beer nor as in free speech. The use of patents against vendors of Android-based phones mobile phone operating software will probably result in increased prices and possibly also in reduced functionality of Android-based phones. The use of patents against open-source video codecs, which Steve Jobs said would happen but without providing any specifics, would have a similar effect for Theora and, possibly, VP8.

Re:Patent trolling should be outlawed

[lorenlal]

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.

Re:Patent trolling should be outlawed

[rpresser]

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.

but that's not the *big* problem

[ciaran_o_riordan]

Patent trolls are a problem for big companies that have lots of money. Trolls have nothing to do with HTML5 not being able to recommend a video codec, and they've nothing to do with worries about how Microsoft will use their patents on .doc, XML, or Mono. Some trolls *do* practice their invention, like the mp3 guys that made a packet from trolling - and as a side-effect, completely insignificant to them, forced GNU/Linux distros to omit mp3 support.

To solve the social problems caused by software patents, we have to abolish them - tweaking the numbers to reduce the problems of mega corporations is not *our* job.

• Patent trolls
• Harm with neither litigation nor threats
• Apple v. HTC (2010, USA)

Re:Patent trolling should be outlawed

[chrb]

must be producing something that uses it or actively developing something that uses it

Two problems:

• Does the item that uses the patent have to actually do anything? I can take a patent, and then implement some product that I have absolutely no intention of ever selling or releasing to the public. And if I did sell it, would there be a minimum sales threshold for the patent to be valid? If I make a single item, put it on ebay, does that then make the patent valid?
• What about companies that produce intellectual property, such as patents, and then license those patents to third parties? The patents involved in this model are now no longer valid, because the inventor does not directly produce items for sale?

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.

• Who decides whether or not a patent is valid. How is a jury qualified to decide on patent validity? Should there be some alternative? What?
• The cost. Will the state continue to finance the patent system, through patent offices, examiners, courts? Fixing the patent system will require a greater investment than is currently being made by any nation - who is going to pay for this? The inventor? That would favour rich over the poor. Should it continue to be paid for through taxation? That will require increasing taxes.
• The current system favours large corporations that can afford to keep patent lawyers on the payroll. Small inventors can not afford court cases that run for years.
• Geographical scope of patents in a globalised economy. What if a company in China violates your U.S/E.U. patents, running software on servers that are accessible globally? This kind of scenario requires a global patent framework, with some kind of oversight body (WIPO? United Nations?). Do you really want that? If you say that corporations in other countries can willfully violate patents, then corporations will favour locating subsidiaries in countries that have no patent enforcement. We are already seeing this - hardware companies moving to China, which has one of the lowest rates of patent enforcement in the world, and biotech companies opening R&D subsidiaries in India.
• Where is the evidence that the patent system actually does what it is supposed to - that is, enable real inventors to fairly profit from their inventions, whilst maintaining the right of others to compete fairly by manufacturing their own inventions. When was the last time you heard a positive patent story? Ever?

Big patent holders are still the bigger problem

[FlorianMueller]

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.

Re:One more reason to stay away from smartphones

[hallucinogen]

If you spent over 40 billion EUR in R&D (like Nokia) I'm sure you'd sue as well if you thought that somebody was stealing your innovation (like Apple). Thankfully this isn't about "mind share" but actual merits. Nokia just might end up killing Apple's mobile ventures. As a Finn I'm totally rooting for Nokia because they make up a large chunk of our nation's GDP.