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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.'"
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.
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.
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.