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Are Patent Wars Worth the Price Tag?
ericjones12398 writes "It's beginning to feel like a TV series, a weekly patent war drama. Apple and Samsung have consistently been going back and forth with claims of IP infringement, to the point where who is accusing who of what is exhausting to follow. The question I would like to ask and try to answer is what the opportunity costs are of pursuing litigation versus just toughing it out? Would it be more economic for both companies to live and let live, or is there value to be captured in legal finger pointing? My best guess would be that this isn't about stopping sales this quarter or next, nor is it about defending the small-scale tech features that merely mildly differentiate. It's instead about momentum and branding. Winning these cases is PR that says, we are the leaders in smartphone technology, we are the innovators."
This is more about the legal department making decisions. Are they going to decide "Let's not do any litigation!"? Of course not. They will always pick a choice that keeps them employed.
There is no way to estimate the cost of not playing the game without stopping it. There is too much testosterone involved to try anything that radical. This is as much about CEOs throwing a hissy as it is about bidness.
To the community at large: no. End of line.
William George
I am convinced that at least 99% of patents are useless. They are trivial expansions on previous patents, maybe changing the temperature of an annealing, maybe adding .01% more chromium, or changing the angle of a gear surface by a degree. Software patents are far worse them mechanical patents, and I have not heard of a single one that is not obvious to someone skilled in the arts.
If those companies spent half on research what they spend on patent lawyers, they'd beat the competition in products and build up their internal skills to keep their edge.
Patents are the first refuge of the unskilled.
Infuriate left and right
After a few years of these patent wars, all the Googles, Apples, Microsofts, Samsungs, etc have big war chests that they can win some battles and lose some battles. unfortunately, battles will kill the smaller companies and keep the existing big companies in place.
Status quo all the way baby...it's a new world.
Karma: Excellent. 15 moderator points expire sometime.
If you can spend $20M on litigation and it gives you a monopoly over a key feature in a market worth even a few billion, it may well be worth it.
Whether it's worth it to *society* is a different question, one that has to do with when and to what extent patents actually do their job of promoting innovation.
-- IANAL, this isn't legal advice, and definitely isn't legal advice for you. Also, Squee!
A little part of me wonders if the lawsuits are as much a strategic business plan to foil the competition. Y'know, like throwing around some bad press will dissuade investors, and a court ordered delay for a product's entrance to market in a particular region will cost the opponent so much in revenue, and allow the plaintiff time to get a foothold in the marketplace. Sort of 'gaming' the legal system to get a competitive edge, without so much concern for the outcome of the suit.
I'm bored with it all. This kind of shit just makes people want to stay out of business all together. It's no wonder some people resort to leaving the system and smoking themselves to a stupor. Simply. Just. Done.
Where genius and insanity become confused true wisdom is found
Nail, head hit. It means that someone who has something truly innovative either faces the choice of being bought out by a big company for pennies on the dollar of what they are worth, versus being forced into bankruptcy.
And people wonder why zero R&D is done in the US these days...
Litigating like this says "We are assholes who are afraid our competitor has a superior product and will do anything at all to try to stop them"
Of course they are worth it.
You have to factor in the huge advantage of patents in transforming a virtual landscape, where the idea of a startup can sink an established competitor in a matter of months, in a real market where the advantage of being big makes it very hard for real competition to emerge.
Add the secondary advantage of dealing with imaginary property, which let corrupt managers of big corporations create empty shells/patent troll companies that can transfer money with no need for justification to whatever bank account they like, evading taxes or cheating shareholders.
Big companies dueling are just pretending they hate each others, they cannot use patents only against the little guys, and keep the pretense that they facilitate innovation (which happens to be true, but only for non trivial patents which describe enough of a system to let people replicate it easily when it expires)
---- MISSING MISCELLANEOUS DATA SEGMENT --- [sigdash] trolololol
Pay for the legal costs by making a TV series out of it.
The point of all this is not just a given case, but the force of software patent law altogether. Most of these patents are ridiculous and should not have been granted. In my opinion, software "patents" should be abolished altogether. But that is not the point either. The point of all this litigiousness is to use patent law to create giant software monopolies as walled gardens allowing the monopolies to get away with charging exorbitant fees for DEPLOYING applications. At some point, the war between the giants will turn into the war between the giants and the little guy, because there were be so many "software patents" that the little guy will be threatened with a slap suit if he dares try to innovate. THE RIGHT QUESTION IS "SHOULD SOFTWARE PATENTS EXIST IN THE FIRST PLACE!"
Status quo all the way baby...it's a new world.
That's a definition of 'new' of which I was previously unaware. We already have big business, the status quo, the stagnation of our technology and engineering industries, the lack of people entering college who can pass the entrance exams to take science and technology courses... everything happening right now seems centered around depriving the middle class of any ability to exist, let alone move into wealth.
Whether it's Google, Intel, Apple, Microsoft... or big pharma, or big oil, or whomever... the agenda is clear across the board: It's time to kill America. We're moving in to milk it dry, wait for the infrastructure to rot out, and then move on like locusts to another country we can develop, exploit, and then impoverish. ]
#fuckbeta #iamslashdot #dicemustdie
Ah, you have blundered into the "innovate or litigate" arena. For example, if you are Mickeysoft, and you aren't making money from Android phones, you claim that the operating system infringes on your patents. This is exactly the way Mickeysoft is making money from Android, even though they don't make an Android phone (see Groklaw.net for more).
Or you do as the ill-fated SCO did, and sue IBM, claiming they used parts of SCO's UNIX in their Linux. Until Novell tapped SCO on the shoulder, and said, "uh, excuse me, YOUR UNIX....?"
And, of course, there are all of the outfits we affectionately call "patent trolls". These are the companies that make absolutely nothing, yet, because they hold patents, go after the folks that actually make things, and try to collect licensing fees from them. (think Lodesys, et al)
Overall, patents were meant to temporarily protect the inventor, so he could make some money from his invention. Unfortunately, the patent system has been subverted. The patent office grants patents on blatantly non-original works. Non-manufacturers assault manufacturers for monetary gain, or to try and drive them out of the market. And don't get me started on that worst of all twentieth-century contrivances, software patents. Oh, well.
Patents are basically nuclear weapons.
A patent is a contract between the inventor and the government. The exchange is:
1. The government grants an right to the inventor to prevent others from practicing the invention for some period of time, currently 20 years.
2. The inventor publishes in the patent the details of the invention which would give others the ability to practice the invention.
So it's worth it if having the details of the invention published outweighs the costs associated with the restriction on practicing the invention.
Your mileage will vary depending on the nature of the invention. The less obvious it is the more likely you will come out ahead.
For the vast majority of the inventions that Samsung and Apple are quibbling about the answer is pretty simple to see. It's not worth it.
These patents should have never issued.
If we're talking about consumers and society in general, than the short answer is "NO"... The long answer is also "NO," but prefaced with a long string of expletives.
Now, if we're asking whether or not patent trolling is worth the effort for those who engage in it... I don't know, but I assume they wouldn't be involved in these patent wars of attrition if there was no benefit to be found.
Hey, there's a thought: Somebody go patent the process of suing people over patents, that should fix it...
An enigma, wrapped in a riddle, shrouded in bacon and cheese
Would it be more economic for both companies to live and let live, or is there value to be captured in legal finger pointing?
I would be willing to wager that the majority of patent litigation stems from a combination of arrogance and machismo. The exception would be patent trolls, which are leeches on the skin of innovation.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
Except that, if I have a BS patent, I'm going to throw it against all of these guys with, say, a $5000 settlement price. That shakedown should work against most significant companies since just involving a lawyer to respond in any way will cost more. The big companies have already asked for, and failed to get, patent reform that would prevent this. I would have thought that there would be enough entrepreneurs out there to apply this business model to have the big guys looking for real patent reform (eg end of software patents).
It's instead about momentum and branding. Winning these cases is PR that says, we are the leaders in smartphone technology, we are the innovators.
It has nothing to do with PR. It has everything to do with frightening your competitors and locking new entrants out of the marketplace. These IPO litigations are expensive. On a slightly deeper level they are about trying to establish revenue streams based around licensing agreements.
We're moving in to milk it dry, wait for the infrastructure to rot out, and then move on like locusts to another country we can develop, exploit, and then impoverish.
It's called shock economics - was popular in the 80's and 90's on the international scene (I think they re-branded it and call it austerity now). It is a theory based on breaking unions, abolishing the middle class, privatizing everything in the interests of global companies, and creating two distinct classes of folks - rich and poor. Many of it's proponents and architects came from the University of Chicago. . . . And it seems that they've turned their sights on our country in the last ten years.
There's a book out called the Shock Doctrine - it's about the IMF's and US's involvement in South America, Europe and the Middle East, and our policy of shocking an economy back to health. It's older at this point, but it's main ideas are still relevant, and startlingly similar to what we have going on in places like Greece, and the early stages of what's happening here in the US. Privatize (for a profit for my buddies), because private industry does it soooo much better. What's that? Health care - NOPE. Living wage? NOPE. Suck on that po' folks. But I digress. It's a good book, and is just the start of the rabbit hole.
The ability to own an idea, and to have the full force of law behind my ability to control the utilization of that idea for *everyone in the world,* is worth every penny.
Of course, the only people who can actually leverage patents to this effect are the already-entrenched wealthy, but that is a practical necessity; if patent enforcement were available to everyone then the whole system would come crashing down in a gridlock. What a waste *that* would be! So since the utilization of patents is already limited to the specific groups who already own most of them anyway, the system as a whole is well worth the cost.
1) Other people notice and start taking advantage of it.
2) The courts notice and say you gave up your patent rights.
3) 10% of the time it IS relevant - and people get screwed over for millions of dollars. Significant examples are the 'intermittent windshield wiper' story. (wikipedia it) or the MANY many Thomas Edison patent cases - most of which make Thomas Edison look like a second place man. (Motion Camera stuff for example).
excitingthingstodo.blogspot.com
Patents only have value with corporate entities. The value lies in the "legal leveraging" over the competition. Period.
For the average person a patent is mostly worthless. If someone with more money can survive you in a legal battle, they'll drag you through the courts till you give up, or are broke.
Hopefully this is changing.
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A patent is a license to enrich ones lawyer. - kps
Once you read Don's writings on this topic - there isn't much left to be said.
See:
http://www.google.com/cse?cx=003767467503737118174%3Aw_hild2gcro&q=patents&sa=Search+Guru's+Lair&cof=FORID%3A0#gsc.tab=0&gsc.q=patents&gsc.page=1
It's nothing to do with PR, that's for sure. It's never good PR. It's about competitors trying to get one over on the opposition. Sometimes by stopping them shipping, and sometimes by making them pay through the nose for it. Trying to make it more complicated than that is a waste of time.
In many ways, patent wars resemble a version of the Prisoner's Dilemma.
If both companies sue each other for patent infringement, they both lose. If neither company sued the other, they would have a pleasant status quo. But if just one company sued the other, they would win big.
Although both players know that they'd be better off if they didn't play, it is literally a logical certainty that they have to sue each other.
I'm not sure how "make a cross licensing agreement and move on" fits into a classic Prisoner's Dilemma, but why let real life complications get in the way of a good philosophy metaphor.
http://en.wikipedia.org/wiki/Research_In_Motion#Patent_litigation
On May 1, 2006, RIM was sued by Visto for infringement of four patents.[47] Though the patents were widely considered invalid and in the same veins as the NTP patents – with a judgement going against Visto in the U.K.[48][49] – RIM settled the lawsuit in the United States on July 16, 2009, with RIM agreeing to pay Visto US$267.5M plus other undisclosed terms.[50]
Purely about the money.
I only look human.
My mother is a halfling and my dad is an ogre, so that makes me an Ogreling
5, 6, 7, 8, I know how to litigate."
I think that also shows what I feel the maturity level of these "patent wars" are.
I invented Rounded Corner Rectangles by Think(ing) Different(ly)
Most big companies have lawyers on staff already.. no extra cost out of pocket.
The first step in problem solving is to find someone to blame.
What is most interesting to me about this is that patents were originally created to encourage companies to share their designs instead of hording trade secrets. In the current climate, however, many companies are more inclined to keep their products closed source rather than risk having someone sue them for patent violation. Perversely, a highly litigious patent climate encourages the exact behavior that patents were intended to remedy.
No, it's PR that says, we are fucking douchebags, we hate competition. Apple has a few parties that eat that up, but that's about it. That crowd tends to take most anything Apple does as good news, though.
This is my signature. There are many like it, but this one is mine.
*POP*
The book is full of errors and unsubstantiated claims. Please do see Norberg's rebuttals of central claims of the book.
Its just passed down to the consumers anyway, so why should they care?
---- Booth was a patriot ----
Um, those are already covered by copyright.
Its less about making money in the short term, and more about eliminating competition, and sending a message to future would be competitors than short term profits.
So if apple beats samsung or vice versa, its a warning to smaller companies not to try and compete with the big boys, otherwise lawyers will just flat out steal everything they have, legally. Its a prelude to extortion via reputation. Patent wars have devolved to the level of street gangs.
A fight between huge players like Apple and Samsung serves to scare any new players from entering the market... These big companies know how to deal with other big companies, what they are most scared of is new, innovative and nimble upstarts.
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
Let P be the probability that either Apple or Samsung "wins" the patent war. In this case "winning" would be any market outcome that, due to the litigation, is substantially better than what would otherwise have been achieved through more conventional means such as advertising, features and price competition. The probability of losing then is 1 - P. Let cost of litigation be C and amount of winnings be W. Now, what will be the expected "winnings" for a party involved in the patent war? It would be as follows:
Expected Winnings = P * W - C * (1 - P)
As long as the expected winnings of continuing the litigation remain positive compared to the alternatives of either settlement or reversion to straight competition, the parties are likely to continue until, one way or another, the courts force them to stop. The smartphone and tablet markets are absolutely enormous in size worldwide. They are a very significant "prize" to any company which can capture and retain a commanding share. Given that companies like Samsung and Apple maintain lawyers and law firms on salary and retainer (a sunk cost) and the potentially enormous benefits of winning, even a small chance of winning is likely to make continuing the fight worthwhile for both sides.
To make a long answer short: The stakes are too high and the costs to low, relatively speaking, for either Apple or Samsung to fold before the river card is dealt and the final betting begins. Obviously, both companies believe that they have a strong hand.
This has got to be a segway for making a movie. Lets see that would be John Cleese, Jack Black, Clint Eastwood and Hugh Grant.
When shit hits the fan get some of these https://youtu.be/pY-GncsZ-UE
A good illustrative example of the effects of patents on corporate viability can be found in the Wright Brothers. They got the patent for the airplane, but then spent so much time defending the patent and suing other parties that they did not do much more innovation. In fact, in the end the company went into bankruptcy. I believe that the last remaining vestige is found in the Curtis-Wright company (manufactures of aircraft electronics). I believe that Curtis got the first military contract. I also believe that Curtis had the first public showing of an aircraft in the US (public as in advertised not public as in anyone could see it). The point here is that the defense of the patents caused the company to divert energy from innovation and promotion of the product and hastened its downfall.
Pardon me if I assume that a "Briefing Paper" by a right-wing think-tank might also be biased. Both of them can cherry-pick bits of Milton Friedman to support one point of view or the other.
I find this paper to also be full of spin ; e.g.
More damaging for Klein’s case, Thatcher
was not implementing unpopular reforms. On
the contrary, surveys during the strike showed
that the public systematically opposed the
strikers, and that opposition grew during the
strike.
It doesn't cite who performed the surveys, what bias *they* may have had, etc. Never mind that we are talking about a government here, of a party that has recently been shown to be deeply in bed with the popular press, who as I recall, worked very hard to bias public opinion against the striking miners. I was quite young at the time, I remember having a preference for the Conservative party and Margaret Thatcher over the Labour party. I guess I was young and susceptible to spin.
Other evidence of bias : substitution of the word "liberalization" for "privatization" throughout the paper ; the corporate acquisitions being discussed in the Shock Doctrine are anything but "liberal" ; not the formation of a healthy market with multiple participants, but a sudden and complete monopoly over a local service or industry as the result of a disaster, often with Government sponsorship, which would seem to be the total antithesis of the liberal doctrine which preaches a diverse market with as small a Government as possible.
It also reads like a personal defence of a slur against Milton Friedman. I think the contention here is that while Mr Friedman may in fact have the good intentions he claims, the evidence is that liberal doctrine doesn't actually seem to work ; the intended liberalization of destabilised regions / economies doesn't actually take place. The natural path of capitalism is not liberalism but oligarchy, as profit concentrates power which begets more profit, ad infinitum. I think we can all agree that the liberal tenets of reducing the power of Government in order to reduce it's potential for collusion and corruption seem attractive ; but rather than "less government", what we tend to see demanded by corporate interests instead is "less of the government that gets in my way! (and the government that gives me money is just fine, thanks)". Pure liberalism is just as much an artificial, fanciful state of affairs as pure communism, because of this effect of concentration of power, so paradoxically, if liberalism is to take hold, you need strong regulation.
"What are you going to do? Outlaw private funding into medical research?"
NO!!!!
How fucking thick do you have to be to read "There should be no patents" as "Outlaw private funding"?
How?
BECAUSE YOU'RE A RETARD.
They don't know and don't CARE to know about a business. They therefore discard any pretense of finding out whether there's money to be made and just ask "do you have a patent on that?" and if "yes", then jump to the conclusion that this will be a money maker.
PRAGMATICALLY, since 90% of VC ventures fail in their first year, these people shouldn't bother investing in the first place.
But, since it isn't their money and they get paid a cut of the movement of money, they'll go for it. Not because of pragmatism, but because they don't know and don't care to know.
And, as a substitute for investigation (which would increase their success rate), they ask "do you have a patent on that?".
For the lawyers.
Apple's look and feel suits are the ultimate insult. First they sue Microsoft for copying the very same things that Apple had lifted from Xerox PARC. Now they've taken possession of the rectangle. Imagine the same thing happening in the automotive industry. Hyundai can't sell cars because Mercedes thinks that their grills look like theirs. Someone else can't sell their cars because their headlights look like another's. No one can sell anything because their "C" pillars look like BMW's. Enough is enough.
No matter what one's opinion of market competition and/or patent enforcement, there is one rather telling fact in this case: reportedly, it came out in court that not even Samsung's own legal counsel could tell the difference, visually, between the iPad and the Galaxy Tab. This seems to me to present a pretty clear case for patent litigation.