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Google and Apple Spent More On Patents Than R&D Last Year
parallel_prankster writes "NYTimes has an interesting article about how patents are really stifling innovation in the tech industry. Today, almost every major technology company is involved in ongoing patent battles. Of course, the most significant player is Apple, industry executives say, because of its influence and the size of its claims: in August in California, the company won a $1 billion patent infringement judgment against Samsung. Former Apple employees say senior executives made a deliberate decision over the last decade, after Apple was a victim of patent attacks, to use patents as leverage against competitors to the iPhone, the company's biggest source of profits. At a technology conference this year, Apple's chief executive, Timothy D. Cook, said patent battles had not slowed innovation at the company, but acknowledged that some aspects of the battles had 'kind of gotten crazy.' It is a complaint heard throughout the industry. The increasing push to assert ownership of broad technologies has led to a destructive arms race, engineers say. Some point to so-called patent trolls, companies that exist solely to sue over patent violations. Others say big technology companies have also exploited the system's weaknesses. 'There are hundreds of ways to write the same computer program,' said James Bessen, a legal expert at Harvard. And so patent applications often try to encompass every potential aspect of a new technology. When such applications are approved, Mr. Bessen said, 'the borders are fuzzy, so it's really easy to accuse others of trespassing on your ideas.'"
Google and Apple Spent More On Patents Than R&D Last Year
I was going to submit this story this morning but I didn't because I couldn't find the source of this Stanford analysis that is mentioned (though not cited) in the article. Could someone please give me a link to a news release or PDF or anything? I thought I had pretty good Google skills but found nothing. The thing that worries me is that this headline lead me to believe that all the court fees and lawsuits are costing more than R&D. However the article itself says:
In the smartphone industry alone, according to a Stanford University analysis, as much as $20 billion was spent on patent litigation and patent purchases in the last two years — an amount equal to eight Mars rover missions. Last year, for the first time, spending by Apple and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products, according to public filings.
So my first concern is that this is also about patent purchases so this could also be including that "per phone or per license" cost that you pay when you actually do license someone's patent legally and use the system as it was intended to work. Does anyone know if they're including this or just acquisitions of smaller companies that have patent portfolios as defense/attack mechanisms? Secondly, I'm concerned that we're only seeing public filings and these sums cannot reflect undisclosed terms for settling out of court and/or licenses that are not publicized.
Again, before people explode over this headline, I'd just like to get my hands on the data and verify that there is indeed a reason to explode over this. This isn't an apology for patents, this is just the most basic journalistic caution before I fly off the handle.
My work here is dung.
Right now, there's a huge profit incentive for patent trolls because of the huge payouts in damages when these lawsuits are won.
Either cap damages, or limit compensation to injunctions, to remove the huge incentive that companies have to make profit from patent battles.
Having these companies bickering over patents and billion-dollar payouts is bad for everyone, since they should be inventing new technology or at least fixing those iPhone purple flare cameras.
Remember Creative, the maker of Soundblaster cards? They were also one of the first makers of MP3 players. ("Less space than an Nomad, lame")
[in 2001] Creative applied for a broad software patent for a "portable music playback device" that bore minor similarities to the iPod, an Apple product that had gone on sale the same year. Once the patent was granted to Creative, it became a license to sue.
When Apple came out with its own MP3 player called the iPod, Creative sued... because it infringed on Creative's patent for a "portable device that plays MP3 files". Apple settled three months later for $100 million.
Afterwards, Steve jobs vowed never to get caught with his pants down again. When developing the new iPhone, he declared "we're going to patent it all". Basically, Creative took Apple to school on patents, and Apple learned real fast.
This is what haappens when we let attorneys build the system. It's almost written for them. No matter who gets screwed, an attorney wins, somewhere.
In other words, the US patent system has been shit for a long time but for some stupid reason we have yet to get around to fixing it.
At the expense of everyone else.
I think it's more accurate to say that lawmakers enact legislation which benefits their campaign-financiers. This happens even when neither is a lawyer. However, one thing that's for sure: the campaign financiers are multi-national corporations.
Most of Apple and Google's patent-related spending was not on litigation but rather patent purchases, such as Google buying Motorola primarily for its patent portfolio. But the value of those patents is part of what enabled Motorola to invest in the R&D that produced those inventions in the first place. Effectively, Apple and Google financed R&D done at other companies. I don't think it's meaningful to draw such a bright line between "spending on patents" and "spending on R&D."
Patent disputes over motion picture films were a major influence on the development of Hollywood. From Wikipedia:
So, at least for the movie industry, it was possible to avoid or minimize patent harassment by moving elsewhere. In today's world that's obviously impossible.
Good engineer: $60-80/hr
Crappy lawyer: $300/hr
Good lawyer: OMG$/hr
If you're going to bring in the suits, you'd better have the wheelbarrows of cash ready - which Google and Apple both do.
Looks like the only thing that will come close to fixing it will be from having gone over the buggering edge of ridiculousness.
http://www.mondaq.com/unitedstates/x/156824/Patent/First+To+Invent+First+To+File+Or+First+To+Disclose+Patent+Reforms+Real+Incentive
First to file will bring on the Patent Armageddon, most likely. That change is such a BLATANT swing to the rich I still have a hard time fathoming how the decision was even made. "Hmmmmmm, how can we make sure that no one has a business outside of serving my elite buddy Chad some low wage service commodity? Oh, I know! Let's tip the scales completely towards the armies of lawyers who sit around all day spamming the patent office."
Hate to mention the movie Brazil again, but Gilliam had prophecy there...
Apple only does development. As far as I can tell they have zero published research.
The current patent system is harmful to society because it tramples on freedom. The purpose of patents is to provide an incentive for innovation and compensate inventors for their hard work. However, it should not infringe on the freedom of others. That would be counter to its purpose. Above all, the system must never serve as a carte blanche for a few to bully all others out of the market. What we need is something like this:
1. A special independent fund must be set aside to compensate inventors for their inventions and reward innovation.
2. A retroactive formula must be adopted to calculate the amount of the compensation.
3. The formula must be adjustable so as to establish the best return for society at large in terms of innovations.
4. Last but not least, whatever the formula chosen, it must never infringe on the right of the individual to copy and use any invention for whatever purpose.
Inventors should register and publish their findings as soon as they can because their compensation will depend on how much society like and use their ideas. Of course, we still need a Patent bureau and a system to manage claims and the proper registrations of inventions. The system should be as automated as possible.
The word "Spork" made it into the dictionary in 1909, but people had to wait 61 years before it was patented and trademarked. http://www.salon.com/2012/10/06/consider_the_spork/ How horrible it was for people to know what something was, but be totally unable to use it because there wasn't a company to own the idea. (:-)
All ideas^H^H^H^H^Hprocesses in this post are Patent Pending. (as well as the process of patenting all postings)
The idea that the patent system was founded on was protecting an idea so it can get to market without being stolen.
I think we've found with software patents, the opposite holds true. Software patents protect the big guys so little guys can't make any product.
Lets face it: Programming software is illegal. If you make any non trivial software, you trip over dozens, hundreds, or even thousands of patents you're not even aware even exist! This is because people are awarded patents on trivial things that everyone else already knows how to do. So programming is illegal, we just try and make aps with the hopes that no one is going to sue us. But at any time, someone could sue if they wanted to.
Because the big guys patents so many trivial things, non-trivial software trips over many patents. Patents do not protect the little guy. Patents protect the big guy from the little guy having a chance to compete.
God spoke to me
That's interesting. Apparently, another important factor for the early movie industry was how the local community received the movie makers. Compare Hollywood:
With Jacksonville:
Still, it's clear that they were avoiding New York, which already had a movie industry.
The slashdot headline, and, to some extent, the slashdot summary, make it sound like Google and Apple are the only ones compiling bogus patents, but it works both ways, of course. They sue other people for patent infringement, but they also get sued. The big difference is that Google and Apple really do have R&D, and really do come up with at least some things that deserve to be patented, whereas the typical patent troll has never made any positive contributions, and is simply hoping to take advantage of the fact that the patent office doesn't really care whether applications are nontrivial.
I got subpoenaed last week by a lawyer from Google, because Google is getting sued by a patent troll (I don't know the name of the company), and Google wants to use the web site in my sig, which dates back to 2001, to prove prior art and invalidate the patent. It's apparently a business methods patent. You might ask, "How do you know that they're a patent troll when you don't even know the company's name, and don't know anything about the patent other than the fact that it's a methods patent?" Well, the way I know that is that I built that site, and it required absolutely zero innovation or creativity on my part. If you take a look a the code, you'll see that it's embarrassingly amateurish -- I think it was the very first Perl code I ever wrote. I simply bought the O'Reilly book on the Perl DBI interface, and built a bog-standard web-based front end for a SQL database. The database is nothing but a digital library catalog, the sole difference being that most such catalogs keep track of a physical collection of books, whereas mine is a catalog of books that are free on the web. It also has a feature where users can write reviews.
Responding to the subpoena (as I'm legally required to do) has been and continues to be a minor pain in the ass. But it's just absurd that any patent examiner allowed anyone to patent anything that went into my web site, because it required zero originality. For that reason, I feel like I'm doing something somewhat positive for society by helping Google deliver a smackdown to this troll.
Google and Apple are probably both companies that would benefit greatly from patent reform, including the elimination of software and business method patents. The big losers would be the patent trolls.
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