- Jan 5, 2011
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An interesting phenomenon in the world of computing has been developing over the past decade. Furthermore, it seems to have accelerated even further during the era of smartphones. What I am referring to is Intellectual Property Wars, or 'IP Wars'. IP Wars are these ongoing legal battles between different technology companies, in which one tries to gain the upper hand over the other by using the legal system instead of competing with each other legitimately in the marketplace by innovating and evolving.
It's important to differentiate between 'IP Wars' and the legitimate defense of a a trademark, copyright or patent. The original purpose of any Patent Office, or Copyright/Trademark Office is to help protect individuals or companies from having their ideas stolen. This is a laudable and important goal, and should be preserved. Unfortunately, the system could use some refining, because the way it exists now practically invites abuse, but also, we need a paradigm shift in the way the world's tech companies look at these legal matters. The current perspective encourages this abuse, which results in the IP Wars that I am referring to, and in the long-run, these IP Wars will end up being a "no-win scenario" for everyone, including the companies involved, the consumers, and the taxpayers.
The easiest current examples are the several different legal battles started by Apple against competitors, although there are several examples throughout the last few years of other companies besides just Apple. For now, we will take just a few of Apple's lawsuits as examples. The first lawsuit example from Apple seems to be a purely 'anti-competitive' move rather than an actual bid to defend their IP. This is their lawsuit against Amazon for use of the phrase "Appstore" to describe their app store. Apple previously trademarked the words "App Store", and wanted to sue/block Amazon from using the phrase (which itself leads one to question if the Trademark office was thinking clearly - since these two words are so general and generic it invites accidental abuse). I have yet to talk to anyone, even Apple fans, that think this makes any sense whatsoever. In fact, Microsoft is still in the process of fighting Apple to reverse the trademark altogether. This is obviously a case where Apple has decided to spend some of its $76 Billion dollars in reserves just to see if they can throw out a lawsuit that will stick. This is an abuse of the system, which costs taxpayer dollars and forces Amazon to spend some of its reserves just to fight off this legal "pot shot". This is tremendously wasteful, and there should be some legal repercussions built in to the system to deter this type of frivolous lawsuit, so that companies will think twice before they fling their lawyers at each other.
The second example is actually fairly debatable on several levels. This is Apple's lawsuits against HTC and Samsung, for violating technology patents, and for "the look and feel" of its products. I can fully understand if a company wants to protect its interests, and it should be allowed to do so. Also, if these two companies really did use some of Apple's patents without permission, then there should be some recompense. However, the way that Apple has gone about this, really makes you wonder if their intention was really to protect their interests, or if it was simply just to stifle HTC and Samsung (and by proxy, Android) as a competitor. As far as the "look and feel" of the products, I hear people go 50-50 on this argument. Some agree that Apple was copied, and others believe that the similarities are simply the natural result of having a limited amount of design ideas for a tablet or smartphone. How many ways can you really make a smartphone before they start to bleed into one another and look similar? At any rate, even if it turns out to rule in favor of Apple, Samsung can make a few minor redesigns to fix the issue.
Of greater importance is the patent complaints. If Samsung and HTC are really violating Apple patents, each of the companies, including Apple, probably already knew this before the Samsung and HTC products ever came to market. Samsung and Apple have been partners for many of the primary components on the iPad and iPhone for several years now. If Apple really were just trying to protect their own interests, they could have simply negotiated a licensing deal with their "partner" that would have been mutually beneficial to both parties. Furthermore, Apple could have done the same thing with HTC as well. Microsoft was willing to work out patent deals with HTC and other Android-related companies, and now they are making more from Android's success than from their own WP7. Apple didn't choose to do that, and from the way the court proceedings are going, they have no intention of doing so. More than likely, their only intention is to block or slowdown Samsung and HTC from bringing more competitive Android smartphones to market until they can boost sales of their next iPhone or iPad. Some may argue that this is just the way of big business, but really, the problem is more systemic than that, and it shouldn't be tolerated. It really wouldn't be the way business is done, if there were better legal controls in place, and if companies would simply gauge themselves with a barometer of fairness. Ironically, HTC recently acquired some patents from S3 Graphics that Apple is infringing upon. HTC may be able to use this to their advantage to maneuver a licensing deal with Apple, but they wouldn't have to do this if Apple simply tried to play fair.
Lest you think this article is being biased in calling out Apple, these IP Wars are by no means relegated to just them. They have been heating up for quite some time now, and there are several companies that are guilty of these same practices. In fact, there are even examples of companies that are bitter enemies joining forces to create a temporary consortium with the sole purpose of buying up other patent holding companies. Their intent is to hold these patents against their competitors and basically use them like ammunition to blast away at each others' bottom line. Recently, it was reported that just such a consortium is even being investigated by the U.S. Justice Department. A recent article in the Wall Street Journal said that the Justice Department is stepping up its efforts in an investigation of a company called Rockstar Bidco. This company is really a consortium made up of Apple, RIM, Microsoft, Ericsson, Sony, and EMC. Recently this group purchased a portfolio of 6,000 patents auctioned by the bankrupt Canadian telecom equipment maker Nortel Networks Corp. The whole picture to the story is that originally, Google was going to acquire those patents for $900 Million, which was considered a "fair starting point" for negotiations. However, this consortium of companies jumped into a bidding war with Google and eventually bought up the patents for $4.5 Billion dollars, which was 5 times higher than Google's original offer. Since then, the Justice Department has been probing to determine if these patents were acquired simply to attack Android smartphones. Additionally, this isn't the first time recently that the DOJ has had to step in; In just April of this year they had to "thwart another consortium of companies made up of Apple, Oracle and Microsoft from using their recently acquired patent portfolio to unfairly hurt rivals".
Obviously, this means there are some safeguards in place, because incidents that are especially egregious seem to be investigated and/or halted. However, the issue still seems to be increasing in frequency, not decreasing, and the analogy of a global corporate war fought in the courtroom is not without merit. Here's a quote from Google's Senior Vice President and general legal counsel, Kent Walker, sharing his perspective on this issue, The tech industry has a significant problem. Software patents are kind of gumming up the works of innovation. Each side can blow the other up on some level everybody can block the others products from coming to market. You create this mutually assured destruction scenario, but its very expensive to get all those munitions. Buying patents so you can hit the other guy, its not good form. You hate to unilaterally disarm here, but we havent in our history. According to reports, originally, Google claims that they hate these patent wars, and they originally bid on the Nortel patents, not to use them against their competitors, but simply to create a disincentive for others to sue Google. Since Google lost the bidding war for the Nortel patents, they later bought 1,030 patents from IBM to try and protect themselves. Mr. Walker believes the constant legal battles "could actually hurt consumers and the landscape of todays ever changing smartphone market," (and that's coming from a lawyer).
The bottom line is that more and more companies are considering it standard practice to use the legal system to wage war, and ultimately it will be at the cost of taxpayer dollars and each companies' ability to focus their resources on innovation. This is the real problem; that these companies think it is okay to continue to abuse the legal system for the purpose of harming their competitors. In the long run, these wasted resources won't help get these companies any further ahead, and will begin to impact the tech world in a negative way. This will prove to stifle long-term growth, and then everyone loses. Perhaps some additional safeguards in the legal process could help to reduce this, but really, the responsibility lies in the CEOs of these companies. At some point they need to hold themselves and their company to a higher standard. Right now, it's just a lot of "hot air" that amounts to cavemen fighting over a dead buffalo.
Sources: BGR and Droid-Life and WSJ and SEO by the Sea
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