2012: Year of the Patent

January 2, 2013
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    We were dominated in 2012 with news of lawsuits and patents. Everywhere you looked some huge tech company was suing another or purchasing a company for patents. While Apple vs. Samsung was the biggest patent story, it may not prove to be the most important one. 2012 may have brought us a myriad of lawsuits, but those may just be posturing for a bigger fight. Will the fight bleed into 2013, or will we see new thinking in tech patents and licensing?

    Rounded Corners

    When Google’s David Lawee said the company didn’t believe patenting rounded corners was possible, it was a sign that tech companies were on the honor system. Google was very forthcoming in that it hadn’t been aggressively pursuing patents for its designs. If they felt that other companies would do the right thing in terms of licensing and design, it’s understandable they felt no need to protect themselves legally.

    A comment like that also cuts to the core of the patent matter: Intellectual Property. Intellectual property can be very hard to argue, as one side is essentially saying the other stole an idea. It’s very possible for two sides to come to the same conclusion, or even a similar one, at the same time. Intellectual property is very vague and confusing, and could point to why the patent system is perceived to need reform. Often times, companies rush their concepts to market trying to pace the competition. Doing this often leads to another company patenting a similar or exact same idea before what could be the originator. If you’re first to patent it, you’re first to own it. While being first to market with a device or technology has credibility, nothing has credibility like a patent in the eyes of the law. Sometimes, slow and steady really does win the race.

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    Apple versus Samsung

    The heavyweight bout of the year had nothing to do with pre-fight weigh-ins and Las Vegas. The real 12-round massacre was done in a courtroom by a few dozen very bright people in suits. Apple vs. Samsung was the powerhouse lawsuit that set the tech world on its ear. The two biggest companies, at odds in nearly every respect, squared off in court for much of the summer. Apple claimed Samsung purposefully stole its design, or intellectual property. Samsung claimed it was simply a matter of two companies thinking similarly.

    What transpired was for the ages: two of the most important companies in technology (not just mobile tech) would travel the world, arguing their case in various courts. A victory in the UK would not mean one in Australia, or the United States. A judge in the UK would even declare what is and isn’t “cool”, muddying the intellectual property waters further. Apple would win a case, but be forced to pay Samsung’s legal fees in an other. We didn’t get the clean, concise decisions we had all hoped for. We got a bar fight where nobody even slapped each other on the back between shots of Jameson afterward.

    We can easily point to Apple’s $1 billion victory over Samsung here in the United States as the largest blow financially, but it was not pleasing to either side. Apple was going for the jugular and felt it nicked Samsung shaving. Samsung argues that the jury foreman was bias, based on a lawsuit he was involved in years ago with Seagate. Seagate, most notably an external hard drive company, is one which Samsung holds a major stake in. Samsung’s argument in the wake of the Apple verdict is that the foreman, Velvin Hogan, willfully held back information during jury selection that he had been involved in the lawsuit and possibly jaded as a result.

    Let’s not get too caught up in the minutiae of it all. Much of what is and has happened is posturing. Maybe the grandest posture of it all is that Apple hasn’t directly sued Google, who has the most to benefit long term. Apple has settled the suit with HTC out of court, and effectively sued Samsung… but not so much as named Google. Why is that?

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    The Google problem

    Early in 2012, Google successfully warded off a few looming lawsuits by purchasing Motorola. Google’s CEO Larry Page was quoted as saying the purchase of Motorola will “enable us to better protect Android from anti-competitive threats from Microsoft, Apple and other companies.” A purchase not only for an in-house partner in mobile tech, but a move to ward off those potential lawsuits. There was no hiding the fact Google wanted Motorola in large part for the impressive patent portfolio. Even at that, Google is not Motorola. So why hasn’t Google fallen into anyone’s cross-hairs, namely Apple?

    Sometimes looking backwards is the only way to see the future. Many moons ago, Apple tangled with Microsoft. In doing so, Apple argued that Windows was stolen product (sound familiar?) and it wanted Microsoft to stop using it. At the time, the PC market was fairly new and growing quickly. Not as quickly as mobile technology has, but quickly for the time. This was the early 80’s. Disco was dead, and the geek were about to inherit the earth. Steve Jobs just wanted a bigger slice of the pie, plain and simple. Apple’s contention was that the user interface of Windows was poached directly from Apple.

    Apple may have been right. Bill Gates and Microsoft did program some software for Apple back when Microsoft was known for its DOS interface. It was after Microsoft had its hands on an Apple machine that Windows came to fruition. Looking at a time line, it’s fairly clear to see how Apple could believe Windows was a copycat of iOS. Both were a form of graphic interface computation, a very new concept at the time. With Microsoft having an existing partnership with IBM, its potential for distribution was much greater than the smaller Apple, who was doing everything in-house.

    Over time, Apple stewed and Microsoft cruised. It wasn’t until 1992 that the tides of its ongoing litigation with Microsoft changed forever. It was then that courts decided graphic interface computing was “natural”, basically saying it was the only way to operate. As such, Apple had no leg to stand on in regard to whether or not the Windows platform was actually ‘stolen’ property. Apple could fight on for licensing rights, but as proving intellectual property is difficult to begin with, it would probably sink them. At the time, Apple was the underdog. Against a giant like Microsoft, it would probably bankrupt itself in legal fees.

    This could be an indicator as to why Apple has never actually sued Google, or named them in any lawsuits. If you nudge Google, you awaken the Android beast. By addressing Android legally, you will be in for the same fight all over again. If this process of apps and icons we all have grown to love and adopt is considered “natural”, then there is no case. Legally, Apple exhausted that avenue years ago. Google would simply lean on that ruling as a precedent, and probably win. By going after Google, you possibly destroy your own market share… a dwindling number Apple simply cannot afford to damage. While Apple has more resources now than in the ‘80s, it may know deep down that fighting Android is like throwing money away.

    Android partners, however, are different. They are simply device makers. Sure, Samsung is rumored to be exploring its own OS, but that may never see the light of day or similar adoption. At heart of the Apple-Samsung lawsuit was the design of the devices, never the utility. The same can be said for Apple’s fight with HTC, which was settled amicably out of court.

    A nominal fee

    We will continue to see patent litigation in 2013, no doubt about it. An even more important issue will come to fruition through a byproduct of these lawsuits. Where we will see the new fight is in licensing agreements. When a lawsuit is won, it doesn’t mean the loser can no longer do business as usual. A successful lawsuit just means you used that technology or design without consent, and must pay for it. Sometimes that infringement is accidental and unknown, sometimes it’s not.

    While it seems unfair to concentrate on Apple for examples, the company was responsible for taking just about everyone to task in 2012. We can start with the Apple-Samsung scenario, in which the various lawsuits set a precedent for licensing. It’s also at the heart of why Samsung immediately wanted to see the results of the Apple-HTC agreement. While $1 billion may seem like a huge amount of money, and it is, Samsung can cover that with relative ease considering the cash it has on hand. A big hit to Samsung, but that’s not the end of the matter nor the heart of the issue.

    Licensing fees are the core issue, and it’s the biggest factor in Samsung being so anxious to get its hands on that Apple-HTC settlement. In just perusing public record, you’ll find that Apple has reportedly agreed to let HTC pay $6-8 in licensing fees for each instance they are used, but would like Samsung to pay $30-40 per phone. While Apple set up a very convoluted plan to help Samsung “save money”, it’s a slap in the face. Much like the apology a UK court ordered Apple to publicly issue, a biased cross-licensing agreement is a dangerous line to walk for Apple. Taking on the largest manufacturer of mobile devices is commendable, but snubbing your nose at them only makes for a vitriolic backlash later, both from Samsung and consumers.

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    Everyone wins

    Recently, LG and Samsung have been tussling over OLED patents as they relate to mobile displays and TVs. While this has nothing to do with Android per se, it does lead to a possible solution. If we have an Open Handset Alliance, why shouldn’t we have an alliance of manufacturers who agree to arbitrate any patent disputes out of court? If such an alliance existed it would limit the damage done to reputation, as well as a variety of other factors.

    If LG and Samsung were members of such an alliance, their dispute could be handled outside the auspice of a courtroom. In fact, guidelines could be instituted to allow for fair licensing practices among members of this alliance. While things like displays or chipsets have little to do with Android, especially as much of that technology is used in TV or standalone computer displays, it does bring the parties involved together outside of a courtroom.

    This alliance doesn’t have to be limited to Android, either. This could be as simple as a mobile handset alliance, or a mobile technology alliance. We can all agree the patent system needs reform. We can also agree that the patent system, as a government agency, will reform slowly if at all. It can be further argued that the technology sector may need its own set of patent rules and logic, as it moves too quickly for the patent system  An alliance of this sort can circumvent the slow process of patent litigation that we’ve grown accustom to, or at least create a mediate forum before a company decides to pursue litigation.

    In such a circumstance as a company feels slighted or wronged by someone using technology they believe to be theirs, they can invite the other party to a mediation. In this mediation, both sides present a case as to why the technology in question is theirs, or why they should be allowed to use it without paying licensing fees. Of course, a mediator agreed to by both sides would preside, and if an agreement can be reached for licensing they would enter a binding contract. If no such agreement can be reached, they either agree to not pursue the matter further or head to trial.

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    This could accomplish a variety of things. First, it could possibly eliminate the need for drawn out trials in which one or both sides feel as though the legal system let them down. At a mediation, they could more openly discuss the technology in dispute and not have quite the formal setting of a courtroom. This could avoid the bad-blood scenarios, as is the case with Samsung and Apple.

    Another benefit is the agreements are legally binding. Let’s hypothesize that LG and Samsung sat down to mediation over their OLED displays. In this mediation, LG presents convincing evidence and arguments that Samsung indeed infringed on patents, and should pay royalties. Samsung’s lawyers would then understand that pursuing this in a courtroom would do little more than waste time and money. The evidence presented by LG is strong, and there is little reason to believe a jury or judge will find in Samsung’s favor. As a result, Samsung agrees to pay a licensing fee agreed on by both sides. Both parties avoid a very public and messy trial, leaving their respective egos and image in check.

    The largest beneficiary of such a process is the consumer. Without the vitriol between companies, the focus is on cooperation. Without the lengthy trial process, the focus is on innovation. By settling this in what can be called ‘the old fashioned way’, perhaps we can move forward. As mentioned before, sometimes you have to look back to see the future. Maybe there needs to be a new direction in regard to patents and licensing.

    2013 and beyond

    We will never see the end of patent litigation. It’s been going on since the dawn of man in one respect or another. Discussions over who invented the wheel (insert Apple joke here) has brought us to who has a patent on OLED displays. The technology space is inhabited by very bright people coming up with very innovative ideas all the time. These products are designed to generate revenue, and anything that is designed to generate revenue is going to be questioned at some point.

    With so many companies stepping on each other’s toes on technological breakthroughs, the next frontier is licensing fees. A win in court rarely means the loser must cease using the technology in question. Had they taken the actual phone and used it, that would be a different tale. In our world, the issue is intellectual property… and that’s quite a nut to crack. Successfully arguing that you had an idea first is difficult at best, and rarely works out well for either party. Even if you win, your reputation takes a hit.

    Take Samsung and Apple. If we’re being objective, Apple won primarily because Samsung was sloppy in concealing its designs. They openly discussed via email that devices needed to look “more like Apple”, even though Google urged them to back away from that thinking. Rather than coming out the victim, Samsung looks a bit petulant in continuing the fight. Those internal emails have shown Samsung to be less than honorable in its intentions. Had the two sides been able to litigate, perhaps this could have been avoided. Go to litigation, get snippy with one another, then settle it amicably. In that scenario, considering the hit to both sides’ reputation and public perception a trial brings, everyone wins. While the patent system does need reform, fair licensing fee guidelines are what need to be established for the future.

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