The trench warfare of World War I has become synonymous with futility and wasted resources, human and otherwise. The smart phone patent wars of the past few years may soon be regarded as their equal in terms of commercial pointlessness.
The notion that sparked this battle was that intellectual property, especially patents, could be the secret weapon that provided combatants with strategic advantage and the key to victory. It hasnt worked out that way.
Apple was widely perceived to have bested Samsung when it won a @$7 billion judgment. But the validity of Apple's patents have been called into question and Samsung has continued to outsell Apple, even widening its lead. Other litigants have faced similar skepticism from the courts. The patent holders assumed they could capture and hold hostage the value of wide-ranging swaths of commercial property. But they overreached and the courts have challenged the self-serving and avaricious interpretation of the patent holders' mandate.
A fundamental flaw in the litigious approach was ignoring the collaborative and evolutionary nature of smart phone technology innovation. Developmental credit is not as definitive as the owners might have supposed, nor for that matter, is the question of ownership itself.
In a winner-take-all economy, it was supposed that grabbing the intellectual high ground would convey associated riches and eventual domination. It turns out that a smarter approach would have been to embrace the collegial legacy of the tech industry, sharing both credit and potential benefits rather than attempting to grab all the glory for one's self. The latter has proven to be costly, counter-productive and ultimately fruitless - which is especially ironic in an industry replete with apples and blackberries. JL
Ashby Jones reports in the Wall Street Journal:
Smartphone makers who went on the offensive in the industry's patent wars are learning a tough lesson: The courts aren't buying it.
The nearly $300 billion industry has been roiled by more than three years of expensive litigation in courts from California to South Korea. But a string of rulings in big cases has left litigants with little to show for all the trouble. The courts have proven as likely to deliver plaintiffs a rebuke as a win, and the slow grinding of the justice system has sapped the impact of the occasional big victories.
In the latest setback for a litigator, European Union regulators on Monday slapped Google Inc. unit Motorola Mobility with a formal complaint, claiming the company's efforts to enforce an injunction against Apple Inc. over the use of its patents is hurting consumers. Motorola, which has said it properly followed procedures for enforcing its patents, recently found itself at the center of one of the more notable losses for a patent holder.
In a decision likely to have broader implications, U.S. District Judge James Robart last month rebuffed Motorola's demand that Microsoft Corp. pay it billions of dollars annually for its use of Motorola patents relating to standards for wireless communication and video compression. The Seattle-based judge instead ordered Microsoft to pay just $1.8 million a year.
"Motorola has licensed its substantial patent portfolio on reasonable rates consistent with those set by others in the industry," said a Motorola spokesman after the ruling.
Judge Robart's decision comes amid questions about the strategies that have led technology heavyweights from Google to Microsoft to Apple to Nokia Corp. to the courts. Recent rulings "further this notion that buying up a few patents and trying to get rich off them by suing is a questionable pathway to profitability," said Mark Lemley, a patent-law expert and law professor at Stanford University, who has represented Google in unrelated litigation.
The seeds of the smartphone wars were planted about six years ago, after technological advances turned mobile phones into minicomputers, complete with email, Web access and other features. Incumbents like Nokia suddenly found themselves competing with innovative new players, like Apple and Google. Within a couple of years, a legal war had broken out, with the biggest players claiming their competitors were ripping off each other's designs and technologies. Heated rhetoric piled up in courthouses all over the world. Apple's lawyers in court papers last year accused Samsung of a "deliberate plan to free-ride on the iPhone's and iPad's extraordinary success by copying their iconic designs and intuitive user interface."
The result has been tens of millions of dollars in litigation costs, heightened tensions among competitors and a growing consensus within the technology community that the patent system is hindering, not helping, innovation.
The battle is far from over. Many cases are on appeal or are working their way to trial and an ultimate winner could yet emerge. But so far, the courtroom wars have done little if anything to alter the sector's balance of power. In the U.S. and Germany, where most of the legal battles are occurring, significant financial damages have been awarded in only one, albeit notable, case: last summer's jury verdict ordering Samsung to pay Apple $1.05 billion for stealing the design and technology behind the iPhone and iPad.
The majority of the injunctions requested in both countries have been denied outright or fizzled on review or sidestepped relatively quickly with technological tweaks.
And eight months after the legal battle between Apple and Samsung, Apple has yet to recover much of anything. In March, U.S. District Judge Lucy Koh overturned a jury's damage award for several of the devices at issue in the case, slashing the damages award by about $450.5 million. A retrial on the damages issue is set for November.
Meanwhile, the validity of a pair of Apple patents at the heart of the case has since been called into question by the U.S. Patent and Trademark Office. In December, the office preliminarily invalidated the patent on Apple's "pinch-to-zoom" feature, and last month, the office, in what it called a final ruling, invalidated Apple's patent on its "over-scroll bounce" patent. Apple is challenging both rulings. Samsung has argued that the trial on a different set of Samsung products, expected early next year, should be pushed off until the challenges to the two patents are resolved. Compounding Apple's woes: The two sales injunctions ordered last year by Judge Koh against two Samsung products—the Galaxy Nexus phone and the Galaxy Tab 10.1—were later dissolved.
"That verdict just didn't hit Samsung in the pocketbook the way a lot of people expected it to," said Michael Carrier, a patent-law expert and law professor at Rutgers University. "The injunctions didn't stick, and by the time the trial rolled around, a lot of the phones at issue weren't even being sold."
Samsung's lead over Apple in smartphone sales continues to widen. In the first quarter of 2013, sales of Apple phones grew to 37.4 million, a 6.6% jump over its first-quarter 2012 numbers, according to a study by research firm IDC. But Samsung sold 70.7 million phones in the same time period, a 61% hike over its sales from a year ago and more phones than the next four competitors combined, according to IDC. Samsung now owns nearly 33% of the global smartphone market, compared with 17% for Apple.
Spokespeople for Apple and Samsung declined to comment, citing ongoing litigation.
Some companies have privately defended their strategies, arguing that even wins that appear small, like knocking a product from the market for a month or forcing a company to disable even a minor feature, can yield significant advantages.
Big technology and big litigation make an incongruous pair. Technology, especially in the highly competitive smartphone market, moves fast, with companies rolling out new products as often as every few months.
U.S.-style litigation, on the other hand, with its discovery battles, depositions, motions and counter-motions, moves slowly. It isn't uncommon for a large case to take five or more years, from the first complaint to a verdict. Often, as was the case in the first Apple-Samsung case, products that were relatively new at the start of a case are likely to be replaced by updated models at the end.
Also making life difficult for patent-holders: a growing sense among scholars, lawyers and judges that the PTO and other patent-granting organizations have been issuing too many software patents, many of which are of incremental or dubious value. A spokesman for the PTO didn't respond to a request seeking comment.
In recent months, the agency has said it has changed its procedures to allow its examiners more attention to software patents. The 2011 America Invents Act, much of which went into effect in March, could also help weed out bad software patents.
Other legal experts think the litigation could lead to a flurry of cross-licensing deals, possibly after a few more appellate decisions give the companies a clearer sense of their legal strengths and weaknesses.
"But already, this has gone on far longer than I thought it would, and I think it could go on endlessly," said Stanford's Mr. Lemley.
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