PATENT POLICYEARLY ON Valentine's Day in 1876, Elisha Gray, founder of Western Electric, dashed to the patent office in Washington DC to file a notice (a caveat) that he was in the process of inventing a new device called the telephone. His notice was duly registered into the office's cash ledger at lunch time.
In the interim, however, Alexander Graham Bell’s lawyer had gone to the same office to register Bell’s patent application for a telephone, demanding an immediate entry into the cash ledger. Ten years later and by a single vote, the US Supreme Court upheld Bell’s claims over a case brought against him by Gray and the well-funded Western Union Telegraph Company.
Now the US has another patent war over the telephone. When Steve Jobs introduced the iPhone in January 2007, he noted: “Today, Apple is going to re-invent the phone . . . We’ve filed for over 200 patents for all the inventions in the iPhone and we intend to protect them.”
The iPhone was a revolution, introducing a relatively large touch-screen, keyboard-free, combined phone, music player and internet browser. The industry had to try to respond: Apple does not license its iPhone software to others. In November 2007, Google released its open-source Android smartphone software, and handset manufacturers appeared to be offered a lifeline. Nokia, the then market leader, tried to go its own way but has since stumbled badly. A number of Asian-based handset makers embraced Google’s intervention, however.
Jobs has now acted on his 2007 threat. Last March, Apple sued the Taiwanese handset manufacturer HTC, alleging infringement of numerous iPhone patents in its Android-based handsets. The next month, Apple sued Samsung for “slavishly” copying both iPhone and iPad tablet patents in its Android-based Galaxy smartphone and Galaxy Tab computer.
A few days later, Samsung countersued Apple alleging infringement of a number of its wireless technology patents. Both companies are now lobbying the US International Trade Commission to prohibit sales of each others’ products in the US.
As a backdrop, Google’s development of Android has led to accusations by Oracle of patent infringement relating to Java technology, which Oracle obtained by its acquisition of Sun Microsystems.
Meanwhile, Apple, Microsoft, EMC and Oracle are seeking regulatory approval to buy about 800 wireless-technology patents from Attachmate for $450 million, which the latter now owns as a result of its acquisition of Novell. Microsoft has said Google rejected an invitation to join the consortium in acquiring these patents.
At the same time, Apple has partnered with Ericsson, Microsoft, Oracle, RIM and Sony to buy about 6,000 wireless-technology patents from Nortel (under Chapter 11 restructuring) for $4.5 billion, five times Google’s initial $900 million offer. Google’s chief legal officer David Drummond recently accused its competitors of a waging a campaign against Android, and that “bogus” patents are being used to “strangle” Android. So perhaps we should not be surprised by Google’s audacious purchase of the Motorola Mobility division for $12.5 billion, including 24,000 patents.
What does this all mean for us? Almost certainly, continuing high prices for smartphones, as manufacturers and software companies charge consumers for the costs of the royalty payments they make to patent holders. Some may argue that this is only fair if society is to benefit from continued innovation, and if inventors are to be encouraged.
But let’s consider the contract that society and inventors undertake. Society grants an inventor a patent so that the inventor publicly discloses his invention, thus advancing the state of the art and encouraging learning, and even more innovation. The invention is expected to be novel, useful and not obvious. In return, for a set period, society grants the inventor the right to prohibit others from using the invention in its products. The inventor may use the patent directly, or choose to license the patent to others, and so benefit from royalties, or even sell it to another party.
However, the inventor or patent holder may do nothing at all. Instead of using the patent, the invention stagnates and is kept in reserve as a defence should a competitor ever claim a patent infringement against the owner. Thus, some parties build up patent war-chests, much as the Cold War led to nuclear stockpiles to deter an enemy via a Mutually Assured Destruction response. A “my assets are bigger than yours” accumulation strategy clearly encourages patent mass-production, with many of them being of questionable quality and limited practical value.
Is there an alternative? “Use-it-or-lose-it” provisions and case history appear in trademark legislation in some jurisdictions: if a trademark is stagnant, or incorrectly applied, the trademark holder may lose it in a court challenge by a competitor.
Patent legislation could be extended so that during the period of exclusion offered by a patent, a competitor could bring a court case requiring a patent holder to demonstrate that the associated invention was being used to the benefit of society. The patent holder would then need to show in court that either it was using the patent in goods, services or processes, or that one of its licensees was so doing. A “use-it-or-lose-it” provision would concentrate minds, affect reputations and arguably reduce the number of dubious patent filings.
I am not convinced that the current patent war in smartphone technology is good for the industry, let alone consumers and society at large. New thinking in patent legislation is timely, and is an opportunity to take an international leadership position.
