Analyst Says What We Already Knew: Apple's Multi-Touch Patent Fight Won't Help Its Business

from the in-case-you-didn't-get-it-yet dept

Tue, Feb 3rd 2009 4:54pm — Carlo Longino

After Palm showed off its new Pre smartphone, including the device's multitouch interface, at the Consumer Electronics Show last month, Apple made some threatening noises about how it would go after anybody who "ripped off" its intellectual property. As always, we didn't see how this would benefit anybody in the marketplace, since competition pays benefits to consumers, and drives participants, even Apple, to continually innovate and improve their products. Now, a wireless industry analyst has called Apple's threats into question. He makes the point that a long, drawn out IP fight won't help Apple's business in the long run: "Building on the company's legacy as one of the greatest innovators in the technology industry may be a smarter business model than taking on the rest of the industry in a battle that may be impossible to win."

His reasoning is twofold: first and most obviously, Apple stands to gain more by competing in the market than competing in the courts. Second, he says that if Apple went ahead with patent suits, it may not be able to win them. He says that it appears that much of Apple's multitouch IP portfolio is based on work from a couple of its employees -- who also were granted a number of multitouch patents while they were employed by the University of Delaware. The University holds those patents, while the analyst also found a lot of potential prior art he says could threaten the Apple patents' validity if they're reviewed. So if Apple realizes the patents may not stand up to a review, it could explain the bluster; but once it's clear the threats are empty, they hold no value. The question now seems to be how long Apple will try to play out the show, and how many resources it will throw at it that would be better spent on developing its products.

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Filed Under: iphone, multi-touch, patents, pre
Companies: apple, palm

21 Comments

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Ima Fish, 3 Feb 2009 @ 5:14pm

A good sign that a company is taking a turn for the worse is when its business plan goes from satisfying its customers to hindering competition through the courts.

If I had any Apple stock, I'd sell.
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Anonymous Coward, 3 Feb 2009 @ 5:39pm

Perhaps the investment company this analyst supports has holdings in Palm or has a number of clients with such holdings. Interestingly, the report mentioned in the article does not appear to be publicly available.
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Just Curious, 3 Feb 2009 @ 5:52pm

Does Techdirt EVER feel that a company can assert intellectual property rights against anyone? I'm a big fan of TechDirt, but lately, you can sum up a vast majority of TechDirt articles as follows:

"XYZ Company owns the IP in Widget 1."

"ABC Company is exploiting or reproducing Widget 1 without a license."

"XYZ Company is mad and brings claims against ABC Company"

"TechDirt Response: XYZ Company is bad bad bad."

Geeze. Patents give the patent holders monopolies in IP they invent. Consequently, patents incentivize inventors to innovate. Listen, the patent system is flawed, but I'm beginning to wonder if TechDirt would EVER find it appropriate for an IP owner to claim infringement.
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- Ima Fish, 3 Feb 2009 @ 6:06pm
  
  Re:
  Invention never takes place in a vacuum, in other words, it is always based on prior work.
  
  Look at an amazing and utterly useful invention the transistor. The first patent was filed in 1925. The second patent on it was filed in 1934. The third was in 1947.
  
  However, the father of the transistor, William Shockley, the guy who actually got it to work and made it useful. The guy who rolled up his sleeves and actually made it commercially viable. The guy who actually laid the foundation for what is now called Silicon Valley... had absolutely no patent on it.
  
  Exactly how did those patents help innovation when the true innovator, i.e., the guy who got it to work, was not "incentivized" by the patent system at all?
  
  Maybe you should give us an example of a patent that actually worked to create more innovation rather than hinder innovation by locking up competition in the courts.
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  - Anonymous Coward, 3 Feb 2009 @ 8:34pm
    
    Re: Re:
    "...had absolutely no patent on it."
    
    Likely because he had assigned his rights to his then employer...Bell Labs.
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    - Anonymous Coward, 4 Feb 2009 @ 12:09am
      
      Re: Re: Re:
      That is indeed correct. It is also what happened with the integrated circuit as intellectual property, it was about 10 years after the invention that the two companies (Fairchild Semiconductor and Texas Instruments) finally had the question of who owned the IP over an IC settled in court. By the time they had this settled, the technologies in question were very outdated.
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- Anonymous Coward, 3 Feb 2009 @ 6:22pm
  
  Re:
  Consequently, patents incentivize inventors to innovate.
  
  Ralph Waldo Emerson, wrote in 1841 that "the party of Conservatism and that of Innovation ... have disputed the possession of the world ever since it was made … Innovation is the salient energy, Conservatism the pause on the last moment."
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- Anonymous Coward, 3 Feb 2009 @ 6:25pm
  
  Re:
  Consequently, patents incentivize inventors to innovate.
  
  Ralph Waldo Emerson, wrote in 1841 that "the party of Conservatism and that of Innovation ... have disputed the possession of the world ever since it was made … Innovation is the salient energy, Conservatism the pause on the last moment."
  
  When you stop to see patents as a snapshot or "pause" on an idea in time, you can see how innovation becomes stifled.
  
  Today, many companies find it difficult to innovate or create something brand new, and exciting. Often this is because of the fear of litigation. But those that do and extend, and expand upon an original idea to benefit the livelyhood of their customers or in a more general sense, humanity, will have bread broken at my table.
  
  Thanks!
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- Mike (profile), 3 Feb 2009 @ 6:25pm
  
  Re:
  Geeze. Patents give the patent holders monopolies in IP they invent. Consequently, patents incentivize inventors to innovate.
  
  I think you've got the story a little mixed up there. It's not a "consequence" of the monopoly that anyone has an incentive to innovate -- and repeated studies have shown the opposite. Those monopolies actually significantly decrease and limit the incentive to innovate, because it allows an *inventor* to block anyone else from innovating, decreasing competition, and removing the main incentive for innovation.
  
  but I'm beginning to wonder if TechDirt would EVER find it appropriate for an IP owner to claim infringement.
  
  We're waiting to see a case where the "progress of science and the useful arts" is actually promoted. Would be great to find one.
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RD, 3 Feb 2009 @ 6:05pm

Wrong
Wrong, wrong, WRONG! Patents do not and have not EVER incentivized inventors to innovate. Patents do NOT foster innovation, they foster invention and the exclusive profit thereof. "But RD," you scream like a whiner, "thats the same thing!" Wrong AGAIN! Inventing something is not innovating, necessarily. Sometimes they can be the same thing, but most of the time innovation ONLY comes through competition. If you create a widget NO ONE ever thought of, would you need to "innovate" after you are granted a patent and can sit back and reap the rewards? No, you only innovate when there is a NEED. There is a need when there is competition. Look at the cellphone industry for a good example. Lots of competition, lots of drive for better/smaller/faster/more features. Look at the cable internet industry. Monopoly in most places. In those places, the slowest speeds available in the broadband market. On the east coast, where there is FIOS, multiple cable providers, multiple DSL, speeds are 3-20 times faster, and cheaper, than cable internet in, say, the midwest. Why the big difference? Why didnt they "innovate" so they could be better or faster than anyone? Competition. No NEED to innovate with no competition (midwest), big need to innovate when there is (east coast). Patents are nothing but a wall to hide innovation behind and profit from doing the least amount of it.
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Anonymous Coward, 3 Feb 2009 @ 6:53pm

Screw Apple...
I bought a Blackberry Storm!
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dssstrkl, 3 Feb 2009 @ 7:25pm

Why are we still harping on this?
Apple hasn't sued anyone yet, and as both Engadget and Gizmodo have pointed out, there's some significant patent overlap between Apple and Palm, which itself isn't exactly some fly by night that showed up out of nowhere. If Apple sued Palm, Palm would immediately countersue, just like what happened with the "Zen patent" lawsuit.

Let's hold off with the hand wringing until something actually happens, or is that too much to ask?
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- Ima Fish, 3 Feb 2009 @ 8:26pm
  
  Re: Why are we still harping on this?
  "Let's hold off with the hand wringing until something actually happens, or is that too much to ask?"
  
  Apparently, you're too busy to actually read the mere two paragraph blurb above, but something did happen. Apple threatened legal action against Palm.
  
  Based on that threat, people are now discussing whether it is in Apple's best interest to file a lawsuit.
  
  Sort of like what you did when you pointed out that it would lead to a counter-suit. Wow, apparently, you didn't even bother reading what you wrote. Maybe we were "harping" on it for the same reason you were.
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Pete, 3 Feb 2009 @ 9:23pm

Re:Re:Re:
Lets not forget all those times Apple has been sued over the years - over things like the iPod interface, for example. Where were you with your defense of ripping off other's ip?
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Kevin C., 3 Feb 2009 @ 10:11pm

Confused
I confused. Have patents evolved from method to action? Meaning, I build a time machine based on the flux capacitor. I then patent it-the time machine. Am I to understand that people can't travel thru time without infringing on my patent or they can't use a flux capacitor and various other methods I employed to do it?
If it's the former, well that's absurd. If it's the latter, has anyone looked into the method by which palm's 'multi-touch' functions?
With regard to the former again, if it's the case, our patent system is obviously screwed more than I thought AND what kind amoral ahole could file a patent of this type with a clear conscience?
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anid vednag, 3 Feb 2009 @ 11:31pm

Isn't it obvious ?
When Apple announced the iPhone it took the touch concept and enhanced the user experience for the phone to the next level. It has patented the user experience which is now obvious to anyone with knowledge or prior art. If you see Palm Pre demos it is without doubt an iPhone knockoff. I think, if Apple sues, Palm is will have a hard time defending.
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- Anonymous Coward, 4 Feb 2009 @ 6:50am
  
  Re: Isn't it obvious ?
  Touch using just one finger has been around for a long time. It was inevitable that eventually you'd see touch using more than one finger. Thats not patentable. It was obvious. In fact, touch screens that enabled multi-touch have been around before the iPhone as well. So really, its just gestures. And thats just an action, not a method. You can't patent the use of gestures (the patent doesn't even get more specific than that... just saying it patents the use of gestures using one or more fingers). Plus APPLE DIDN'T INVENT IT. They hired employees that already had developed it.
  
  But in any case, you're right. The technology is obvious. Therefore its un-patentable. Just because its the first time used on a phone doesn't make it special.
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  - Just Curious, 4 Feb 2009 @ 10:12am
    
    Re: Re: Isn't it obvious ?
    >>"Plus APPLE DIDN'T INVENT IT. They hired employees that already had developed it." Folks...COMPANIES and entities don't "invent" under the U.S. patent systems, individuals do. Company's aren't the named inventors, they are ASSIGNEES of the name inventor (who are individuals or prior assignees). Therefore pointing out that "apple didn't invent it" doesn't quite make a lot of sense, no company "invents". Employees are going to be the inventors (and they assign their rights to the employer)...that is how the patent system works. As for the "patents don't foster innovation" crowd, I guess everyone forgets the early part of the last century where inventors were largely motivated by the pay-out they would get from making and selling inventions in new and exciting industries. Clear example is the oil industry (drill bits), lights, etc. Patents foster innovation in that inventors are extremely incentivized to "invent first" so that a competitor doesn't beat them to publish or commercialize. Again, don't get me wrong, the patent system is EXTREMELY FLAWED (e.g., patent trolls, patent office granting stupid patents, etc.). But saying, "do away with the patent system" or "patents don't foster innovation" is a little short sighted IMHO...
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    - nasch, 4 Feb 2009 @ 12:57pm
      
      Re: Re: Re: Isn't it obvious ?
      Patents foster innovation in that inventors are extremely incentivized to "invent first" so that a competitor doesn't beat them to publish or commercialize
      
      But you haven't demonstrated that there's no such incentive without patents. In fact, there is. There are significant advantages to being first to market, even in the absence of patents.
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siobahn, 4 Feb 2009 @ 11:07am

Something weird's going on
Most people, apparently here too, are focusing on one single Apple patent (the one on multitouch) and overlooking the bigger picture: that Apple has "taken out" not one or two but hundreds of patent applications relating to the iPhone/iPod Touch. If you think back to the day Steve Jobs unveiled the iPhone (January 9th 2007), he had a slide on screen about that fact and even said "and boy have we patented it". If you recall from further back, there was even a design patent covering the appearance of the iPhone.

Now jump forward to today. The iPhone clones like the Palm-Pre, Meizu M8, and just announced Toshiba TG01 all copied not just the touch screen component, but the overall appearance. How can that be? Apple's rivals cannot presume they can overcome ALL of the 100's of patent filings Apple has (should they ultimately issue as patents), can they? Yet Palm has rushed into betting their whole continued existence on the success of copying an Apple product?
Something doesn't add up here. Either something else is going on here, or companies like Palm are so stupid they are willing to face shareholder class action suits when their attack on Apple fails and their whole operation collapses. Something weird is going on, and it sure ain't hinging on that single Apple multitouch patent.
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geno, 5 Feb 2009 @ 11:32am

People are missing the point
First of all @siobahn
..."The iPhone clones like the Palm-Pre, Meizu M8, and just announced Toshiba TG01 all copied not just the touch screen component, but the overall appearance...."

How can you sue on the basis of patent infrignment of a design of a Cellular device when every manufacturer these days have the same basic device and further Apple's claim that they "invented" the basic design of a candybar full-screened phone (the iPhone) is completely incorrect when the LG Prada came into existence first. In the US, aren't patents done by a FIRST TO MARKET basis and if so that Apple patent can easily be defeated.

Also, it would be easy for Palm to defeat the other patents that cover how you interact with the screen, simply because there are only so many ways that you actually can interact with a flat surface. They can't patent the scrolling behavior or the pinching behavior because these are OBVIOUS gestures that woulda been used regardless of the iPhone doing it or not.

Furthermore, Palm has so many patents when it comes to PDA's and Smartphone's that it is not unlikely that Apple infringed one or maybe more of these and Palm can countersue them with it making it further unlikely Apple will file a lawsuit on the Palm Pre.
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