Wired Takes On The Smartphone Patent Thicket And How It Stifles Innovation

from the dumbpatents-and-smartphones dept

Back in February, we noted the rapid explosion of patent lawsuits in the smartphone realm, with pretty much everyone suing everyone, and began to wonder if it was even possible to build a smartphone without getting sued. As it continued to play out, it became clear that the smartphone market was a living example of the problems of a patent thicket -- where a new technology is so locked down by patents, as to slow down the pace of innovation in that market -- directly the opposite of the intended purpose of patents. Patent thickets have been demonstrated in many areas, with smartphones just being the most recent.

Wired Magazine has now taken on the issue, with a good article detailing the patent thicket mess in the smartphone space, and why it's a problem. There isn't much new in the story if you're a regular Techdirt reader, but it's an excellent summary of the situation and why it's a mess:

Underlying much of this litigation is a broken patent system that increasingly churns out weak patents, concomitantly strengthening the rights of those who hold them. Patents described in vague, abstract terms are the source of most infringement lawsuits as they provide more leeway for subjective interpretation. Patent examiners grant weak patents because administrative structures are overloaded and understaffed. And in an age of rapid product development, a market niche can be identified and a product manufactured, retailed and retired before a patent is even granted.

The article also discusses the fact that patent litigation storms like this one had been avoided in the past when big companies came up against each other through "gentlemen's agreements" not to sue each other. But that's been flipped around a lot through a combination of non-practicing entities getting big awards, and companies arguing over who's in the stronger position for such an agreement not to sue.

The end result, though? Money that could go towards productive investment, instead is being wasted on litigation. It's exactly the opposite of what the patent system is supposed to do.

Filed Under: patent thicket, patents, smartphones
Companies: apple, google, htc, nokia

HTC Fires Back At Apple, Patent Nuclear Response Launched

from the and-here-we-go dept

With Apple and Nokia already locked in a patent nuclear war involving lawsuits filed back and forth and back and forth, it looks like the same thing may be happening now in the Apple-HTC dispute. The difference, of course, is that Apple initiated the lawsuit against HTC. But now HTC has responded in kind, claiming that Apple violates a bunch of its patents, while using the ITC loophole to get the iPhone barred from the US.

What we're really seeing is what happens when you get a patent thicket in a highly competitive, dynamic area. Suddenly, rather than focusing on competing in the marketplace, and continually outpacing each other by offering new innovations and benefits to consumers, companies start wasting millions upon millions of dollars trying to block competitors from doing the same thing. It leads to a massive net negative impact on society and consumer benefit. What a shame.

At the very least, it appears that HTC recognizes this:

"As the innovator of the original Windows Mobile PocketPC Phone Edition in 2002 and the first Android smartphone in 2008, HTC believes the industry should be driven by healthy competition and innovation that offer consumers the best, most accessible mobile experiences possible."

Either way, it's yet another nuclear war in the patent world, taking money away from actual innovation. What a shame.

Filed Under: patent thicket, patents, smartphones
Companies: apple, htc

This Is What A Patent Thicket Looks Like [Updated]

from the visualization-works dept

A couple weeks ago, we asked if any smartphone could survive the patent thicket. In the last few months there has been a ton of lawsuits (and ITC filings) over smartphones supposedly violating patents. And since that post was written a few more lawsuits were filed as well. It's patent nuclear war breaking out in the smartphone space, and the end result is that we, the public, all suffer. Lots of money is being spent on lawsuits, and that could have gone into better development and giving us more features, better prices and better service.

Of course, while I described this in words, sometimes, as the cliche goes, a picture is worth a lot more. Thanks to Nick Bilton at the NY Times for putting together that picture (see update below) that shows what the patent thicket in the smartphone space looks like: That's a picture of a patent thicket, and it's a picture of waste that does the exact opposite of promoting innovation.

Update: Unfortunately, it looks like Bilton may have exaggerated a bit. Joe Mullin looks through the details and notices that some of the lawsuits appear totally unrelated to the smartphone space. As he notes, there are plenty of smartphone patent lawsuits to go around, but there's no need to exaggerate them.

Filed Under: patent thicket, patents, smartphones

NY Times Seems To Recognize That Nokia's Patent Fights Have Nothing To Do With Innovation

from the it's-just-a-big-pissing-match dept

When Nokia first sued Apple for patent infringement over the iPhone, we noted that it appeared like yet another case of a company getting beat in the market suddenly whipping out some patents to sue over. This seemed to anger the usual bunch of patent system defenders -- along with a group of Nokia defenders -- but it appears that others are noticing as well. The NY Times has an article discussing Nokia's sudden aggressiveness in the patent realm, noting that the company has been facing some business troubles, and it's notable that its patent aggression seems to have shown up at just the same time as its own performance trouble. Funny that.

Of course, this is a major issue. As with so many high tech areas today, there are giant patent thickets. It's effectively impossible to launch a product that doesn't violate dozens, if not hundreds, of patents. And (despite claims to the contrary) it's got absolutely nothing to do with companies "stealing" from each other. It's got plenty to do with companies making the next logical step in the innovative process, and coming up with products that meet what the market wants. But with patent offices around the world being willing to hand out patents on minor changes, it's impossible to actually build a useful product that doesn't violate patents. This has nothing to do with innovation. At this point, patents are just a weapon that can be flung against anyone who does innovate if you can't compete.

Filed Under: patent thicket, patents, wireless
Companies: nokia

The Way Forward On Intellectual Property For China And India

from the what-to-do-now... dept

This is the final post in our series on intellectual property in China and India. Feel free to read through the whole thing.

The continued development of the knowledge economies in both China and India requires thoughtful, practical policies that will give the needed incentive and capacity to innovators while providing benefits to as many as possible. In contrast to the beliefs of many, further strengthened intellectual property rights are unlikely to provide a positive impact on the economies of China and India. Instead, the two emerging giants should dedicate maximum attention to the other ingredients of a knowledge economy while structuring, to every extent possible under international treaty obligations, their domestic intellectual property regime to provide the optimum balance between incentives and access, bearing in mind that to diffuse the gains from existing innovations, the latter is to be favored.

Perhaps the single-most beneficial thing China and India can do to promote innovation and a dynamic knowledge economy is to provide high-quality education for all. This can be done in numerous manners, but it is important that science and technology education is promoted, perhaps even subsidized, to make it more attractive and affordable. Developing highly-skilled workers will provide the creativity and drive essential to the invention, adoption and productive utilization of new technology. While providing training for scientists and engineers, China and India must also create a strong managerial class to absorb and adopt technologies from around the world (Maskus 2000).

Additional policies can promote innovation, as well. Labor laws, especially in India, should be restructured to create maximum mobility and provide competitive salaries for the best and brightest. Government procurement laws, the rules of science and technology ministries and funding sources can be reformed to provide the incentives that intellectual property seeks to create, but without the unintended consequences of limited access and monopoly prices (Graff 2007). Universities, an important source of knowledge, should be connected with industry and receive funding for basic and applied research. Further, economic policies should encourage open competition, macroeconomic stability and a robust ICT infrastructure.

China and India should seek to structure their respective intellectual property regimes to best promote their individual interests, not an unclear global compromise that is driven by nations far wealthier than themselves. China and India are unique due to their size in which advanced capabilities exist in parallel with deep-seated poverty. Although existing international treaties largely confine China and India, they do have some room for flexibility. For example, TRIPs leaves room for domestic standards regarding novelty, nonobviousness and the scope of patent protection (Abramson 2007). This can be used to tilt the intellectual property regime towards second-comers, especially domestic innovators (Reichman 1997). For example, nonobviousness should be interpreted widely, allowing Chinese and Indians to legally utilize overly blatant foreign patents. Disclosure should be strengthened, leading to additional information spillover. And competition laws can be used to curb many of the adverse effects of IP. In the face of overly-strong intellectual property abroad, China and India should structure their legal incentives to encourage long-term competitiveness, establishing an innovation system that will be increasingly attractive to MNCs who find innovation difficult in the West.

A number of specific recommendations are possible, as well. Think tanks and research institutions focused on issues concerning intellectual property should be established with independent, objective and well-trained staff. Both existing IP systems should be run efficiently and with social interests in mind. This means training judges, administrators and bureaucrats in the nuances of intellectual property and their costs and benefits. When addressing university commercialization, India and China should fund and manage research in the public interest, mandating transparency, avoiding exclusive licensing unless necessary for commercialization, and potentially retaining government use rights for resulting innovations (So 2008). Although it has not been the focus of this paper, on the topic of traditional knowledge, China should follow India’s lead in actively defending the public use of exiting knowledge by fighting attempts to reappropriate the public domain through marginal changes to traditional knowledge. India’s successful challenge of patents on neem and Basmati rice provide useful examples (Boldrin 2008). Finally, the capacity of domestic institutions to support limited intellectual property should be strengthened, most prominently by prosecuting misuses of the IP regime (Okediji 2006 PDF).
    
With increased global prominence, China and India should accept their rightful place in the international system. As far as it is in their populations’ interests, they should resist further elevation of intellectual property, seek expanded compulsory licensing capability, and promote exceptions and limitations for educational materials for students.

Above all, China and India should seek consistency and transparency in their intellectual property policies to create a business environment conducive towards investment and innovation. IP should not be strong; IP should be efficient. As an imperfect tool, it should be used pragmatically and critically.

Robust, clear and enforced intellectual property is very likely a part of a successful knowledge economy, but the advantage of strengthened IP is frequently overstated. In contrast to the other parts of a knowledge economy, intellectual property has a tendency to be misused to the detriment of the economy. For both China and India, placing faith in exclusive rights will limit the ability of the impoverished masses to find productive employment and threaten the long-term sustainability of their innovativeness.

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Other posts in this series:

• Do China And India Really Want Stronger Intellectual Property?
• A Brief History Of Intellectual Property In China And India
• Why Might China And India Want To Strengthen National Intellectual Property Policy?
• Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World
• In China And India, Stronger Intellectual Property Is Unnecessary
• There Is No Harmony In A Patent Thicket
• The Way Forward On Intellectual Property For China And India

Filed Under: china, india, intellectual property, patent thicket, patents

There Is No Harmony In A Patent Thicket

from the just-thorns dept

This is the sixth post in a series of posts looking at the question of intellectual property rights in both China and India. We've got one more post to go.

Why Intellectual Property Is Insufficient For Economic Development In China And India

The strong focus on intellectual property presented by advisers to China and India miss the ecosystem in which useful innovation takes place. This ecosystem includes, among other things, education, entrepreneurship and openness. For example, intellectual property can only add to growth when coupled with trade liberalization, something India significantly lacks (Gould 1996). However, because a larger market provides a larger incentive for commercial innovation, some researchers have found that with increased market size should come decreased intellectual property (Boldrin 2005). This finding, that for every 2% of economic growth, the duration of IP should be reduced by 0.5% would have significant implications in rapidly growing China and India, but it receives little to no attention amidst the drive for ever stronger intellectual property. Finally, even though intellectual property may stimulate cross-border licensing of technology, it is unlikely to bring a sudden inflow of foreign investment because other facts account for the variation in the behavior of MNCs in different countries (Fink 2005).

Watch out for the Patent Thicket

As China and India are exhorted to increase intellectual property protection and enforcement to higher standards - “harmonization” in the rhetoric of its proponents - they risk emulating the detrimental IP systems of the developed world. The United States, widely viewed as the most innovative nation in the world, has a patent system that  has, according to Jaffe, "become sand rather than lubricant in the wheels of American progress” (Jaffe 2004). Even more worrying, the trend in international intellectual property is actually speeding past the American level of protection, raising concerns that the incredibly strong IP in countries will diminish, rather than promote, innovative capabilities.

Patent thickets - "a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology" - and the "tragedy of the anticommons" - where "too much ownership... wrecks markets, stops innovations and costs lives" - are useful concepts for policy-makers in China and India to keep in mind as they are encouraged to increase their intellectual property. Instead of being incentives for innovation, 47% of firms are using patent portfolios in negotiations and 50% as defensive protection from lawsuits (Boldrin 2008). If China and India grant patents too broadly, they risk overshooting privatization, likely stunting the domestic growth of complex technologies and innovations whose production will be covered by dozens of competing patent claims (Jaffe 2004). This will only be exacerbated by bad standards that do not restrict exclusive rights to truly novel, useful and non-obvious inventions (Boyle 2008).

Are China and India Overshooting Optimal Intellectual Property?

There is already evidence that the two emerging superpowers are making these errors. East Asian countries are patenting at a per capita rate of 4 times the developed world, leading to quick patent quantity convergence (Brahmbhatt 2007). China, whose patent office led the world with 800,000 applications in 2008, is now also home to the most patent lawsuits per year (“Battle of Ideas”). While, prima facie, the enormous absolute populations of China and India will likely make their patenting activity among the highest, given the relatively small sectors engaged in truly innovative work, these figures are worrying. In fact, the same motivations that have been fingered as the causes of the American patent system’s woes – government downsizing and competitiveness – are currently present in China and India, increasing the likelihood that they follow America’s folly (Jaffe 2004).

Another American policy of uncertain quality that is being emulated in China and India is university commercialization. The Bayh-Dole Act, passed by Congress in 1980, encouraged universities to commercialize their innovations through patents, but its effectiveness is highly suspect. Bayh-Dole changed “academic norms regarding open, swift and disinterested scientific exchange” (So 2008). In India, this is already a concern with 71% of surveyed executives feeling “that lack of collaboration between industry and research institutes was the main hurdle to innovation in India” (Dutz 2007). The facilitators of that exchange, Technology Transfer Offices, have “become gatekeepers that in many cases constrain the flow of inventions and frustrate faculty, entrepreneurs, and industry” (So 2008). Yet, China and India are both encouraging university patents (Graff 2007).

Flying Right Past the USA

Unfortunately, simply recreating the flawed American system is unlikely. The world’s largest economic force, the USA, is actively using its trading power to increase international IP standards beyond the current TRIPs-mandated level. Through bilateral free trade agreements (FTAs) and the multilateral Anti-Counterfeiting Trade Agreement, currently being negotiated in secret, the United States is promulgating even more expansive intellectual property policies. The FTAs have strengthened intellectual property rights beyond the high standard already set by TRIPs in dozens of countries. These measures include extending copyright for an additional 20 years, preventing parallel importation of patented pharmaceutical products, limiting compulsory licensing ability, limiting copyright exceptions and limitations through the illegalization of technological circumvention measures, and explicitly extending patents to biological innovations (Fink 2005 PDF). Countries accept these provisions in return for lower tariffs and better quota allotments, but while those are temporary, the expansive intellectual property policies are not.

In addition to all the previously explained reasons why this is likely detrimental to the developing nations who agree, it is useful to note that these policies promoted by the USTR are deeply hypocritical, especially when it comes to copyright. The United States copyright laws give considerable breadth to consumers through the fair use provision. This limitation on exclusive rights has been estimated to contribute $4.5 trillion per year to the US economy (Rogers 2007 PDF). Consumer International, a nonprofit, ranks the United States as among the best copyright policies in regards to consumer protection; notably, it is joined by China and India, condemned by the USTR and copyright industries as too permissive (“IP Watch List” 2009).

Speaking of intellectual property as unidirectional makes little sense when one recognizes that the benefits are neither clear-cut nor absolute. Additional costs of further strengthened IP in China and India will be higher administrative costs, less imitation, and a decrease in the incremental innovation that provides real growth (Reichman 1997).

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Other posts in this series:

• Do China And India Really Want Stronger Intellectual Property?
• A Brief History Of Intellectual Property In China And India
• Why Might China And India Want To Strengthen National Intellectual Property Policy?
• Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World
• In China And India, Stronger Intellectual Property Is Unnecessary
• There Is No Harmony In A Patent Thicket
• The Way Forward On Intellectual Property For China And India

Filed Under: china, india, intellectual property, patent thicket, patents

How Toyota Is Using Patents To Slow The Growth Of Hybrid Vehicles

from the what-a-shame dept

Slashdot points us to a WSJ story about how Toyota has purposely built up a patent thicket so thick that basically no one can build hybrid vehicles without paying up:

Since it started developing the gas-electric Prius more than a decade ago, Toyota has kept its attorneys just as busy as its engineers, meticulously filing for patents on more than 2,000 systems and components for its best-selling hybrid. Its third-generation Prius, which hit showrooms in May, accounts for about half of those patents alone.

Toyota's goal: to make it difficult for other auto makers to develop their own hybrids without seeking licensing from Toyota, as Ford Motor Co. already did to make its Escape hybrid and Nissan Motor Co. has for its Altima hybrid.

Defenders of the patent system often say that there's no problem: others should just "invent around" the patents. But when companies create a patent thicket like this, that makes it effectively impossible. The end result? We all lose. This makes it that much more expensive and difficult for others to innovate, because they need to allocate money to Toyota, rather than to their own innovations. It slows down Toyota as well, since it's devoting so much time and effort to lawyers. And it massively slows down the market. Rather than competing on innovation and a better product, the focus is on patents. And since it slows down competitors it means Toyota doesn't need to innovate as fast either. In the meantime... not only does the economy suffer, but so does the environment.

Of course, we can't just blame Toyota for this. It's the system that created such a scenario. In fact, Toyota recently went through a long and arduous patent battle with someone else over patents held by that guy -- resulting in Toyota having to pay a tax on every hybrid it makes. So, perhaps it's no wonder that it's trying to gobble up as many patents as possible around hybrids, if only to have the necessary "stockpile" for future patent battles against competitors. Once again, it's the entire patent system that's leading to this questionable result that harms everyone... except the lawyers, of course.

Filed Under: hybrid vehicles, patent thicket, patents
Companies: toyota

Patent Battles Make It That Much More Difficult To Keep People Healthy

from the what-a-shame dept

The problem with the view that patents should be given out for every little improvement (most of which would have come about naturally thanks to market demand) is that you end up with "patent thickets" where a ton of different companies all claim patents on some small part of a larger offering. This isn't just an argument about "ownership" or "rights" in some cases. It can also have direct impact on keeping people alive.

For example, just witness the patent battle going on in the medical device market concerning Boston Scientific, Johnson & Johnson, Medtronic and... famed patent hoarder Acacia. Boston Scientific, Johnson & Johnson and Medtronic have all been suing each other concerning various patents used in stent and catheter technology. Acacia has now jumped into the fray by acquiring patents from Datascope and setting up yet another shell company called Cardio Access.

In all of these cases, everyone is claiming ownership over some piece of the technology used in stents and catheters, basically suggesting that others can't use that part of the technology without paying them. The end result is that we're all put at greater risk. Either stents and catheters won't be able to be as useful as they should be because they can't use the best possible technology -- or if they do use that technology, they get priced much higher to pay for all of these licenses from everyone else. And, of course, with all of these patent lawsuits (and rewards -- since Boston Scientific has already had to pay out the two largest patent fines this year, totaling $750 million), money that could have been spent on making a better product is instead going into lawsuits.

Filed Under: catheters, health care, patent thicket, patents, stents
Companies: acacia, boston scientific, johnson & johnson, medtronic

Quick! Who Else Has A VoIP Patent That Vonage Can Settle Over?

from the sue-and-settle! dept

We've covered in too much detail how it's some sort of "open season" on Vonage when it comes to VoIP patents. After dealing with ridiculous and expensive patent lawsuits from companies who failed to actually innovate in the same way Vonage did, the company was pressured by Wall Street to quickly settle the various patent lawsuits filed against the company. Of course, rather than settle matters, that simply opened the door for other companies to go searching through their patent portfolios to see if there was anything they could sue Vonage over. Indeed, following those settlements it didn't take long for AT&T to dig up a patent and sue -- which was quickly settled as well. Thought things were over? No such luck. Nortel just showed up last month to sue and it took all of about a week and a half for Vonage to settle that case as well.

The Nortel case is slightly different because Vonage actually already had a patent infringement lawsuit going against Nortel, but it wasn't really initiated by Vonage. Instead, it had been initiated by a patent holding firm that Vonage bought in 2006. The end result of the settlement doesn't involve money changing hands, but just a cross licensing agreement for the patents. So what's the big lesson that Vonage and others have learned from this? It's certainly got nothing to do with innovating. It's to hoard as many patents as possible so that you have your own nuclear stockpile for when someone else sues you. Want to know why the USPTO is overwhelmed? It's not because there aren't enough examiners (as some will claim) or that there aren't enough funds. It's because the way the system now works is that you are supposed to file patents on every tiny little advancement so you can use it to protect yourself against lawsuits from everyone else. That's not about innovation. It's about waste. In the meantime, since it's still open season at Vonage, who's going to be next? There are a ton of other patents in the VoIP space that can surely be used in a lawsuit, right?

Filed Under: lawsuits, patent thicket, patents, settlements, voip
Companies: nortel, vonage

And Another One: Nortel Latest To Sue Vonage Over VoIP Patents

from the who-else? dept

A "patent thicket" is when so many different entities claim patents on a particular space or product, it becomes nearly impossible for any company to actually put a product out in that space without either having to pay ridiculous patent license fees or face a series of patent lawsuits. There are plenty of patent thickets out there -- and a big one is in the VoIP space. The concept of using internet protocol for voice communications has been out there for ages, and there were lots of attempts to get such a service working in the late 90s. While technically it was possible, the real problem was that most users didn't want to go through the hassle of setting things up to use VoIP. Vonage was the first company to get past that hurdle by making things easy: you plug a box into your modem, and then you plug in a phone -- and everything works just like your current telephone. It was this simplicity, combined with a big advertising campaign, that made VoIP popular. It certainly wasn't the basic technology advances that almost everyone in the space had figured out well before. Yet, Vonage's ability to attract users made lots of other firms jealous, leading to a series of patent lawsuits. Earlier this year, under pressure from Wall Street, Vonage agreed to settle such patent lawsuits from Verizon and Sprint, as well as some tiny patent holders. As we noted at the time, this was simply flinging the gates wide open -- and anyone who had any kind of patent related to VoIP should probably sue Vonage as fast as possible.

AT&T couldn't resist and dredged up some VoIP patents itself. And, sure enough, Vonage quickly settled. Of course, that wouldn't be the end. Now along comes Nortel, who has also sued Vonage for infringing on nine separate patents. To be fair, Vonage may have also brought this one on itself, having first sued Nortel over its own patents, leading Nortel to retaliate. You would have hoped that Vonage would have learned its lesson that patent battles aren't particularly helpful, but it appears that the company took away the wrong lesson, and is hoping to get in on the patent dollar bonanza. All we're really seeing is a blatantly clear explanation of how patents are holding back innovation, rather than promoting the progress of useful sciences. Update In the comments, someone from Vonage notes that the company did not quite initiate this, as the lawsuit actually came from another company that Vonage acquired.

Filed Under: patent thicket, patents, voip
Companies: nortel, vonage