Patents, Smart Phones and War

The technology wars continue to smolder between Apple and other smart-phone companies. It’s a web of litigation, with Apple sustaining lawsuits from more than a dozen companies, while also targeting some of its biggest competitors with claims of their own. Though Apple blew the field wide open in 2007 with the release of the iPhone, new and old competitors reacted quickly to release their own comparable devices. For various reasons some old competitors, like Canada’s Research in Motion (RiM), have fallen hard. Others, like Motorola, are on a rebounding surge. And a new type of competition, from Google’s focus on designing specifically open-sourced software instead of hardware or devices, has proven to be resilient and steadily growing.

Google’s strategy isn’t entirely new. Other companies have created open-sourced software before, and plenty others focused on making operating software for phones as well. But none of them combined the two, along with Google’s overall vision for unified devices and software. Android allows independent developers to make their own applications, without Apple’s app rules—which number well above a hundred. This allows higher innovation in the field, but with less regulation comes less safety for the user who chooses unverified applications. Despite these risks, and Apple’s larger app store, the Android operating system has steadily risen in market share. It currently makes up 53% of all devices, compared to iOS’s 29%.

But Apple is fighting back.

As reported recently in the Wall Street Journal[1], patents are taking a new role in litigation. Many patent lawyers formerly involved in corporate defense are now working for patent holding companies. These companies purchase intellectual property, and then seek earnings from their purchased intellectual property through litigation. Even at traditional corporate level, patents are being redefined. They were often viewed as a shield, protecting a company’s or inventors’ intellectual property and profits. But they’re finding that they’re also incredible tools for stymieing competition and making significant profits. TiVo has recently received hundreds of millions of dollars from Dish Network, AT&T, and EchoStar by claiming infringement on patents for DVR technology. They still have further lawsuits open against Verizon and Microsoft, with already existing long term licensing agreements with Comcast and DirectTV. Companies have responded by buying up patents in a bid to protect themselves, and earn revenue. Google spent $12.5 billion purchasing Motorola, as it had only a few thousand before, including those bought from IBM. Apple spent $4.5 billion on buying patents from Nortel. Unwilling to flat out sell its own patents, Microsoft has extensively licensed out its intellectual property, and now has 70% of Android running smart phones under its patent umbrella.

On the offensive against Google, Apple opened up lawsuits against many of Google’s hardware partners, such as Motorola, Nokia, and HTC. At the same time, though, Apple is being sued by Kodak, Motorola, Nokia, and various other technology patent holding companies. Motorola is suing, and being sued by, Microsoft; while Nokia, Samsung, Sharp, LG, Hitachi, and Toshiba all go at it. According to The Economist, mobile-phone related lawsuits have risen by 20% annually since 2006. Even more difficult to understand is exactly what Apple is suing over, and what their recent gains have actually been.[2]

In James Grimmelmann’s article[3], “Owning the Stack: The Legal War to Control the Smartphone Platform”, he describes how mobile technology is built in stacks of service providers, software, and hardware. At the bottom lie the networks, then the hardware and devices, the operating systems and how they interact with the other two come next, which culminates in the software written for the operating systems. That software would include the apps and programs that we easily recognize and utilize. Lawsuits in the field of mobile devices can be horizontal in nature: suing people on the same technological plane—such as two app developers suing each other for trademark infringement. Or lawsuits can be vertical in nature, claiming their own technology as the basis for other companies’ devices or software. The latter is exactly what Apple has attempted to do. Apple’s lawsuits are generally  over various extremely basic technologies, looking to shake down other companies for significant amounts of money—or put them out of business altogether.

Ultimately targeting Google itself, Apple has declared war on the ‘Open Handset Alliance’ with the lawsuits against HTC and Motorola.  This loosely applied term refers to a group of companies that have declared themselves proponents of open-sourced technology, and consists of companies like HTC, Sony, Dell, Intel, LG, Samsung, T-Mobile, Motorola, and Nvidia. Apple even made some gains against Samsung in Germany, where it temporarily blocked the release of Samsung’s Galaxy tablet. Their lawsuits against HTC and Motorola are even more interesting. Apple sued both companies through the U.S. International Trade Commission, where a positive verdict would ban the infringing technology from being imported to the United States. In early January, though, Motorola was ruled not to be infringing on Apple’s patents. They responded in celebration by opening a new lawsuit against Apple, this time in Florida. The case had already been tried, with success, in Germany a few months prior.

Apple’s case against HTC over ten alleged patent infringements in the US ITC was far more successful. Though all but two claims were ultimately thrown out, HTC must still race to rework their devices sans the infringed technology. HTC has until April 2012 to make the necessary changes, which they insist is entirely feasible while still retaining their products’ functionality. One might assume they’re also looking into filing another patent lawsuit of their own.

[1] Ashby Jones’ article in the Wall Street Journal can be found here:http://online.wsj.com/article/SB10001424052970203750404577173402442681284.html

[2] A wonderful illustration of the entangling lawsuits can be found here, from The Guardian’s website:http://www.guardian.co.uk/technology/blog/2010/nov/01/smartphone-patent-lawsuits-diagram#

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