What a shame that a precept conceived to incentivise innovation, has been corrupted into threatening it
Google surprised many industry watchers last week with the announcement that it is purchasing Motorola’s mobile phone division for US$12.5 billion (S$15.1 billion). According to the BBC, the deal “gives the search giant access to a range of technology patents (which) means extra ammunition in the spiralling arms race of suit and counter-suit”.
Even before this development however, this arms race had already descended into something much worse – an ugly battle over patents that has pulled in companies both big and small.
Earlier this month, a court in Germany ruled that Samsung’s latest gadget, the Galaxy Tab 10.1, may be infringing on Apple’s patents, effectively banning the Korean company from launching its tablet in most countries across Europe. The ruling marked another in a series of setbacks for Samsung, which now stands alongside HTC and Motorola at the receiving end of the world’s biggest company’s lawsuits.
Then there is Microsoft, which has developed an IP strategy that strangely allows it to make more money from Google’s Android operating system than it does from its own Windows Phone 7. Citigroup analysts estimate that for every Android licence that HTC gets from Google (for free), the company pays US$5 to Microsoft – a small fee to avoid a lawsuit claiming that the Android OS infringes on Microsoft’s patents.
Even more bizarre are the patent trolls – companies that have no interest in developing new products but are buying patents only to sue anybody out there who may be even remotely infringing on them. The National Public Radio in America published a story last month on the growing number of “companies without employees or operations” that are filing lawsuits using obscure patent claims that “would make pretty much the entire Internet guilty of infringing”.
Welcome to the wonderland of 21st century intellectual property, where a patent portfolio is much more than mere defensive armour. It is an asset that can be monetised on its own merit – that is, leased, sold, or if the patent holder has no intention to use it productively, even used for extortion.
THE GREY AREA OF SOFTWARE
There used to be a time when the world was simpler. Patents were meant to encourage inventers by giving them the reassurance that the designs or technologies they develop through hard work would not be copied by others. So if an automobile company developed a better braking mechanism, it could safely deploy it in its cars without having to worry about its competitors stealing the idea.
But as products became more complex, their development began to be separated into hardware and software. Hardware design pulled itself away into an independent discipline, and a new generation of software programmers began to focus exclusively on converting creative ideas into ever-smarter programs. It was not long before someone asked a question: Are these software programs patentable?
This sparked a debate around whether software programs are real inventions in the same spirit that an automobile’s braking mechanism is an invention, and hence patentable. Or are they to be understood as a collection of ideas, not unlike mathematical algorithms, which according to US law cannot be patented? (For example, it would be absurd to patent the mathematical ideas behind Newton’s law of gravity, or a formula such as E = mc2, as these are held to be laws of nature that were discovered and not invented).
Years later, a lack of consensus around this debate sits at the heart of the patent battle that is ongoing right now. US courts neither excluded computer software from patentability (unlike a few other countries such as New Zealand and Philippines), nor helped define clear guidelines that would ensure that any software patents issued were for new developments that truly pushed the envelope.
In the absence of such guidelines, the software patent landscape has degenerated into insanity, with a flood of overlapping patents, mainly in software, having been issued over the last two decades.
According to the National Public Radio report cited earlier, by the time a patent for an online backup system was approved in 1998, 5,000 other patents had already been issued for the same concept! So much for the idea that the law requires patents to only be issued for inventions that are novel.
The most remarkable quote from the NPR story is from Mr Chris Sacca, a former Google employee and an early investor in Twitter: “We’re at a point in the state of intellectual property where existing patents probably cover every behaviour that is happening on the Internet or our mobile phones today. The average Silicon Valley start-up or even medium-sized company, no matter how truly innovative they are, I have no doubt that aspects of what they’re doing violate patents right now.”
It was only a matter of time before the holders of these patents understood, or were made to understand by their lawyers, that they could knock on other companies’ doors asking them to pay up for these alleged violations. You may be in a position to answer these calls if you are Samsung or HTC, but small developers with little appetite for a legal fight can only do so much.
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