“Patent wars are needlessly destructive. No one wins. They have been shown to actually stifle growth and creativity, and they can be a terrible drain on corporate coffers, to say nothing of tying up courts’ time. Instead of broadening frontiers and pushing the creative envelope, companies are content now to sit back and sue the living daylights out of anyone who gets in their way.”
The latest wrangle in these patent wars between technology giants Samsung and Apple was enough to bring President Obama into the fray: following the International Trade Commission’s ruling on August 5th that Apple had breached some of Samsung’s patents, the President openly sided with Apple in vetoing the International Trade Commission’s ensuing sanctions against Apple. What the next stage will be, who knows?
To date though, it is evident that these patent wars show little sign of abating. The one between Apple and Samsung over i-phone and i-pad patents is but one of a plethora of similar patent disputes in the high tech industry. Google, Microsoft, Yahoo, Facebook: all the big names are participating in these wars. The latest tactic is the amassing of arsenals of patents, a practice which has been compared with countries stockpiling nuclear weapons as a deterrent at the height of the Cold War. Stockpiling of patents is the rival technology titans’ deterrent against potential lawsuits. In the two years 2010-2012, $20 billion dollars was spent on patent litigation/patent purchase by smart phone rivals. It is estimated that Google has purchased over $12 billion’s worth of patents and the recent number of patent purchases for Microsoft is said to be a staggering 21,000. This deterrent has not always worked. There has been a massive upsurge in the number of patent infringement lawsuits: between 2004 and 2009 the increase was 70%. That companies like Apple and Google spend far more on these patent lawsuits (the average cost of defending a patent infringement claim is $2.5 million)and patent purchases than they do on research and development of new products is evident. It is this anomaly which supports the view that the patent wars do indeed stifle creativity and innovation.
Of course, the technology giants will defend their reliance on patent protection. In its defence Apple has said:
“Apple has always stood for innovation. To protect our inventions, we have patented many of the new technologies in these ground- breaking and category-defining products.”
“If we can’t protect our intellectual property, then we won’t spend millions creating products like the i-phone.”
Incidentally, the average smart phone contains over 200,000 patents! This links to a further criticism, that there are indeed too many dubious patents granted, especially in the high technology industries. Many of these patents are vague and allow for sweeping ownership. Such an example was the software system devised to calculate on-line prices. One of the USA’s leading patent lawyers and Federal Appellate judges has admitted that the “standards for granting patents are too loose.” He went on to say: “I am sceptical whether patents are needed in the software industry to provide adequate incentives.” The Federal Reserve Bank of St. Louis has also criticised the proliferation of patents: (there is) “No empirical evidence that more patents or stronger patent laws contribute to productivity. Instead, products are used to protect incumbents in mature industries from new competitors.” Quite a lot of academic research supports this view that the patent war culture does indeed stifle small start-up businesses.
So the patent wars continue to rage. Suggestions for peace and reform have been made, including limiting time restrictions on patents, stricter definitions of what is a patentable insight and better disclosure on how new innovations work. A balance needs to be found between, on the one hand, encouraging inventors and innovation and rewarding them by giving them some protection for a period of time over their new ideas , and on the other hand, of not giving them permanent protection because that stifles innovation and keeps people out of the marketplace.
The final words go to an executive vice president of Samsung:
“Legal battles with Apple have been ‘a loss’ for both the industry and innovation as a whole.”
This article was provided by Vannin Capital, experts in litigation funding. Visit litigationfunding.com today for more information.