Apple-Samsung Case Highlights America’s Troubled Patent System
Paula J. Hane
Posted On September 6, 2012
It’s clear that Apple scored a major victory over Samsung in its recent and highly publicized patent dispute. A jury found that a number of Samsung’s mobile devices infringed on Apple’s patented designs and awarded damages of $1.05 billion to Apple. The jury also found that Apple had not violated any of the five patents Samsung asserted in the case. Apple then requested a ban on the sale of eight models of Samsung smartphones. Both companies are considering their next steps, while the media and blogosphere continue to buzz with reactions.
The jury finding in this case has triggered an onslaught of commentary, with speculation about what this means for the two companies, what it might mean for Google’s Android platform (used by many Samsung devices), and what it might mean for consumers. But, it has also brought up many questions about the nature of the U.S. patent system. The comments have ranged from “software patents are evil” to the U.S. has a “broken patent system.”
Matthew Ingram, a senior writer at GigaOM, says, “The implications of Apple’s recent billion-dollar victory over Samsung in a patent-infringement case go beyond the specifics of this particular battle—the reality is the war over software and design patents is bad not just for individual companies but arguably for society as a whole.” Samsung and some observers say the verdict will lead to fewer choices, less innovation, and potentially higher prices.
Observers have warned for years about the giant technology companies accumulating software patents. Furthermore, the patent system is complex and unwieldy, and litigation is clogging the courts. Simon Phipps, writing at InfoWorld, pointed out: “Most concerning in this case: How on earth did Apple get awarded these patents? They’re patents on ideas, such as gestures that give commands like ‘zoom,’ visual norms for illustrating software status, and design ideas for rounded corners on icons and devices.”
Phipps notes that, “Patents are authorized in the Constitution ‘for the advancement of science and the useful arts,’ but their effect here is the opposite. Market competitors who build on the shared consensus of the market are prevented from doing so…Intellectual property law has become a game for anticompetitive control of markets—not a protection for innovation.” He hopes the Apple-Samsung case will convince legislators that the patent system is “fatally flawed when applied to software-based technologies.”
And there’s more litigation. The Wall Street Journal reports that another Apple lawsuit, which the company filed in February, contends that all eight of the patents it is asserting are being infringed by features related to Google’s Android. Apple is clearly concerned about the rapid market growth of the Android operating system. (Even Amazon’s Kindle Fire uses a version of Android as its operating system, so Amazon is likely keeping a close eye on these cases.)
Reuters reported that Google Inc. chief executive Larry Page and Apple CEO Tim Cook have been conducting “behind-the-scenes talks about a range of intellectual property matters, including the mobile patent disputes between the companies.” A possible ban of sales of some Samsung products has been widely viewed as a “proxy war” between Apple and Google. Some fear the verdict against Samsung could spur Apple to file more lawsuits.
The stakes are high for Google. As The Wall Street Journal article points out, “Google needs to keep enticing hardware manufacturers to use its software. Continued legal action against Android phone makers could deter companies from building Android phones. None, however, have indicated they are backing away since all are eager to compete with Apple.”
Reuters also reported that the latest complaint was filed by Motorola Mobility, now a unit of Google, against Apple at the U.S. International Trade Commission claiming some features of Apple’s devices infringe on its patents. A previous lawsuit between the two in a Chicago court was thrown out by a federal judge, who said neither side could prove damages.
Apple and Samsung have not limited their legal battles to the U.S.—they also have legal disputes ongoing in almost a dozen countries, according to The New York Times. Immediately following the victory for Apple in the U.S. court, a Japanese court rejected patent claims made by Apple against Samsung. And a judge in South Korea, where Samsung is based, handed down a split decision in a patent case shortly before the jury verdict in the U.S. case.
The New York Times in Mobile Patent Suit
With news of the Samsung lawsuit still fresh in the media, comes news of another highly visible patent lawsuit. The Associated Press (AP) reports that The New York Times is leading the defense for a diverse group of companies (including CBS Corp., Comcast Corp.’s TV channels Bravo and G4, and J.C. Penney Co.) that have been sued for sending text messages with web links to mobile phones. (Huh? Hyperlinks—the foundation of the internet?!)
According to the AP, the “technology was patented by inventor Richard J. Helferich, who filed an outline of how such a system would work with the U.S. Patent and Trademark Office in September 1997. He was granted several patents on the method, giving him the right to sue companies that use it without permission. Since 2008, his company, Helferich Patent Licensing, has filed 23 suits against companies ranging from Best Buy Co. to the National Basketball Association, claiming they are infringing on his intellectual property. HPL offers companies the chance to settle by paying a one-time fee of $750,000 ... Roughly 100 companies have settled with HPL already, it says, including Apple Inc., The Walt Disney Co., and McDonald’s Corp.”
Until now, these companies have settled, rather than risk getting bogged down in a court fight. But, HPL doesn’t make any products or services—it just uses patents to extract license fees. Critics call these companies “patent trolls.” Patent trolling isn’t illegal—the patent office doesn’t require action on ideas. So The Times is taking on the fight and has filed complaints with the U.S. Patent and Trademark Office and is battling the case in the U.S. District Court in Chicago. This will be a closely watched legal battle. Observers say that actions of trolls are a clear sign why the patent system needs to be reformed.
Change the Law
There’s some hope for improvement. In September 2011, President Barack Obama signed into law the most substantial overhaul of U.S. patent law in nearly 60 years. The AP says it is “aimed at streamlining the patent process, reducing costly legal battles, and giving the patent office more money to process applications in a timely fashion.” While certain provisions won’t take effect until March 2013, one provision that took effect right away “has made it more difficult for patent holders to name dozens of defendants in a single suit.” That has reportedly led to a decreased number of companies sued.
On Aug. 1, 2012, Rep. Peter DeFazio, along with co-sponsor Rep. Jason Chaffetz, introduced legislation (HR 6245) in the House of Representatives that would help make the patent system work better for innovators and innovation, and make life more difficult for patent trolls. The act is cited as the ‘‘Saving High-Tech Innovators from Egregious Legal Disputes Act of 2012’’ (SHEILD Act). It is designed “to provide for the recovery of computer hardware and software patent litigation costs in cases where the court finds the claimant did not have a reasonable likelihood of succeeding, and for other purposes.”
The Electronic Frontier Foundation (EFF) reports this is “fee shifting,” often called “loser pays,” and it is not a new idea. It has long existed in copyright law, for instance, allowing a court to award a winning party costs and fees in certain cases. EFF supports the legislation and has started a campaign called Defend Innovation to address some of the biggest problems with the patent system by asking those who actually work with software and deal with patents how they think the system can best be fixed. The site has more than 13,000 signatures and promises to compile comments into a white paper to take to Congress.
Update Sept. 23, 2012: Neither side is happy with the verdict. Samsung has requested a new trial. Apple is seeking an additional $707 million in damages and interest.