Tag Archives: Patents

HTC sues Apple using Patents Google bought from Motorola

It would not be worth mentioning that two mobile phone manufacturers sue each other. They have been doing this in such complicated ways, that the charts visualizing this became art itself. The latest one is interesting though.

It has been mostly speculated that Google bought Motorola for its patents, although some have argued that Google did it for the hardware part too. The patents part can be confirmed at least now. Google acquired around 17k patents (including applications), and it apparently has transferred some to beleaguered HTC which allegedly already has to pay up to $15 per Android handset to Microsoft (which seems to demand $15 alone), Apple and other ‘innovators’.

Now Bloomberg reports (via LWN) that HTC has filed a new lawsuit against Apple, claiming that it infringes on nine patents. Patents that originate from Palm and Motorola, and which Google has acquired over the last year. Google has handed those patents to HTC, and they are firing back at Apple immediately. Am I the only one whose head starts to spin, trying to understand this?

It is no secret that I think the patent system is somewhat broken as it is. If all patent litigations were adjudicated in 2008 the total cost would have been $31,224,000,000. (nice infographics included). We live in a world where a Firm can sue Gap, Dell, eBay, Apple, Amazon, Walmart, Barnes&Noble, Microsoft, and Verizon in the same suit because of a patent to recommend alternative products before a deal has been done. I mean car dealers have been using this method in real life since the car was invented.

The situation is especially bad in software, as many patents are vague and broadly specified so that it is unclear what they cover until actual litigation ensues. It also perverts the original intention of patents to disclose knowledge so that the invention can be used by the public after it has run out.

It has been argued, that patents are needed for innovation occurs, but a study has shown that the software industry does not seem to be the main benefactor of software patents itself:

that the broad software industry (SIC 737) accounted for only 11
percent of software patent grants to public firms in 1996 and 17
percent in 2006. The prepackaged software industry account for 2.8
percent and 9.8 percent in those years respectively. Thus the
software industry still accounts for a small portion of software
patent grants, although that portion has increased over the last
decade. Most software patents still go to non-software firms.
–Bessen 2011 via Techdirt blog post

Patently absurd

The current patent war in the mobile phone space is absurd and obscene (this cool chart visualizes that everyone is suing everyone).

I am all for innovation, but we are living in a world in which Microsoft earns more from Android phones than they do from Windows phones.

Now Google has agreed to buy the mobile phone division from Motorola for $12.5 billions (yes BILLIONS). The main reason they are doing so is to get access to the vast patent portfolio that Motorola has. That gives GOOG ammunition to defend itself and Android manufacturers from others that are aggressively building patent portfolios in this area.

Interestingly enough, the Motorola CEO had announced just 4 days ago that they might be using their patent portfolio in a more offensive manner against Android rivals. A move to increase the sales price? Most likely.

Google, which had only around 660 patents or so until recently, many of them search-related, had been attempting to gather a patent portfolio for quite some time. They unsuccessfully bid for the patents of bankrupt Nortel (in typically geeky manner, they bid odd sums that represent weird constants, eg. the number π in billion dollars).
A portfolio of around nearly 800 patents from Novell had already gone to a Microsoft-Apple-EMC-Oracle consortium and the 6,000 Nortel patents went for $4.5bn to a consortium of Apple, Microsoft, RIM, and Sony (among others).

Google had complained about unfair market dominance in the first deal already and the anti-trust agencies had modified the conditions of the deal. The Nortel patent deal increased the pressure from Apple and Microsoft on Google to build up their own portfolio. It is said that Android handset makers are already paying between $5 and $15 per handset to Microsoft, and possibly to other patent holders too.

Patents are supposed to stimulate innovation. But a world in which a 5-year old can patent a way to swing on a swing, is clearly insane and patents fail to work. Academics that are real patent experts, such as Jim Bessen, who have done studies on this agree.

P.S. Why in the world does everyone and his dog has to cite Florian Mueller (I’m not linking there) as the patent expert uncovering important issues. I know that activists and lobbyists can be experts too, but the clear lack of transparency and obvious bias is unsettling.

P.P.S. This deal will make Google the largest supplier of TV set-top boxes.