Are patents a cancer to the mobile phone industry?

Aug 4th, 20116 Comments

Microsoft's biggest success?

Did you know that for every Android phone you buy, Microsoft earns some green bills? Our displeasure for Windows on mobile phones and Apple’s phones, indirectly leads to Microsoft gaining. Did you also know that Microsoft earned more by the sale of Android devices than it did by shipping Windows devices? go on ‘Google (Bing?)’ it and you’ll see that Microsoft earned up to 5 times more from Android sales than from it’s own Windows Phone 7 sales. This purely through patent royalties extracted from all the manufacturers of Android devices.

6000 patents auctioned off

With the recent Nortel patents auction (6000 patents), where Google and Intel jointly bid after their individual bids against a consortium of big players like Microsoft, Apple, Sony, RIM, Ericsson and EMC, who ultimately won with a bid of US $5.4billion. Sure that’s a lot of moolah, and hooray to the winner too. That’s not all, Lodsys a company whose sole business is to own patents and lease them out is also suing companies for patent infringement and developers too. Oracle is no different too.

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Lodsys recently sent notices to prominent developers like Rovio, QuickOffice, Clapfoot, EA, Atari and others for infringement of patents. Lodsys claims several of its patents were used by the developers and as a result it is entitled to payment. Now this is a simplistic way of putting it, the reality is far removed from such a simplistic statement.Smaller developers are in a worse position as they do not have the resources or capability to bear legal costs or hire patenet lawyers to help them get out of this legal tangle. Some developers have reportedly removed their apps from the app stores of Apple and Google citing the lawsuit from Lodsys. Patent lawyers and Technology lawyers have stated that if Lodsys is to win the case by proving what it is doing is correct, then it could possibly file a case in the international courts and increase the spread of its right over the patents. For app developers who have withdrawn, you might still have to pay up.

Who's patent is mightier of them all?

Patent lawsuits aren’t a new phenomenon, they’ve been used by warring giants to settle scores and at times when they’re right and also when they can’t find anything else to throw at their opponent. Nokia V/s Apple, Apple V/s HTC, etc. There are tons of lawsuits and counter suits filed by many firms. Some, a fraction of them are genuinely a case of the bigger player pushing its weight on the smaller one. The rest, just a regular lunch time fight. What it has escalated to is this – Nortel’s patents and how they intend to be used. Google is the obvious loser since Android will bear the brunt of it.

Eric Schmidt, Executive Chairman – Google, is right is stating that patent acquisitions and subsequent lawsuits and the gross misuse of the privilege is hurting innovation and stifling growth in the industry. In fact let’s look at how many patents does Google have – 728 and another 1000 acquired from IBM, Microsoft has a whopping 18000 of it’s own and Apple stands at about 4000. Clearly, Google was acquiring it for defensive purposes, to save the Android platform. A self centered move, but a necessary step for them to take to prevent further taxation on manufacturers and OEMs for using the Android OS.

It is clear that these patents acquired by the consortium are designed with only one thing in mind – extorting money. After all a majority of the people in the consortium are known to resort to these cheap tactics to stay in the news and to maintain a disguised monopoly. One can be sure that even the winning team has little clue on exactly what all has been acquired by them. And is you thinks that’s all, well Oracle is claiming US $6.1billion in damages for infringement of patents in Java that it holds from Google. This is of course based on the fact that Oracle can prove it entirely.

How does it affect us, the average user? What’s in it for me? you might think. Well it clearly affects us. For one, you can now be assured that you won’t be seeing too many advancements in your cellphone or any device because of these patents. It means that your Android device might just get costlier, It means that as a software developer, you will now have to go through patent filings just to see if you’ve accidentally violated any patent, you will also have to develop applications and innovate in a very narrow spectrum, thanks to patents. The other downside of these patent wars is the amount of money wasted in R&D, litigation costs and fees and waste of man hours spent ideating and creating something.

Patent for Laser. Patents like these are killing innovation today

Patents have become the new cancer for this industry. They are clearly being misused and stockpiled by companies to destroy one another. Patents were meant to protect innovation, it was meant give their owners a right to exclude others from using the invention for a set period of time., but clearly that has changed, today the same tool is being wielded to do the do other things. Patents and the manner in which they are dispersed, used and how they are applied for, needs a thorough inspection and change. The current policy and laws binding it clearly seem to be ineffective and inept at stopping a cancer that is breeding and beginning to thrive in the technology industry. Today a patent is acquired to not only stop but, cause financial damages and create a disincentive to innovate.

At the receiving end?

Why is Google the target? Well because it’s free. Nobody likes to have anything being made available for free. Certainly not Cupertino and Redmond who swear by a pricing model that’s not necessarily friendly and sensible.

“A patent is a patent and you may not agree with it, but it’s the law,” Will Stofega(program manager at researcher IDC Corp) said in a Bloomberg article. “It’s a weakness for Google and everyone’s acknowledged it. The competition is so fierce and so brutal, any perceived weakness is going to be found out and you’re going to pay for it, in court or wherever.”

You can see this patent war being played out in your own hands. Look at your smartphone carefully, when was the last time an app or a technology gave you the impression that it was innovative? If you really take a good hard look at your device and look back at how the industry has progressed, you will find that little innovation has taken place in the last few years compared to the big leaps that were taken in the early 2000s

So while Google is the one who stands to lose financially in the near term, it is really the users and the market that stands to lose in the long term as this cycle will only get vicious and more corrupting.

The only good piece of news regarding these patent wars is the US Department of Justice planning to question the winners on how they plan to use their winnings. If indeed there are depositions and a formal investigation to check for the possibility of these patents being misused then there might be hope for Google and the industry. Hopefully it will also highlight and lead to a re-examination of the current system that is in place.

Patent Monster

Until then beware of the patent monster!

About author:

Aditya Singhvi is the Editor in Chief and the man behind World of Phones. He loves mobile phones and can never get enough of them. He’s known for using too many phones and numbers at the same time. He is absolutely content with having more than 2 cell phones with him.

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