Nivedit Majumdar Nivedit Majumdar

Patents: Technology wars and trolls

Let’s start off with a few statistics,

1. Symantec was recently asked to pay up an amount of $17 million, on accounts of violating two patents owned by Intellectual Ventures.

2. Xiaomi ran into some trouble in India, with Ericsson claiming that the Chinese tech giant had violated patents by selling phones with Mediatek chipsets in the country.

3. In the last month alone, Apple has patented at least three different innovations.

4. Samsung and Apple. Enough said!

Do you see the underlying link in all these cases? More than what these companies do, is what these companies declare legally as their own. More than the cutthroat competition in the tech world, is the legal battles these companies have to face over patent issues. And in this article, I expound upon this very aspect of tech giants and consortiums – patents.

FACTORS RESPONSIBLE

While the reasons have been mainly the growth of innovations in the arena of technology, and the ability of the tech corps to tap into these innovations and declare them legally as their own, there have been quite a few factors which have promoted the patent scene.

In the USA alone, there’s the AIA (America Invents Act). This act brings about several changes in the U.S Law, which make the process of challenging software patents much easier and reduces the cost of patents. As a result, the recent months have seen a reduction in the number of court wars over the issues of patents and the stock prices of various patent holding companies to plummet. All in all, we will now begin to see a system which promotes patents as a source of licenses, and not just litigation.

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Bet you didn’t know this statistic : Number of infringement suits filed against popular tech corps in 2013

PATENT TROLLS

If there’s one thing which hampers the growth of innovation, and at the same time the legal protection of intellectual property, it’s the various patent trolls out there. What these patent trolls do is basically buy software patents (from inventors or from each other) and they use these patents to sue tech giants.

If you look at their modus closely, it is actually quite an intricate – albeit a tad underhand – affair. The patent trolls buy patents and in the process create a marketplace. This marketplace will check the advancement of the big tech firms, and ultimately the patent trolls rely on the unbiased authorities for the resolution of their “patent conflicts” – the courts of law.

Now, while this protects the ideas of the local innovators who don’t have the capabilities of making it large, it also generates lots of revenue in the form of lawsuit expenses made by the big tech corps. Think of it as a Robin Hood approach – rob from the rich tech giants, and give to the inconspicuous innovator, legally of course.

In a way, the entire procedure relies on the elements of intimidation, rather than concrete and substantial backing. Ergo, patent trolls can be heralded as the bane in this particular aspect!

ROCKSTAR AND ITS ROLE IN THE EQUATION

In the world of patents and tech giants clamouring over them, one name always stands out – Rockstar Consortium.

It can basically be considered as a patent troll of sorts, since it was originally created to negotiate the licensing for patents which were acquired from Nortel – a now bankrupt multinational telecom and data equipment manufacturer. In essence, this consortium waged legal wars on other companies in the technology sector, playing according to the rules in the patent troll rulebook.

The Rockstar Consortium is comprised of quite a few heavyweights in the field. Members include Apple, BlackBerry, Ericsson, Microsoft and Sony. The consortium basically did this – acquired patents from other companies, and then requested legal action against big organisations.

At the outset, this doesn’t really seem like much. But trust me, the implications of patents are of massive proportions. To give an insight into exactly what this consortium could have accomplished, here’s a statistic: Back in October 2013, Rockstar had initiated legal action against eight companies – which included Google, Huawei and Samsung, as well as Android OEMs such as HTC, LG Electronics, Pantech, ZTE and Asustek.

Long story short, the Rockstar Consortium could have essentially stopped the manufacture of Android powered handsets, or some of their features.

Frightening, isn’t it? Fear not, Rockstar has decided to turn over a new leaf. Just recently, the Consortium sold quite a few of the assets in its possession to San Francisco based RPX Corp., which is a patent clearing house that helps companies protect themselves from patent lawsuits. This move has basically checked the high profile lawsuits that were filed by the Consortium, primarily against the Android OEMs.

Citing this example out here was necessary, because it is an indication that the technology war that we have been witnessing in courtrooms might soon be coming to an end. An apt summation might be made in the form of a quote by John Amster, the chief executive of RPX.

“I think people have started to realize that licensing, not litigation, is the best way to make use of patents, and this deal is a significant acknowledgment of that reality.” – John Amster

STATISTICS AND TRENDS

Let’s jump to the numbers now, shall we?

• In 2014, a total of 5010 patents were filed for in the U.S. alone. Below is a graph depicting the number of patents filed per month.

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When compared with the figures of 2013 and 2012, the count is much lesser in 2014. The total number of patents filed for in 2013 stood at 6083, while in 2012 the count was 5433.

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Could this imply the coming about of a saturation of sorts in the technology sector? I hope not!

• Here’s an estimate showing the number of patents that have been acquired by companies in 2014, in decending order. It is interesting to note that the company dominating as far as patents are concerned is actually IBM, and not Apple, Google or Samsung.

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• While we’re on IBM, another interesting aspect to note is that this is the 22nd year in a row wherein IBM has bagged the title for most patents. A major contributing factor to this has been the annual expenses made by the company in R&D – which stood at a tune of $ 6.22 Billion in 2014.

• 2014 also saw Google make its entry into the Top 10 list last year, while Apple too moved up two places to #11. Both these companies bagged a combined total of 943 more utility patents in 2014, than they had in 2013.

• Also, interesting to note is the presence of Asian corps in the Top 50 list, with China’s Huawei Technologies at #48, the Taiwan Semiconductor Manufacturer Company at #23, Hon Hai Precision Industry Co at #18 and Japan’s Hitachi at #38. These are of course besides the tech giants that are Samsung and LG.

• ZTE – an active Chinese OEM – was just shy of the Top 50 mark, with its position at #51.

• Below the Top 50, the exceptional gainers were:

Japan Display Inc., +1525%
Shenzhen China Star Optoelectronics, +331%
ZTE Corp., 160%
Wistron Corp., +131%
Facebook Inc., +120%
Toshiba Tec KK, +83%
Kyocera Document Solutions, +72%
EMC Corp., +62%

(source : IFIClaims)

All in all, if the trends from 2014 are anything to go by, 2015 will see a lot of action from the Asian players. Also, hopefully, there will be a reduction in the number of patent trolls and their associated cases in courts.

CLOSING COMMENTS

At the rate at which technology is advancing today, it becomes an important prerequisite to protect the knowledge or rights for particular features, components or assets. While this has always been the forte (and the significance) of patents, their usage in courts of law just to intimidate big corps is downright ridiculous.

I hope to see a better situation in 2015, where innovations and the legal system will work hand in hand to ensure better technology for the public and more revenue for those organisations who actually deserve it!