Article in Mobile, iPhone, iPad categories.

Patents: Constraints on Innovation

“We have invented a new technology called multi-touch, which is phenomenal it work— it’s like magic. You don’t need a stylus. It’s far more accurate than any touch display that’s ever been shipped. It ignores unintended touches — it’s super smart. You can do multi-finger gestures on it, and, boy, have we patented it.”

Steve Jobs safeguarded innovation. At Macworld 2007, Jobs introduced the iPhone, an omnipotent vehicle that proved the utility of the mobile phone. With cool cadence, Jobs scrolled, literally, through the phone’s faculties. Jobs paused after every declaration, allowing an ephemeral moment for awe and reverence. When Jobs offered a light-hearted jab at the phone’s hermetic patenting, the Moscone Center crowd erupted in a fit of laughter. Jobs wasn’t messing around.

General Counsel at Apple until 2006, Nancy R. Heinen explained Job’s rationality: “His attitude was that if someone at Apple can dream it up, then we should apply for a patent, because even if we never build it, it's a defensive tool.” According to a Stanford study, in the past two years, smartphone manufacturers have spent more on patent application, licensing, and litigation costs, than on research and development.

Apple has stockpiled thousands of patents to protect unique features as multi-touch, rubber banding, and Siri.  Notwithstanding its own patents, Apple disputes hundreds of lawsuits over patent infringement. Although patents slow liberal development, they are necessary evils; patents regulate competition and identify ownership of intellectual property. A classic conflict arises when Company A patents a “dream” and sues Company B for realizing the dream. How can a jury quantify Company B’s degree of infringement? Phraseology and marginal subjectivity go a long way.

Patent Karma

In August, a U.S. Court ordered South Korean manufacturer Samsung to pay $1.05 billion in damages to Apple. Samsung infringed on Apple’s “pinch and zoom” ‘915 patent and “double-tap to zoom” ‘163 patent, among others. Reporting second-quarter gross revenues of $4.5 billion, Samsung flinched at the loss. Apple received less than half the amount it sued for and, in filing the suit, acknowledged Galaxy S III as a competitor to iPhone 5. Emboldened by the payoff and a June ban on Galaxy Nexus phone (Apple’s doing), Samsung hatched an aggressive marketing blitz that pitted Galaxy S III against iPhone 5. Galaxy S III ads, which run roughly 90 seconds, brazenly identify iOS 6 shortcomings (maps, anyone?) and present Galaxy S III as the visible solution. Samsung also invested a significant share of retained earnings in research and development. Smart move.

In September, Samsung added iPhone 5 to a dense list of Apple products that infringe on eight Samsung patents. Samsung lawyers are lobbying for a ban on iPhone 5. The device infringes on seven patents, including U.S. Patent No. 7,577,757, which affords Samsung a monopoly on any device that uses a “multimedia synchronization” method. In theory, the patent targets a sizable majority of smartphones, those equipped with MP3 players or photo apps. Samsung, however, has elected to lord its entitlements over Apple, a company with a liberal lawyer collective. In the smartphone market, what goes around comes around — twice as hard.

Vaguer The Better

Samsung holds U.S. Patent No. 7,232,058 on a “data displaying apparatus and method.” The threadbare diction of the patent lends it to all phones, tablets, computers, and even calculators. Samsung is leveraging the patent over Apple’s iPad line, though the patent, in its enormity, can calculate more significant damage.

Patent lawyer Raymond Persino admits, “If you give the same application to 10 different examiners, you'll get 10 different results.” Patent lawyers can revise patents up to ten times before examiners nominate a preferred diction that communicates the patent in a tight, unambiguous way. Often, examiners are unfamiliar with abstruse technological patents and approve them without thorough review.

Apple received pushback when filing a patent that would protect Siri. Patent lawyers adopted the phrase “heuristic modules” to refer to software code that lended Siri a didactic quality. Siri also bore the right to aggregate information from multiple data sources. Samsung’s Nexus phone violated the patent as it included a “Google Quick Search Box” that responded to user queries with Web content and contact information. The phone’s ban is still in effect.

Collectively, Apple, Microsoft, and Google hold over 26,000 patents. As each company creates new devices and develops new technologies, it files countless patents and faces charges of patent infringement. Patents impose challenges on innovation and the growth of smaller tech companies, but they constrain innovators to go a step farther, to make the extra efforts to distinguish their products and exceed consumer expectations.

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