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Mutually assured patent wars: Apple ‘going to get very badly burned’

Here’s a column from Cat Keynes who publishes her thoughts on the mobile phone industry every Sunday at www.catkeynes.com. She’s pretty direct with her thoughts. Have a read…

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Intellectual Property is as powerful as any chilli in the recipe for making a mobile phone. All major manufacturers reward staff highly for getting patents. Get enough at Motorola and, like the good burghers of McDonalds you get a gold badge.

Phones are so full of patented ideas, from the way one part is connected to another, to features and designs, it becomes impossible to search them all. Indeed the only way engineers avoid stepping on existing patents is if they go to patent an idea themselves and find that someone was beaten them to it.

Those that have been at it for twenty or thirty years naturally have a lot more patents than newcomers to the market but pretty much everyone can look at a rival phone and find something that they hold intellectual property on.

This made all the players insecure in the knowledge that if they took any action on their rivals they would see a retaliatory suit faster than a politician filing his expenses. So no-one took the nuclear option. Samsung didn’t look too hard at the Nokia 6700 and Nokia ignored anything they might have on the Motorola Razr.

But the new kids in the playground don’t understand the rules and they have started picking on the bigger boys. They, and yes, I’m particularly thinking of Apple here, have got so used to thinking that they are top dogs, they’ve re-written the rules, they can start asserting their ‘rights’. They are going to get very badly burned.

The worst thing that could happen is an injunction.

Phones, if you’ll pardon the Apple analogy, are like fruit. They have a shelf life, if you don’t sell them when in time you have to throw them away. From launch to end of life is typically eighteen months but they are only fresh for the first six. You can add preservatives in the form of software updates, colour refreshes and bundles, but price tumbles. Just as I follow the girl with the pricing gun around Waitrose on a Sunday night, knowing she is going to mark goods down, the operators buy phones on a price curve. There is the exclusive and just launched price, then the three month price and so on. Manufacturers have to get the volume up early to reduce costs and keep a margin.

Judges don’t understand this. If one manufacturer approaches a court and says “the people over there in America/Finland/Korea have stolen our intellectual property, we can’t let them sell here”, a judge may very well grant a temporary injunction until the matter is resolved. Lost sales of a week have repercussions that could drop a phone from hugely profitable to hugely loss-making. It’s impossible to prove what would have happened without the injunction but likely to be very much greater than just the figures for a lost week of sales.

So those that are playing the IP war game are entering into an extremely dangerous space. It is potentially company-crushing, and the companies with the biggest weapon stocks are those where they have the largest patent portfolios.

Taking on the heavily armed gold badge holders might prove to be a mistake the new boys will regret.

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I think you’ve got a point, Cat. I was reasonably relaxed about the various patent fights going on at the moment between the manufacturers but you raise a really, really challenging issue with injunction. What if a judge agrees with (for example) Nokia and posts a temporary injunction on iPhone sales in the United States? (Or vice versa)

What do you think? Do you agree with Cat?

By Ewan

Ewan is Founder and Editor of Mobile Industry Review. He writes about a wide variety of industry issues and is usually active on Twitter most days. You can read more about him or reach him with these details.

3 replies on “Mutually assured patent wars: Apple ‘going to get very badly burned’”

No.

We are talking about the US here. Nokia is a pigmy. And she really believes an injunction will be granted? Come on, with the US legal system. Apple couldn’t even get an injunction for a long time for somebody taking their software and installing it on their own machines and selling them as clones.

HA! Someone else who seems to see this as I do! Yes, Nokia most likely could of shown slightly more flexibility in their initial dealings with Apple on the whole patent royalties thing. But Apple needed to do the same as well in my opinion. What did Apple expect Nokia to do? Turn around and say something like, “Oh well you are Apple, and because everyone loves your cool products, we'll let you have all the benefits of the massive amount man hours that have gone into these patents for free!” Apple just need to look at Nokia when they went round after round after round with Qualcomm, and they were certainly more powerful, in terms of mobile related patents, than Apple are. Apple have fight on their hands with this and I am not entirely convinced everyone, inside or outside of Apple sees this…

When you see that another company has a patent related to your technology/product/business process, you are able to describe unique features to move around their patent. Prior art can be manouvered around,but………

IP protection sucks in many ways [like you describe in your article], I have product I will deliver on mobile, it includes Aug. Reality stuff, I can ensure you that I have IP that does not infringe Yahoo [for example on Aug. reality], and I have product that will hit the market before they do, but they have patent protecion in the area I am delivering my products – what pisses me off is this patent protection is set BEFORE they have made anything. We should have patent protection ONLY for product that is commercially launched.

Yahoo SUCKS on the patent angle they have taken on Aug. Reality [and multiple other areas]. It is akin to getting protection for ideas that have not yet been deployed, and we will have to fight them to exercise our rights in the AR field if they feel we are infringing on their patent..

Maybe I will set up a patent that covers aything a human discovers or invents on planet earth is now part of my company.

Speak soon Ewan………..

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