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11.15.12

Rotten Patent System Not Just a Bad Apple, CCIA Seeks Change

Posted in Apple, Patents, Samsung at 6:19 am by Dr. Roy Schestowitz

Systemic problem

Summary: Lawsuits that discredit the system, including Apple’s only recent ‘win’ in court (trial misconduct alleged)

Some recent news about a patent troll got the attention of this famed FUD buster who writes:

Ars Technica has the story on yet another patent troll — though this one seems a bit special. TQP Development — a typical patent troll in so many ways — has apparently gone on something of a rampage over the last four years (and increased in the last year) suing hundreds of companies. The list is impressive. Its most recent lawsuit is against Intel and Wind River, but it’s sued pretty much everyone you can think of. Apple, Google, Twitter and eBay? All sued. Target, Hertz and Mattel? Yup. The list goes on and on… and the company is able to get a bunch of companies to settle just to get rid of the lawsuit. Apparently not a single lawsuit has actually gone to trial.

There is also this in the news today:

Chicago options market goes nuclear, files $525 million patent suit

There was a time, not long ago, when the titans of the US financial world ran away from patents. During the Bilski case, big banks filed an amicus brief (PDF) on the same side as Google, asking the Supreme Court to disallow so-called “business method” patents to no avail.

However, a few key financial institutions have embraced patents enthusiastically. This week, the Chicago Board Options Exchange has taken finance-patent wars to a new level. CBOE filed a lawsuit against a competing options exchange, International Securities Exchange (ISE), demanding $525 million for the infringement of three patents: US Patent Nos. 7,356,498, 7,980,457 and 8,266,044. The board asked for the first patent in 1999, at the height of the patent-everything craze, and the patents were issued between 2008 and 2011.

This will be a good case for abolishing the patent system and the legal framework around it. It is not so far-fetched a concept. We already saw misconduct helping Apple in court [1, 2], but Samsung fights back against it:

Samsung Replies to Apple’s Defense of Jury Foreman’s “Deliberate Dishonesty” ~pj

[...]

It’s serious. And it happened, according to his own bragging to the media. I’m not surprised there will be a hearing.

Here is more:

Did Jury Foreman Hogan Influence The Apple vs Samsung Verdict?

Samsung has been on the winning side against Apple’s legal attacks around the globe – including the UK, Germany and The Netherlands. It’s only the US, Apple’s home turf, where it is facing some challenges. The biggest and the most infamous billion dollar verdict might have had a different outcome if Velvin Hogan was not part of that jury, believes Samsung and many others due to his perceived bias against Samsung.

Both Samsung and Apple have been arguing about when the opposing party learned about Hogan’s Seagate court case. Samsung seeks a new trial due to Hogan’s failure to disclose about other court cases, his ‘presumed’ bias against Samsung the way he ignored the court’s instructions and influenced the jury using his own technical expertise.

While Apple wanted Samsung to disclose when they learned bout jury foreman Hogan’s other court cases (and Samsung disclosed), Apple itself refused to entertain Samsung’s similar request.

Samsung wouldn’t settle. Why would it? It has a lot to gain now that it is leading. It is Apple that might want to retreat and prevent further retribution from Samsung. Here is what Samsung is doing:

Samsung Raises Prices To Apple: I Wonder Why?

Now this is an interesting little tale: Samsung has raised the price it charges Apple for the main applications processors in the iPhone and iPad. The interesting question is why have they done this? I have a suspicion that I know the answer why: no proof, just a suspicion.

[...]

So, what might encourage Samsung to go for the short term greed rather than the long term type? My suspicion is that Samsung is realising that there’s no long term relationship available with Apple any more. There is of course the multi-continental fight going on over Android and the design of phones and tablets. But more than that, Apple has been disengaging from Samsung as a flash memory supplier, even as a screens supplier. To the point that there are rumours that Apple has been bailing out a Sharp plant in order to ensure that supply from some, any other than Samsung, company.

There have also been stories around that Apple is looking to either bring inhouse the chip fabrication itself, or to look for another fab house to bake them. Apple already does the detailed design of the chips with ARM providing the basics of the core. In the medium term, over the next generation or two of chips, it wouldn’t be all that difficult for Apple to farm it out to someone else, the physical construction of the chips.

Apple has failed in its litigation against Samsung. Apple likes to accuse Samsung of ‘stealing’ like it accuses — in vain — China of ‘piracy’. All in all, we are dealing with a broken system that even Computer & Communications Industry Association (CCIA) is trying to tackle:

The U.S. patent system is supposed to foster innovation and reward inventors. But in recent years it has devolved into an epidemic of licensed blackmail with shell companies using flimsy patents to shake down productive companies — especially in the tech sector.

Today, technology firms launched a new website called Patent Progress to call attention to the patent problem, and to share solutions from legal and policy experts. The site is run by the Computer & Communications Industry Association, an advocacy group that counts Google, Microsoft, Yahoo and Facebook among its members. Its contributors include leading intellectual property and antitrust lawyers and scholars.

They sometimes lobby for Microsoft. CCIA helps corporations, not people, so Patent Progress is probably not the best way to go. Still, it’s a sign that even corporations are getting fed up.

Ed Black from CCIA writes today that “RPX estimates that there are 250,000 active U.S. patents applicable to the smartphone. Assuming an average of 20 claims each, that is 5,000,000 restrictions on smartphone innovation.

“CCIA’s DisCo project did some further calculations and found smart phone patents account for 16 percent of active patents in the U.S, using RPX estimates.

“As for software patents, researchers say it would take roughly 2,000,000 patent attorneys working full-time to compare every software-producing firm’s products with every software patent issued in a given year. Moreover, any such search would be incomplete, because it cannot reveal applications that are not yet published (18 months from filing in most cases), let alone those that have not yet been filed.”

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2 Comments

  1. mcinsand said,

    November 15, 2012 at 9:14 am

    Gravatar

    Roy,

    I don’t know if you saw this in Groklaw a few days ago (or on Reddit earlier), but it has to be the most concise, forceful, and accurate summary of what Apple considers to be innovation and IP… or what the non-cult considers to be copying and litigously stealing. In fact, if it weren’t so long, it would make a nice article header. However, it is even more powerful of a lesson on how broken the US patent system is, since these images illustrate what Apple is suing over… products that predate Apple’s ‘innovations.’ This series makes the point that Apple is merely a marketing and repackaging company although, like it’s antecedent in business practices SCO, it has diversified into legal terrorism.

  2. mcinsand said,

    November 15, 2012 at 9:23 am

    Gravatar

    Uh-oh. I think I’ve just seen the next front in Apple’s war on freedom and true innovators: Like this. How long do you think it’ll be before Apple games the USPTO for a patent on flexible displays. I mean (at least to a cultmember), Samsung obviously slavishly copied the flexible iPhone 6 or 7 that will come out sometime well after Samsung’s product entry.

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