It seems difficult to imagine life these days without our beloved smartphones. They have affected almost every facet of our daily life to varying degrees and 15 years ago it would seem absurd to say that in the near future, everyone will have a device with the functionality of a computer, GPS, camera, audio device, etc. in his pocket. However, it has also become a common occurrence to read about the latest big money lawsuit among tech companies that have developed these technologies. And these are not your run-of-the-mill legal disputes; We are talking about lawsuits of thousands of MILLIONS of dollars, waged by intellectual property rights that allow a majority participation in the global technology market. And yet such a high risk has just become part of business, but it raises questions about how much damage is done to the industry in the process and could there be a better way to resolve these conflicts?
To really understand the impact, we must first look at how new ideas are developed and the legal process that protects the inventor’s rights to have his work credited. The truth is that there are already very few NEW ideas or inventions. Most new ideas and technologies are based, at least partially, on old technologies and ideas, and there is nothing wrong with that. Most companies are not trying to reinvent the wheel; They are trying to improve it! It is more realistic to put a tire on it, change the material it is made from, improve the tread, etc. And this is where the legality of such efforts gets tricky. In order to register a trademark or patent, an enhancement to a pre-existing idea, you must first sign a license agreement with the owner of the original patent.
The problem in the tech industry right now is that there are so many overlapping patents that developers of new ideas (or improvements) don’t know where to start when trying to license the original patent on which their improvement is based. On top of that, the global technology market has made license fees unaffordable for smaller companies. Not only are license fees a deterrent for smaller entities, but the atmosphere of bloodthirsty lawyers hoping to pounce on anyone who steps on their feet certainly doesn’t help. Never before has it been more difficult for small tech startups to develop new technologies and bring them to market.
Not only are the “technology patent wars” stifling innovation in the industry, but who really pays the cost of these multi-million dollar lawsuits? The consumer, of course. Yes, it is a cost of doing business these days and all costs associated with developing and selling a product must be included in the price of that product.
How do we solve the problem?
Much of the rhetoric you’ll likely read on various popular tech blogs likes to point the finger at the USPTO and the “broken patent system”, but who’s to say the patent system isn’t working as designed?
First, it should be clarified if this problem is insurmountable or even unexpected. It should come as no surprise that this is not the first “patent war” we have seen. Not only that, but when it comes to these types of legal conflicts historically, everything is on track to be resolved eventually. We just have to be patient enough to let things take their course and allow the legal system time to do what they do and sort through all these overlapping intellectual property rights to decide who owns what and who owes whom. Probably the first conflict of its kind was the sewing machine patent war of the 1850s, reflecting all of the same problems we’re seeing in today’s smartphone wars – entities licensing patents, overlapping patents covering individual products; expensive litigation, etc. Eventually things worked out and everyone calmed down.
That’s not to say that the USPTO doesn’t have to catch up in order to operate as efficiently as possible. That is why the recently enacted United States Inventions Act aims to bring the patent system into the 21st century and make the patent application process more efficient by:
• Encourage applicants to submit their applications electronically. Applicants who opt for the paper submission option will need to pay an additional $ 200-400 ($ 200 for smaller entities).
• Fast track application option. The USPTO will offer a “fast track” option, which will allow applicants to expedite their applications for a surcharge of $ 4800 (or $ 2400 for smaller entities).
• Reduce the current backlog. There is currently a backlog of approximately 680,000 patent applications. Due to the new financial provisions in the AIA, the USPTO will begin hiring new examiners and other staff who will help reduce this backlog and improve wait times for applicants.
Additionally, we have also seen steps taken by the US Federal Trade Commission to tame the increasing number of IP infringement lawsuits. When Google acquired Motorola in 2012 for $ 12.5 billion, it also took possession of Motorola’s patent portfolio of more than 24,000 patents. The most significant outcome of the 19-month case is a legally binding agreement by Google to allow its competitors access to “standard essential patents.” These “standard essential patents” are basic patents that many NEW smartphone technologies need access to in order to develop new products and improve old ones.
Between the AIA, the FTC, and the legal system, I think it’s safe to say that things will calm down … eventually. But still no one knows when it will be.