A Smartphone Patent Pool: A Way Out of the Litigation Thicket

Steve Wildstrom / September 4th, 2012
Photo of Gene Quinn from IP Watchdog

Gene Quinn

One major misconception arising from Apple’s legal victory over Samsung is that Apple now has some sort of monopoly over critical components of smartphone touch screen interfaces. Patent lawyer Gene Quinn of IP Watchdog explains the problem with this view in considerable detail, but a quick and dirty way to look at it is that patents almost never are issued for broad, sweeping ideas. Instead, as is the case with the Apple claims in dispute, most patents cover small, incremental improvements in existing ideas. The design of smartphones is covered by hundreds if not thousands of such patents, distributed over a large number of patent holders.

The parties could spend an inconceivable amount of time and money trying to litigate their way out of what Quinn calls a “patent thicket.” Or they could turn to a solution that has resolved such messes in the past, a patent pool. The idea of a patent pool is simple: Each player with a relevant patent contributes it into the pool. Anyone who wished to use any of the patents buys a license. And the royalties are divided among the contributors by formula. Anyone who needs the patented technology can use it and everyone who owns patents gets paid.

Pools have been used with considerable benefit in the tech industry. For example, the development of digital entertainment media was greatly facilitated by patent pools covering CDs, DVDs, and MPEG, among other technologies. People grumbled about paying for the licenses, but development proceeded with little litigation.

Of course, a patent pool for smart phones is more easily talked about than created, especially when many of the players are at each others’ throats. Coming up with an equitable licensing arrangement is a challenge and agreeing on a formula for distribution of the proceeds is a bigger one. The fact that Apple and Microsoft are likely to be the biggest winners, at least regarding touch interface patents, will not sit well with many.

But pieces of such an arrangement are already in place. Microsoft and Apple have an intellectual property nonaggression pact dating back to 1997, when they agreed to end their numerous IP disputes with a broad cross-licensing agreement. And most Android phone and tablet makers have already agreed to license Microsoft’s patents.

But hard though it may be, establishing a pool serves everyone’s long term interests better than the present litigation free-for-all. Says Quinn: “Eventually a patent pool is almost certainly how this will resolve.  If you look at the history of so-called patent thickets, the players fight and fight for a while and then, as more and more innovation occurs, they enter into a patent sharing arrangement of one kind or another.  Patent thickets lead to a tremendous growth in innovation.  We will see that in the years to come.  Likely not too far off if you ask me.”

 

 

Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.
  • mhikl

    Some good food for thought you’ve raised, Steve. The strategy you suggest might take a while though. Some new technologies set standards and the battle between VHS and that other one is a good example. One CD, DVD, and BlueRay standard was inevitable. Each was ground breaking revolutions to older technologies. The iPhone, on the other hand, wasn’t it just fine tuning of another ground breaking revolution to pocketable telephone which originated as a shoe box sized, self-powered walky-talky connected through the aether to phone services? After that came to be, refinements were necessary to make it practical for simple Joes? And refinements made all the difference and are continuous.

    • steve_wildstrom

      You’re right that the situations are somewhat different. The problem in smartphones is that the is a huge amount of IP owned by a lot of different players and the current legal situation suggests that no one has enough of the IP pie on their own to built a phone. The solution would seem to be either a pool or a large number of bilateral licensing agreements such as the ones Microsoft has signed with all of the big Android OEMs. I’m hoping that the enormous cost of litigation will convinced companies that some sort of cooperation is a better course, but you’re right–it will take time.

      • mhikl

        Steve, I suspect that the smart phone is different from every other technological advance in one important way. It is not only becoming ubiquitous, it is a fundamental necessity to ancient needs that are ingrained in our DNA far more than any other technology speaks to. It has to be broken from the strangle holds the players are fighting to control. The untethered smart phone goes beyond the ancient camp fire and extends our greatest and most creative intellectual experiences, individual communications and the drive for knowledge to the whole world of mankind. It is destined to become, as we say up here, “cheap like borscht” with profits that will be “driven down like buffalo over a cliff”.

        Without television services we could turn to radio or the internet. Without telephone communication, I can’t think of one other commodity/ service/ opportunity that could take its place since it was untethered from the wall. Apple came into the game at the right time: early enough to grab enough of the cake and the icing to allow it to build a strong foundation that will allow it to re-re-redefine itself if it continues along its creative swathe. The iPhone is Apple’s present and will be submerged in ubiquity amongst many players beyond itself and Android; the iPad is its present future and what will follow is hard to even imagine should Apple continues its marvellous recent history of innovation.
        Once we untether our phones from cell towers and have direct links to satellites or more possibly, free floating cell receivers over the whole of the world, then communications will become extremely inexpensive and possible for everyone on the planet to engage. This will also depend upon how fast the intermediary between cell phones can be let loose from corporate and governmental powers and restrictions. No one platform can rule all parts of the equation.

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