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

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.”