Problem Patents: The Battle of Ideas

By Prigg, Mark | The Independent (London, England), July 2, 2012 | Go to article overview
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Problem Patents: The Battle of Ideas

Prigg, Mark, The Independent (London, England)

Buying up patents is big business. But the system that was designed to protect the small investor is being twisted by big companies who are using it to stifle the small guys. By Mark Prigg in San Francisco

Gadget shopping is never easy - incomprehensible technical specifications, huge price differences between shops and the underlying fear your new toy will be obsolete in a few weeks anyway.

But, consumers are facing another issue, and one that threatens the entire electronics industry: patent disputes leading to some of the biggest-selling gadgets being pulled off shelves.

Last week Apple won an injunction stopping Samsung Electronics selling its Galaxy Tab 10.1 tablet in the US, giving the iPhone maker a significant win in the global smartphone and tablet patent wars. It is the latest in a seemingly endless battle of claims which has also seen the iPhone pulled from German shelves for a short time.

The problem revolves around highly technical, and often broad patents granted around everything from using your finger on a screen to the way a 3G mobile network works.

It has led to a situation condemned as absurd even by those at the heart of it, with billion-dollar patent disputes seeing products pulled from shelves, and legal rows and court hearings.

"It's become a ridiculous situation," said Matt Barrie of, the world's largest online outsourcing marketplace, and a supporter of entrepreneurs who has over 25 patents filed around the world.

"Patents were designed to protect the small inventor, but it has been twisted and turned into a racket by the big companies to stifle the small guys."

Buying up patents is big business, with the major players competing bitterly for the most lucrative.

AOL, facing a slump in sales, agreed in April to sell and license 800 patents to Microsoft in a $1.1bn [700m] sale. But even that pales into insignificance when compared to bankrupt tech company Nortel, which last year put its 6,000 patents up for auction as part of a liquidation, with the portfolio being sold to Apple and a consortium of other tech companies including Microsoft and Ericsson for $4.5bn - outbidding a $3bn offer from Google, who's recent $13bn purchase of Motorola is also believed to have been largely for its portfolio of patents.

Mr Barrie says the big losers in the patent wars are consumers, small businesses and inventors - the very people the system was designed to protect.

"A patent is only as good as your ability to defend it, so for a small firm it is virtually impossible," he said. "The only people winning here are the lawyers, and those costs get passed on to consumers. In Europe, there is some commonsense and you can't patent software. In the US something similar has to happen - it is unsustainable, you have this multi-directional fight between Google, Apple, Facebook, Microsoft and others, and it's not productive for anyone."

Apple has been at the heart of the patent war since 2010, and last week's injunction against Samsung comes less than a week after Apple suffered a setback when a federal judge in Chicago dismissed its patent claims against Google's Motorola Mobility unit.

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