Battle of the Patents

Marketing, March 14, 2012 | Go to article overview

Battle of the Patents


The plethora of patent-related court cases between major technology brands is the result of a high-stakes strategic marketing conflict, writes Stuart Derrick

Marketers might be forgiven for reaching for Patent Law 101 books of late as a growing number of technology disputes in this area head for the courts.

Yahoo! surprised many in the industry when it became the latest global brand to enter the fray last month, demanding licensing fees from Facebook for allegedly using its technology.

This was followed by patent litigation initiated against Apple by Luxembourg-based Core Wireless Licensing. The cases add to a who's who list of technology brands suing or being sued over alleged infringements (see diagram, right). Apple has several patent cases pending, as do Samsung, Motorola, HTC and BT.

On the face of it, patent law appears straightforward. A licence is granted to an inventor to provide a window of opportunity to exploit an invention; during that time, other companies cannot use the technology without approval, and usually a licensing fee.

However, the intricacy and volume of patents in the IT sector has created a legal minefield. Companies such as Microsoft file thousands of patent applications a year. While these once resulted in legal stand-offs - as a suit would be matched with a counter suit - brands are increasingly opting to go to court.

'Litigation has accelerated because technology has accelerated; there is real money involved,' says Gregor Pryor, head of digital media at law firm Reed Smith. 'If you can stop somebody using a particular file format or software, then it gives (your brand) a competitive advantage.'

Paul Meadows, the former head of marketing at LG Electronics, says that patent disputes can disrupt the activities of a competitor by helping others gain first-mover advantage in a marketplace.

'Once there is traction behind a product or technology, and the marketing spend kicks in, it can be hard to stop a leading brand,' he adds. 'The second or third player in a market may have a better proposition, but it's tough to challenge the leader.'

A patent battle can be all about tactics, he explains. 'Marketers like nothing better than knowing there is a window of opportunity when an opponent is prevented from doing something. That's when you can invest to best advantage.'

Samsung and Apple have both been subject to injunctions recently preventing them from selling products due to patent disputes (see diagram), and compensation payouts can be huge. In 2006, BlackBerry manufacturer RIM paid more than dollars 600m to settle a case with IP company NTP, to avoid a court-ordered shut-down.

Such cases underline the lengths brands will go to over patents. The principal drivers are clear, says Omaid Hiwaizi, planning director at SapientNitro.

'Most brand marketing is based on some sort of differentiating factor, substantiated by reasons to believe - in many cases it's marginal or amorphous,' he adds. 'However, with a patent it's suddenly protectable and, to a greater extent, unique. It is a powerful way to build a differentiated communication proposition. That's why patents can be so valuable.'

In the technology field, the legal actions show no sign of abating as the use of patents as strategic assets grows. Google's acquisition of Motorola Mobility, announced last year, will give it 17,000 patents, helping to stoke the fire further. Motorola Mobility says its patents, which it 'has worked hard over the years' to build up, are vital to success.

Gemma Goatly, communications director at Motorola, adds: 'We will continue to take all necessary steps to protect our intellectual property. Our patent portfolio and licensing agreements with companies around the world are critical to our business.'

As always, the only sure winners in all of this would seem to be the lawyers.

BRAND VIEW

Chris Sheffield (below right) is managing director of Betfred. …

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