An Inside Look at Apple's Role in the Patent Industry

MacRumors · Oct 8, 2012

In the seventh installment of its "iEconomy" series focused on Apple, The New York Times takes a look at patents, examining how and why Apple has wielded them in what seems to be a never-ending series of lawsuits between the company and its competitors.

The seven-page article offers an interesting glimpse into the patent process and traces Apple's aggressive efforts to a $100 million settlement paid by the company to Creative Technology over digital music players such as the iPod. As Apple worked toward launching the iPhone relatively soon after that 2006 settlement, Steve Jobs became committed to ensuring that Apple's innovations would be protected.

Privately, Mr. Jobs gathered his senior managers. While Apple had long been adept at filing patents, when it came to the new iPhone, "we're going to patent it all," he declared, according to a former executive who, like other former employees, requested anonymity because of confidentiality agreements.

"His attitude was that if someone at Apple can dream it up, then we should apply for a patent, because even if we never build it, it's a defensive tool," said Nancy R. Heinen, Apple's general counsel until 2006.

The report describes how Apple's engineers were required to participate in monthly "invention disclosure sessions" in which they sat down with patent lawyers to discuss their efforts and determine whether any portions of their work would be patentable. The report also points to the massive costs involved in the patent industry, with Apple and Google now spending more on patent issues than on research and development.

In the smartphone industry alone, according to a Stanford University analysis, as much as $20 billion was spent on patent litigation and patent purchases in the last two years -- an amount equal to eight Mars rover missions. Last year, for the first time, spending by Apple and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products, according to public filings.

The New York Times shares several other anecdotes that help provide an overview of the patent landscape, including discussion of how Apple spent seven years shepherding what would become the "Siri patent" through numerous reviews before it was ultimately granted on the tenth try.

Another story centers on voice recognition company Vlingo, which was forced to sell itself to competitor Nuance after it incurred millions of dollars in legal bills trying to defend itself from six lawsuits filed by Nuance, even though Vlingo was victorious in the one trial that made it to a jury decision. During that time, Siri, which had yet to be acquired by Apple, switched its allegiance from Vlingo to Nuance, and Vlingo's fate was sealed.

Overall, the report provides a solid overview of some of the challenges facing the patent industry, where overworked patent examiners are tasked with quickly assessing the validity of numerous patent applications as teams of lawyers tweak and prod submissions until they can make their way through the system. Numerous proposals for revamping the patent system have been made, ranging from simply shortening the protection term of technology-related patents to tightening the criteria for patentability, but in the meantime technology companies will clearly continue to spend billions of dollars staking out and protecting their territory to the maximum extent possible.

Article Link: An Inside Look at Apple's Role in the Patent Industry

applesith · Oct 8, 2012

Apple knows something about patents? No idea.

needfx · Oct 8, 2012

while apple is becoming the biggest patent monster of them all

STiNG Operation · Oct 8, 2012

MacRumors said:
overworked patent examiners are tasked with quickly assessing the validity of numerous patent applications as teams of lawyers tweak and prod submissions until they can make their way through the system.

Why are these people being rushed through these processes when the law suits last for months and months and months and months???

KdParker · Oct 8, 2012

They should just start a patent company - make some more money!

SPUY767 · Oct 8, 2012

Like I've said before, if you're not demonstrably attempting to bring a patent to market after a certain number of years, that patent should just go public domain.

ECUpirate44 · Oct 8, 2012

The US patent system is completely broken. I like Mark Cuban's perspective of simply out performing the competition.

chrmjenkins · Oct 8, 2012

needfx said:
while apple is becoming the biggest patent troll of them all

Methinks you don't know what that term means.

Patent troll is a pejorative term used for a person or company who enforces patents against one or more alleged infringers in a manner considered aggressive or opportunistic with no intention to manufacture or market the patented invention.[1]

http://en.wikipedia.org/wiki/Patent_troll

needfx · Oct 8, 2012

chrmjenkins said:
Methinks you don't know what that term means.

http://en.wikipedia.org/wiki/Patent_troll

I stand corrected

Tiger8 · Oct 8, 2012

needfx said:
while apple is becoming the biggest patent troll of them all

Not exactly.

Apple w/patents is like that high school nerd who got bullied in his freshman year, started working out and bulking up over the summer, and came back as the bully next fall.

To be bullied or to be the bully? I think everyone would chose the latter

Tones2 · Oct 8, 2012

chrmjenkins said:
Methinks you don't know what that term means.

Patent troll is a pejorative term used for a person or company who enforces patents against one or more alleged infringers in a manner considered aggressive or opportunistic with no intention to manufacture or market the patented invention.[1]

http://en.wikipedia.org/wiki/Patent_troll

Um, that's exactly what Steve Jobs told his employees to do, apparantly, as quoted in the OP: "His attitude was that if someone at Apple can dream it up, then we should apply for a patent, because even if we never build it, it's a defensive tool,"

needfx · Oct 8, 2012

Tones2 said:
Um, that's exactly what Steve Jobs told his employees to do, apparantly, as quoted in the OP: "His attitude was that if someone at Apple can dream it up, then we should apply for a patent, because even if we never build it, it's a defensive tool,"

great fun fact

chrmjenkins · Oct 8, 2012

Tones2 said:
Um, that's exactly what Steve Jobs told his employees to do, apparantly, as quoted in the OP: "His attitude was that if someone at Apple can dream it up, then we should apply for a patent, because even if we never build it, it's a defensive tool,"

You're misreading what he's stating. He's allowing the possibility they may change their decision to bring to market later, but don't want to find themselves in the position where they do to decide to bring it to market and they didn't file those patents.

Case in point? Number of suits apple has filed over patents not in their products: 0.

Also, the term "defensive" itself implies that it would help when they are being litigated against. But nevermind reality. Apple bad guy! GRRRR.

SatManager · Oct 8, 2012

The entire patent process has gotten out of hand for the tech and software industry. The idea that you can patent an idea and no one else can improve upon it seems wrong. Now I am not talking about patents that are required for industry interoperability, those are supposed to be covered by FRAND rules (though those seem to be pretty broad).

A look and feel shouldn't be something that doesn't change. You can make it better, add a new feature, and you release it. Someone else takes that idea and then improves it. Saying 'this is my idea' and you can't copy the look or feel just doesn't seem right. It would be like someone first brings out the word processor and no one else can use the idea to improve upon it.

Perhaps only give software patents only one year of protection after release before others can use the look and feel. It seems like many products are brought to market with "Patent Pending" anyway.

jontech · Oct 8, 2012

ECUpirate44 said:
The US patent system is completely broken. I like Mark Cuban's perspective of simply out performing the competition.

You being Outperforming then another Samsung comes along....

How do you protect innovation?

We tend to forget that we compete in a world market and every locality has different rules.

HobeSoundDarryl · Oct 8, 2012

SPUY767 said:
Like I've said before, if you're not demonstrably attempting to bring a patent to market after a certain number of years, that patent should just go public domain.

This is exactly right. No defensive patents would solve a lot of problems in this system. Patents were supposed to be about protecting innovations coming to market NOT protecting the status quo. As is, those with the deepest pockets can leverage an every growing library of "we may do nothing with these" patents to squelch any smaller firms trying to actually bring something innovative to market. Defensive patents pinch innovation among the small, reserving innovation for the large, rich companies.

I can't blame Apple for playing the game by the rules (that actually cost them in that Creative patent scenario) but I do completely believe the game's rules should be changed. "No defensive patents" otherwise known as "use it or lose it" would be the first changed rule.

Another: if someone can innovate a medical cure from a patented treatment, the innovator who cures the problem gets half of the original patent. In short, we need cures much more than we need pill-a-day treatments. However, the latter has a forever cash stream while the former is one big blast of revenue and then nearly nothing. Think about how much one-a-day treatment revenue is made on- say- Polio, Smallpox or the Plague. "As is" the rules are such that even if a pharma actually found a cure, they are most incentivized to back it down to a treatment. I wonder how many cures might be laying in a safe somewhere because the treatment is so much more profitable. A simple rule change biased to cures over treatments and we'll get cures again. And before someone labels conspiracy theorist, note how much better all of our tools have become in the last 20-30 years. Now, how many cures of substance have come out in the last 20-30 years? With all the fantastic technology, DNA analysis, medical advances, etc, we can't find a cure for anything?

Another: software cannot be patented, only copyrighted. Else, eventually, you won't be able to code anything because a handful of companies will own all of the conceptual ways of doing anything. Software patents have always been dumb IMO.

There are several other needed rule changes but you get the idea.

subsonix · Oct 8, 2012

chrmjenkins said:
Also, the term "defensive" itself implies that it would help when they are being litigated against.

Exactly, and that is pretty much the strategy all large corporations use.

needfx · Oct 8, 2012

HobeSoundDarryl said:
This is exactly right. No defensive patents would solve a lot of problems in this system. Patents were supposed to be about protecting innovations coming to market NOT protecting the status quo. As is, those with the deepest pockets can leverage an every growing library of "we may do nothing with these" patents to squelch any smaller firms trying to actually bring something innovative to market. Defensive patents pinch innovation among the small, reserving innovation for the large, rich companies.

I can't blame Apple for playing the game by the rules (that actually cost them in that Creative patent scenario) but I do completely believe the game's rules should be changed. "No defensive patents" otherwise knows a "use it or lose it" would be the first changed ruled.

Another: if someone can innovate a medical cure from a patented treatment, the innovator who cures the problem gets half of the original patent. In short, we need cures much more than we need pill-a-day treatments. However, the latter has a forever cash stream while the former is one big blast of revenue and then nearly nothing. Think about how much one-a-day treatment revenue is made on- say- Polio, Smallpox or the Plague. "As is" the rules are such that even if a pharma actually found a cure, they are most incentivized to back it down to a treatment. I wonder how many cures might be laying in a safe somewhere because the treatment is so much more profitable. A simple rule change biased to cures over treatments and we'll get cures again. And before someone labels conspiracy theorist, note how much better all of our tools have become in the last 20-30 years. Now, how many cures of substance have come out in the last 20-30 years? With all the fantastic technology, DNA analysis, medical advances, etc, we can't find a cure for anything?

Another: software cannot be patented, only copywrited. Else, eventually, you won't be able to code anything because a handful of companies will own all of the conceptual ways of doing anything. Software patents have always been dumb IMO.

There are several other needed rule changes but you get the idea.

great read, but I think software writing is kind of like music in its infinity

george-brooks · Oct 8, 2012

Adequate and just legal protection for intellectual property is very important to me, but this whole issue is getting ridiculous. Ultimately all these companies are doing is squashing innovation.

HobeSoundDarryl · Oct 8, 2012

needfx said:
great read, but I think software writing is kind of like music in its infinity

Agreed, and best I know, you can't patent music. Let copyright law cover software and save the patents for the "whole" product, not the electronic byte configuration and algorithms.

Intarweb · Oct 8, 2012

It's too bad. That $20 billion could have built a nice factory or two in the United States and created thousands and thousands of jobs. I know it's necessary but it still makes it unfortunate.

kdarling · Oct 8, 2012

SPUY767 said:
Like I've said before, if you're not demonstrably attempting to bring a patent to market after a certain number of years, that patent should just go public domain.

What about buying companies and never using their tech? Or doing it to keep a previously common product out of other people's new devices?

Apple got an exclusive on LiquidMetal, for example, which prevents anyone else from using it in consumer electronics. Samsung had been using LM in phones since 2002, IIRC. Apple has used it to make what? SIM ejectors?

Now Apple has taken over Authentec fingerprint sensors... which have been used in competing phones and PDAs for years.

STiNG Operation said:
Why are these people being rushed through these processes when the law suits last for months and months and months and months???

A few years ago, the rules for evaluating Patent Examiners changed to put more emphasis on quantity over quality. This is probably partly because the USPTO makes tons of money on patent applications. It's full self funded and the extra money goes into government coffers for other use.

The rules also apparently changed to make it harder to reject an application than to allow it. So as an examiner, what would you do? Of course, after a while you'd allow the patent, figuring that it's a) less work and b) could be challenged later. Apple is known to game patent application rejections this way... filing minor changes over and over again until the examiner gives up. Slide to unlock is an example.

For that matter, software patents only became allowed/ popular in the early 90s. Almost always they're about an idea, not a specific implementation, which is what makes us software developers unhappy.

Upshot: just because you got a software patent approved, does not mean that's valid or unique. It often just means you filed first or at all.

PsudoPowerPoint · Oct 8, 2012

STiNG Operation said:
Why are these people being rushed through these processes when the law suits last for months and months and months and months???

Because the under-appreciated patent office is on a tight budget, and the patents that matter ultimately get tested in court.

I'm strongly in favor of government protection of intellectual property, but I'd like to see the duration of the protection shortened to something like five to seven years. However, there should also be some way to get an extension on that term when the developer can show that a longer term will spur more innovation, or that a longer term is necessary to recover the cost of developing the invention (as with increasingly expensive pharmaceutical developments).

Tiger8 · Oct 8, 2012

Intarweb said:
It's too bad. That $20 billion could have built a nice factory or two in the United States and created thousands and thousands of jobs. I know it's necessary but it still makes it unfortunate.

You are not looking at the bright side: Several AMERICAN lawyers made hundreds of thousand - even millions, of dollars out of this patent war!

Our legal system is broken - the best lawyers always win, and the best lawyers are very expensive. I laugh when people say patent law should be fixed, it's a drop in a bucket of broken legal system.

macUser2007 · Oct 8, 2012

The "patent everything, even if something is not defensible later, and even if you know the application will be denied" attitude is understandable from a business standpoint.

But it also shows the absolute mush the Patent Office has become.

Plus, there is a giant revolving door, where examiners will curry favors from large companies like Apple, so that later they can get a cushy in-house job, or a fat consulting contract.

The system is broken and all large corporations exploit it, to the detriment of us all.

An Inside Look at Apple's Role in the Patent Industry

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