Apple's Continued Patent Offensive Poses Risks for Shareholders

[MacRumors]

Bloomberg takes a look at the ongoing patent battle between Apple and a number of manufacturers of Android-based mobile hardware, suggesting that continued offensive action seeking to block competitors from using Apple's intellectual property may prove riskier for shareholders than licensing the technology.

"A scorched-earth strategy is bad news because it doesn't optimize the value of their patents -- because people will get around them," said [intellectual property advisor Kevin] Rivette, whose clients include Android licensees. "It's like a dam. Using their patents to keep rivals out of the market is like putting rocks in a stream. The stream is going to find a way around. Wouldn't it be better to direct where the water goes?"

Rivette suggests that Apple could probably extract about $10 in licensing fees for each Android handset sold, but with Apple having a war chest of over $80 billion already, the company could use its intellectual property as leverage in other ways if it opted to settle with its opponents.

The company could offer to drop its more than two dozen patent claims against Samsung in exchange for an agreement to hold off using Apple technology for six months or a year, he said. Cook could also try to get price breaks or guarantees that would give it greater access to Samsung parts, Rivette said.

Other industry experts take something of an opposing view, noting that Apple has yet to face any significant threat from its competitors on the intellectual property front, and in the meantime those competitors are being slowed by Apple's aggressive legal actions.

"Apple has the patents, the money and the expertise to go to war," [MDB Capital Group chairman Christopher] Marlett said. "I just don't see why Apple would seek détente, since they're the clear leader. Until they're hit with an injunction by Google or Samsung, they don't need to get serious about licensing."

But even those who believe that Apple's strategy remains viable for now suggest that at some point the company will need to shift course and reach settlements. With innovation obviously still continuing in the industry and an increasing number of players participating in it, it seems likely that Apple will at some point find itself on the losing end of a significant intellectual property suit.

Once competitors begin to land victories over Apple, as Samsung has been attempting with lawsuits over 3G-related patents, Apple may find it beneficial to settle the ongoing lawsuits to bring some stability back to the market.

Article Link: Apple's Continued Patent Offensive Poses Risks for Shareholders

 

[rdowns]

Title should read: May Pose Risks

 

[koach]

I love the thought process of Apple fanatics. Android was announced before the iPhone, Android phones contained numerous features before iPhones had them, and Apple has been blatantly stealing features from Android recently, but these "experts" believe that android manufacturers should be paying Apple licensing fees? Apple should be the ones paying the fees.

 

[Oletros]

So, Apple patents may or may not be a risk for shareholders, Apple patents may or may not have Android manufacturers pay licenses.

Title should say: Analysts have contradictory opinions over war patents.

 

[Small White Car]

I love the thought process of Apple fanatics. Android was announced before the iPhone, Android phones contained numerous features before iPhones had them, and Apple has been blatantly stealing features from Android recently, but these "experts" believe that android manufacturers should be paying Apple licensing fees? Apple should be the ones paying the fees.

Lawyers spend many years arguing cases that depend on tiny little details buried deep in software code.

As much as you'd like to believe so, you can not become an expert at this stuff by simply looking at the phones and typing out an opinion on the internet.

The fact that you used the word 'features' at all shows how far off you are from what these cases are about. It's very rarely about the 'feature,' but rather how the feature is accomplished.

That said, the analysts seem to also be guessing based on little knowledge, so what the heck. We might as well all join in.

 

[kdarling]

This is exactly what I've been saying for years:

1) Those who license their patents are assured of sharing even in their competitors' success.

2) It's not a longterm smart idea for Apple to force their competition to come up with more clever solutions or workarounds (and likely patent them).

3) Eventually the tables will be turned on Apple, and someone will refuse to license to them, just as they have refused to license to others. Bad karma.

 

[C00rDiNaT0r]

So how much will Apple gain if Apple charges 50 cents for each patent infringed, for each Android phone sold?

 

[mysticalos]

I love the thought process of Apple fanatics. Android was announced before the iPhone, Android phones contained numerous features before iPhones had them, and Apple has been blatantly stealing features from Android recently, but these "experts" believe that android manufacturers should be paying Apple licensing fees? Apple should be the ones paying the fees.

lol. when android was announced the iphone was already wellinto development, they didn't poof it. it was a work in progress for like 2 years. Furthermore, people involved in that development, planning, and saw the concept ideas before the iphone was out moved over to android. it's no secret. You should do a little more research on a product development cycle. Things are in development well before announced, they go through concept stages, risk assessments, etc. I remember when android was announced. It was announced in super early dev, way early enough to change stuff, and they did massively change stuff upon the concepts of the iphone, it's no secret. Plus the fact of the matter is still the same, apple patented their ideas first, so anyone using them suffers the consiquences. If android was first as you say, why don't they own the pattent? because they weren't first. Apple patents stuff in concept phase, because they had the idea first.

 

[spacehog371]

This really isn't that hard to understand.

Apple isn't interested in cross licensing. Their goal is to enforce their patents so competitors have to remove features and degrade the user experience on their platforms.

Indeed, HTC was just banned from importing phones that automatically recognize phone numbers and emails and turns them into action links. HTC has said they are going to remove the feature.

That is a serious degradation of the user experience. And it will drive people away from HTC. Apple can theoretically enforce the same patents against any other manufacturer as well, and probably will.

If Android as a whole lost that feature, Apple would certainly sell a lot more phones.

 

[dashiel]

I love the thought process of Apple fanatics. Android was announced before the iPhone, Android phones contained numerous features before iPhones had them, and Apple has been blatantly stealing features from Android recently, but these "experts" believe that android manufacturers should be paying Apple licensing fees? Apple should be the ones paying the fees.

You’re recollection of the timeline of events is incorrect. Android was markedly different prior to the iPhone introduction, it has been well established Android – created by the same team that created the Danger Hiptop aka T-Mobile Sidekick – was closer in form and function to the Blackberry and Danger phones. Android may very well have had a full screen multi-touch phone in development, but considering the G1 didn’t arrive until more than 10 months after the introduction of the iPhone and by all accounts was garbage in every conceivable metric it’s hard to imagine there was one.

 

[Benjamins]

I don't think they understand.

Apple is not looking for money in those patent suits.

 

[benthewraith]

This really isn't that hard to understand.

Apple isn't interested in cross licensing. Their goal is to enforce their patents so competitors have to remove features and degrade the user experience on their platforms.

Indeed, HTC was just banned from importing phones that automatically recognize phone numbers and emails and turns them into action links. HTC has said they are going to remove the feature.

That is a serious degradation of the user experience. And it will drive people away from HTC. Apple can theoretically enforce the same patents against any other manufacturer as well, and probably will.

If Android as a whole lost that feature, Apple would certainly sell a lot more phones.

Actually, if I recall, they found another way to implement it that Apple hasn't patented yet. HTC will lose absolutely no sales from this.

In fact, HTC was initially sued over 10 patents. Apple won with just one. The most trivial one.

 

[Oletros]

It was announced in super early dev, way early enough to change stuff, and they did massively change stuff upon the concepts of the iphone, it's no secret.

Still with this claim? Any source to back this?

Android was announced before the iPhone

False

You’re recollection of the timeline of events is incorrect. Android was markedly different prior to the iPhone introduction, it has been well established Android – created by the same team that created the Danger Hiptop aka T-Mobile Sidekick – was closer in form and function to the Blackberry and Danger phones.

If it is "well established" you can provide sources to back this, don't you?

 

[samcraig]

This really isn't that hard to understand.

Apple isn't interested in cross licensing. Their goal is to enforce their patents so competitors have to remove features and degrade the user experience on their platforms.

Indeed, HTC was just banned from importing phones that automatically recognize phone numbers and emails and turns them into action links. HTC has said they are going to remove the feature.

That is a serious degradation of the user experience. And it will drive people away from HTC. Apple can theoretically enforce the same patents against any other manufacturer as well, and probably will.

If Android as a whole lost that feature, Apple would certainly sell a lot more phones.

No - you missed the point entirely. HTC isn't removing the feature. They've changed the way it's done so it avoids the patent.

So - in essence - rather than Apple making money from licensing the patent - they've forced the competition to come up with a work around. This has both good and bad points as mentioned in the article.

 

[kdarling]

Plus the fact of the matter is still the same, apple patented their ideas first, so anyone using them suffers the consiquences. If android was first as you say, why don't they own the pattent? because they weren't first. Apple patents stuff in concept phase, because they had the idea first.

Simply getting a patent does not always mean it actually is for a unique idea. That can require a court ordered deeper examination to figure out once and for all.

For example, Apple was quick to use their patent for "slide-to-unlock with image and path" against everyone they sued. Now, with various judges saying that it's most likely obvious and invalid, they've withdrawn it from their attack arsenal. Other patents are not doing so well either.

A related example was Apple's attempt to trademark "Multi-Touch". It was almost finalized. Then, after a fervent letter of opposition from Jeff Han's company, the Trademark Office re-examined their original approval and decided that it had been given in mistake.

 

[koach]

Lawyers spend many years arguing cases that depend on tiny little details buried deep in software code.

As much as you'd like to believe so, you can not become an expert at this stuff by simply looking at the phones and typing out an opinion on the internet.

The fact that you used the word 'features' at all shows how far off you are from what these cases are about. It's very rarely about the 'feature,' but rather how the feature is accomplished.

That said, the analysts seem to also be guessing based on little knowledge, so what the heck. We might as well all join in.

Lawyers win cases by being a better liar, finding some obscure precedent, or by exploiting loopholes/issues with our current laws. More often than not whoever hires the most expensive legal team wins the case.

You are completely false about my use of features. In fact the exact opposite is true. Rather than patenting a specific example of doing something, companies like Apple want to patent the feature itself. A classic non-Apple example is amazon's one click patent. I agree with the idea that amazon should be able to patent the code (in addition to copyright) so that a competitor cannot create a one-click system using the same code. Myself and most forward thinking individuals who understand the situation disagree with the idea of patenting the idea of one click . In amazon's case the patent was for the latter. It was not a specific set of code or a way of doing it, it was the idea of a one-click system. THAT is what is broken with the patent system. A lot of these patents have the word "method" in them to make them APPEAR as though they are patenting an implementation, but the patents are worded so vaguely that there is literally no other way of providing that feature because of the vagueness of the patent. It's all a sham.

The fact of the matter is that Android existed before the iPhone. android phones had multitasking, real notifications, etc. before the iPhone did. When Apple came along and copied those features Google didn't cry foul.

I truly believe that if Apple comes out with a TV set, they will then sue every other TV manufacturer for copying their designs, even though the other manufacturers had the design before Apple. Apple lives in a fantasy world where they and only they invented every piece of technology in a bubble.

What apple is good at is taking an existing product (phone, tablet, mp3 player, etc.) and making it better. The problem is once they've done that, they act as if they created a brand new product in a vacuum. They do not pay licensing fees on patents that existed before their product, and then they sue other manufacturers who come out with similar products. To make matters worse, they sue these manufacturers claiming that they are stealing apples ideas and design patents. The funny part is that apple then goes and steals from other companies and thinks it is ok. For example, ios5 saw the introduction of a new notification system. The problem is that they copied it verbatim from android. The core problem is that once Apple enters a market they have this attitude that they own the market and nobody else is allowed to compete in it.

 

[Ihatefall]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A405 Safari/7534.48.3)

This really isn't that hard to understand.

Apple isn't interested in cross licensing. Their goal is to enforce their patents so competitors have to remove features and degrade the user experience on their platforms.

Indeed, HTC was just banned from importing phones that automatically recognize phone numbers and emails and turns them into action links. HTC has said they are going to remove the feature.

That is a serious degradation of the user experience. And it will drive people away from HTC. Apple can theoretically enforce the same patents against any other manufacturer as well, and probably will.

If Android as a whole lost that feature, Apple would certainly sell a lot more phones.

That seems far fetched at best... Last time I checked out phones at the store I wasnt like... "Now, mr. Salesman, does this phone automatically recognize numbers?!?"
Also didn't HTC already announce that they had a workaround in progress for this? It's like the previous poster said they will find work arounds.

 

[Swift]

Risk? I'll show you risk

Apple put together the Mac. Jobs wanted to lower the price, even to barely breaking even, to sell a lot. They kicked him out, apparently believing the Apple II would go on forever.

Truthfully, out of all the bafflegab the Android fans try to make out of Apple's patent war, and Bloomberg's attempt to spin "shareholder risk" in defending patents, what can we truthfully say? Go all Google Woodstock on you, denying that Google makes out like crazy on Android?

The serious dimension is, what are software patents? I'm perfectly willing to make them tougher to get and of a shorter term, but I'm not one who thinks they should all disappear. Apple has a lot of patents in this area now, so that it won't repeat the Mac story again, of spending a lot on innovation and then letting everybody else copy. It takes the incentive out of Apple's business model.. Go ahead, make nice phones. Don't copy what Apple did. Do different stuff. Apple has an exclusive right on some things. (Google has a very suspicious view, to me: what's mine is mine and what's yours in mine, too.) Schmidt's creepy view.

 

[koach]

lol. when android was announced the iphone was already wellinto development, they didn't poof it. it was a work in progress for like 2 years. Furthermore, people involved in that development, planning, and saw the concept ideas before the iphone was out moved over to android. it's no secret. You should do a little more research on a product development cycle. Things are in development well before announced, they go through concept stages, risk assessments, etc. I remember when android was announced. It was announced in super early dev, way early enough to change stuff, and they did massively change stuff upon the concepts of the iphone, it's no secret. Plus the fact of the matter is still the same, apple patented their ideas first, so anyone using them suffers the consiquences. If android was first as you say, why don't they own the pattent? because they weren't first. Apple patents stuff in concept phase, because they had the idea first.

You need to learn about prior art. Apple patents stuff when prior art already exists. And our broken USPTO grants them the patent anyway.

 

[Oletros]

Simply getting a patent does not always mean it actually is for a unique idea. That can require a court ordered deeper examination to figure out once and for all.

What hurt makes patentlyapple.com

Have you seen the last "core" and "key" multi touch patent awarded to Apple?

 

[koach]

False

The first pre-release Android phones were shown in 2006. The iPhone was announced in 2007. You are 100% factually incorrect.

 

[saving107]

I love the thought process of Apple fanatics. Android was announced before the iPhone, Android phones contained numerous features before iPhones had them, and Apple has been blatantly stealing features from Android recently, but these "experts" believe that android manufacturers should be paying Apple licensing fees? Apple should be the ones paying the fees.

Yup, because this is the same

http://www.engadget.com/2007/11/12/a-visual-tour-of-androids-ui/

as this

Its not like Google/Android shifted course when Apple unveiled the the iPhone in 2007

Now back on topic,

Once competitors begin to land victories over Apple, as Samsung has been attempting with lawsuits over 3G-related patents, Apple may find it beneficial to settle the ongoing lawsuits to bring some stability back to the market.

I've never commented on any of these paten lawsuit post, but I like this part of the article.

 

[Consultant]

Not enforcing your intellectual property poses larger risks.

 

[quagmire]

Yup, because this is the same

There were prototypes of touchscreen androids as well....

 

[Zarmanka]

Apple by cross licensing patents will allow competitors to commoditize the technology at faster pace therefore deflating Apple's profit margins. Apple does not have monopoly on innovation. More innovation by competitors is only good for consumers.