Dec

28

Patent Trolls And How They Affect The Smartphone Industry

Mark Stephens

As 2011 draws to a close it has been a big year for the mobile handset industry; one of the topics that has caused quite a stir amongst developers and hardware manufacturers is patent trolls and we take a look at where that is all at now.

What Are Patent Trolls?

Essentially, patent trolls file aggressive patent lawsuits against companies because they have previously registered the patent, but many have no intention of ever developing the invention they hold the patent for.

They are opportunists, looking for ways to enforce patents against alleged infringers and make their money that way.

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The high costs of defending against a patent lawsuit often forces the defendant to settle with patent troll out of court, who can then pocket quite a sum for basically doing nothing! 85% of cases are settled out of court because of this.

A Recent Example

Let’s illustrate patent-trolling with a recent example.

Earlier this year Amazon unveiled its Kindle Fire tablet; inside two weeks of the announcement (even before the release date) Amazon was sued by a company called Smartphone Technologies, because it claimed that the Kindle Fire violates four of its patents.

The same company has sued Apple and Research In Motion (which produces the Blackberry) so there is something of a common theme here.

There have always been big battles in courts between different tech companies – Microsoft and just about every software company around, for example!

What seems to be a growing phenomenon is that tech companies which make the gadgets that us game developers design games for are finding themselves in court fighting companies that do little else but file patent lawsuits and enforce licenses….and business seems good!

Why Is the Situation so Bad?

This has been a growing trend of the tech world mainly because wording in software patents can be abstract and open to interpretation and because software is patented rather than copyrighted.

Large players have partly protected themselves by buying up loads of patents – Google recently paid $12.5 billion for Motorola Mobility, partly because it wanted its patents, which numbered 17,000.

When large tech companies go head to head often there are suits and counter-suits but patent trolls are immune from that because often they don’t actually make or develop anything.

Also, renewals of patents are under $1000 in the US, which encourages companies to stockpile them even if they have no intention of inventing anything – and this is one of the problems that hasn’t been dealt with yet.

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Are Even Apple Taking A Bite?

It was reported earlier this month by TechCrunch that Apple had made a deal with a patent troll company called Digitude Innovations.

Reports claimed that Apple transferred ownership of a dozen patents to Digitude, which is now going after virtually every major mobile device maker including Nokia, Research in Motion, Motorola, Samsung and Sony, with Amazon also included on the list.

This story seems a little bizarre even in the ultra-competitive smartphone market where there have been some fierce battles already; but considering Apple’s opposition to the tactics of patent trolls in the past, when the company has been the victim of lawsuits against it, it seems even stranger.

Perhaps this is part of a slightly sinister new Apple strategy, but more likely is that Digitude came after Apple in the first place and were “paid off” by patents.

Some patent troll companies accept and even prefer payment in other patents rather than cash.

Even that second scenario is a bit baffling given Apple’s punching power and seeing how it stands to gain from future Digitude suits against its main competitors.

Looking Ahead

One thing’s for sure, the issue of patent trolls doesn’t seem to be going anywhere in 2012 and we should probably expect to see more handset manufacturers doing battle out of court with these parasitic companies that seem to make a killing by living off their host!