Tuesday, March 2, 2010

Live by the patent, die by the patent

Apple sued smartphone maker HTC for patent infringement Tuesday in Federal district court, and filed to block imports of HTC phones with the US International Trade Commission.

PC magazine lists the phones and patents, while All Things D has the actual court filings, and TechCrunch has both. CNET summarizes HTC’s oral response. Engadget has details of the patents and what they mean.

The ITC complaint lists both Android phones (Droid Eris, Google Nexus One, the Dream/T-Mobile G1) and others (HTC Touch Pro, the Touch Diamond, the Touch Pro2, HTC Tilt II, HTC Pure, HTC Pure, and HTC Imagio.) Nearly all of the accusations are against the Android phones.

The reaction by iPhone haters is predictable outrage. When it comes to aggressive assertion of IP against heroes of the open source revolution, Apple is now where Microsoft was almost a decade ago.

To at least some degree, Apple is doing what exactly what the patent system was intended to do. Apple created a new interface for the mobile phone industry, it was very popular, and then it was copied by its competitors. I haven’t examined the specific patents and allegedly infringing products, but in principle it seems plausible.

Rationality may not be the entire explanation. Apple oldtimers — and I suspect Steve Jobs — still have a bad taste in their mouth from losing the Windows look and feel lawsuit (mainly because of a stupid decision by Apple to grant MS a license in exchange for a renewal for MS’s Basic). It appears that Apple hopes that patents will work to protect Apple from competitors where a look-and-feel copyright suit two decades ago did not.

The problem today is that Apple’s patents are mainly in UI, which are a small part of a complex portable network-connected multifunction device. In my study with Rudi Bekkers, we found that there’s a thicket of 3G patents out there, including held by four of Apple’s largest handset rivals. Among UMTS patent holders, Nokia and Ericsson were the top two with more than 240 each, while Samsung and Motorola were 5th and 6th more than 50 each. (HTC didn’t even have a single one as of 2005.)

So while HTC might be easy to sue, it could be very dangerous to sue four of the top five handset makers. A no-holds-barred patent war could easily become a lose-lose proposition for Apple, unless Apple obtains protection through a patent pass-through license to large 3G portfolios from its current (Broadcomm) or future (Qualcomm) component suppliers.

My guess is that this will slow up the Taiwanese and Chinese commodity rivals for a couple of years, but not those from Europe, Korea or North America that have generous patent portfolios. If it only works against HTC — the fastest growing Android supplier — that might be enough for while. But even if it does, in the long run Apple will need more than patents to protect it against the commoditization of its smartphone innovations.

No comments: