Patent Wars Could Dull Tech's Cutting Edge

Aug 25, 2011
Originally published on August 26, 2011 9:41 am

Some call it an international patent arms race: Tech companies like Apple, Samsung, Nokia and Google are launching lawsuits over competing patent claims related to smartphones and tablets.

As NPR's Laura Sydell tells Morning Edition co-host Renee Montagne, companies are mounting takeovers aimed at gaining control of thousands of patents.

Google recently spent $12.5 billion to buy Motorola Mobility, a cellphone manufacturer with more than 17,000 patents. And as Sydell has previously reported, "patent trolls" are on the lookout for potential infringements and the payday that a lawsuit might bring.

But those clashes don't affect only the tech giants. The patent war may have some collateral damage, Sydell says.

"It does affect more than just these big companies," she says. "So you, as a consumer, first off, may pay more. Secondly, it may slow down innovation. There are a variety of ways in which this is also being used to stop the next cool thing from happening. Because you can just try and sue not only a big company — but maybe a small company that's coming in to compete in your market with some new, cool idea."

The patent wars aren't likely to end anytime soon, Sydell says. Google finally entered the fray by buying Motorola Mobility, and other companies are looking at potential purchases that might bring them protection from patent prospectors.

"You may see some people try to bid on Kodak, which has a huge, valuable patent portfolio," Sydell says. "Some say that Kodak's patent portfolio is even more valuable than Kodak itself."

And as a Reuters graphic that charts mobile patent lawsuits neatly shows, Kodak is suing Apple over patent infringement.

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RENEE MONTAGNE, Host:

Good morning.

LAURA SYDELL: Good morning.

MONTAGNE: Laura, start by giving us an example of a single battle, one patent that's being fought over.

SYDELL: Okay. Well, let's take Apple suing the company HTC, which is a Taiwanese cell phone maker that makes Android cell phones, uses the Android operating system. So Apple is suing HTC and has won the first round, though it's going to be appealed. But here's what the patent is for. You know when you get an email on your cell phone and you see, say, a phone number, or a link to something and it's underlined and you press it and it goes to a map or it says do you want to call that phone number?

MONTAGNE: Right.

SYDELL: Apple says we have a patent on that. They say that Android phones - which, in fact, do the same thing - are violating their patent. You should understand, though - and this is what gets so weird about these patent wars - is that this is a patent from 1995.

MONTAGNE: And - cell phones?

(SOUNDBITE OF LAUGHTER)

SYDELL: You grab this big, broad patent and you use it to sue your competitor.

MONTAGNE: So that is basically what these companies have to gain.

SYDELL: Yeah.

MONTAGNE: A leg up...

SYDELL: A leg up...

MONTAGNE: Or more than a leg up.

SYDELL: It's kind of like the Cold War, right?

(SOUNDBITE OF LAUGHTER)

SYDELL: I should say, Renee, that a lot of people think this is a terrible waste.

MONTAGNE: A terrible waste of energy, money, whatnot. I mean, I'm looking at a graphic.

SYDELL: Everything.

(SOUNDBITE OF LAUGHTER)

MONTAGNE: I'm looking at a graphic of the patent suits, and it's like a plate of spaghetti.

SYDELL: Yeah.

MONTAGNE: Every arrow is going in all directions. All the big companies seem to be involved.

SYDELL: Yeah. I mean, all right, so look. So Google spends 12-and-a-half billion dollars, right, to buy this company. That's 12-and-a-half billion dollars that basically didn't go into making new products. It didn't go into hiring anybody, and it will probably show its head maybe when you go to buy the Android phone and the price goes up.

(SOUNDBITE OF LAUGHTER)

MONTAGNE: So it does affect consumers.

SYDELL: It does affect more than just these big companies. So you, as a consumer, first off, may pay more. Secondly, it may slow down innovation. There are a variety of ways in which this is also being used to stop the next cool thing from happening, because you can just try and sue not only a big company, but maybe a small company that's coming in to compete in your market with some new, cool idea. And yes, so this will affect you and me.

MONTAGNE: Is there some way for a peace treaty to be signed in these patent wars?

SYDELL: So, for example, you may see some people try to bid on Kodak, which has a huge, valuable patent portfolio. Some say that Kodak's patent portfolio is even more valuable than Kodak itself. And so no, I think this is going to be going on for a while.

MONTAGNE: Laura, thanks very much.

SYDELL: You're welcome.

MONTAGNE: Laura Sydell is NPR's Digital Culture Correspondent. And you can hear more of her reporting on the players in the patent wars, including one group of people called Patent Trolls, on npr.org. Transcript provided by NPR, Copyright NPR.