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Brawling OEMs & a Broken Patents System

A furious scramble for patents is unfolding in the wireless communication sector. OEMs and components vendors are jostling for any differentiating advantage in what is beginning to look and feel like an out-of-control Worldwide Wrestling Federation all-comer smackdown event.

Here's how it's going: {complink 379|Apple Inc.} is suing {complink 4751|Samsung Electronics Co. Ltd.}, which is countersuing Apple, which recently agreed to pay royalties to Nokia following the end of a two-year-old patent lawsuit and is now suing (and is being sued by) Google, HTC, and Motorola.

I am not done: Software vendors and components suppliers won't be left out of the brawl. So, {complink 4092|Oracle Corp.} is suing Google and any company that dares to use the Android operating system; Software maker Skyhook Wireless has hauled Google to court; Microsoft wants to make both Barnes & Noble and contract manufacturer Foxconn pay for allegedly violating a number of its patents; and smartcard supplier Gemalto has joined Google, HTC, Motorola, and Samsung in a lawsuit alleging violation of some of its patents. It's only a matter of time before intellectual property trolls join the fray.

The headlines alone capture the intensity of the situation, and some of these are worth repeating here:

While this legal wrangling is playing out in courtrooms all over North America, Europe, Asia, and even in Australia, all of these companies and their support partners are developing variants of proprietary technologies to lock their IP down with new patent applications, even as they scour the industry for IPs held by less cash-rich companies. Patents held by third-party players are in play right now, for huge sums.

Several themes run through this patent tug of war. First, although Apple has an enormous lead in the smartphones and tablet devices segment, it would be naïve to believe the company is invincible. In fact, my bet is on Samsung taking over the crown within a few quarters. The Korean company is the only rival that has the capacity to take on Apple; its willingness to embrace the Google Android and Microsoft Windows operating systems means it can offer a wider range of products (and price points) than Apple could. However, it must scale a mountain of lawsuits in various markets globally.

Another noteworthy development from the wireless war is the growing involvement of regulatory authorities. As OEMs hunt for patents and as the biggest players use their considerable cash hoards to secure the most valuable IPs, regulators are getting concerned these moves will result in anti-competitive, near-monopoly situations and are therefore scrutinizing transactions much more closely. The recent transaction involving the acquisition of various Nortel patents by Apple and Microsoft, for instance, is being reviewed by the Department of Justice. Its findings may determine how these companies will be able to use and share the related IP.

6 comments on “Brawling OEMs & a Broken Patents System

  1. UdaraW
    August 3, 2011

    Having followed some of these patent lawsuits as they unfold, what I have come to understand is that many large companies go by the norm 'ignorance is a bliss' and do not perform an adequate prior-art search before they decide to develop a new technology.

    As a result, majority of the companies seem to live through the risk of treding on anothers patents at some point in future and in one way or the other. This purposeful ignorance of prior-art and exiting patents appear to have its benefits, in that, when a patent lawsuit fails, they do not have to pay the treble damages because, there have not been a 'willfull infringement' of the patent in question. Thus, these large companies seem to adopt the strategy of facing the patent lawsuits as and when the arise, and not do proper searches for prior-art and existing patent landscape prior to technology development.

     

     

  2. Jay_Bond
    August 4, 2011

    It is amazing how many lawsuits are going on right now, particularly the ones involving counter suing the other company. It is going to be interesting to see who comes out as winners in this global rat race. Of course since this is in the court system, this could take a few years to even begin to be solved. I do agree that Samsung is clearly the front runner to take over Apple's spot. Samsung's overall flexibility allows them greater growth possibilities. 

  3. Clairvoyant
    August 5, 2011

    Agreed, Jay. It is always interesting watching the battles between the large electronic companies.

  4. itguyphil
    August 5, 2011

    Clairvoyant,

    I would agree BUT only in the case where the 'battles' do not hurt us, the consumers.

  5. Clairvoyant
    August 7, 2011

    Yes, pocharle, very true!!

  6. Anne
    August 20, 2011

    The problem with all these patent lawsuits is that it will come to hurt the consumers, as the both the wins and loses are costly and those cost always get tricked down to the consumers.  The loss from the royalty paid to themselves will be made up out the consumers' pockets.

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