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Perspective on The Apple-Smart Phone Patent Battle

July 19th, 2011

The media is abuzz over the recent ITC (International Trade Commission) ruling by Judge Carl Charnesk, in favor of upholding two of Apple’s software patents against Smart phone rival HTC, using the Android O/S from Google. In essence, Android O/S is at the center of the debate as the March 2011 complaint filed by Apple, with broader implications for the roughly three dozen other Android Smart phone OEM vendors.

Reuters reported that, "The ruling, though preliminary, will be closely dissected as it is one of the first between Apple and other smartphone makers that use Android." And HTC is just the first on Apple’s hit list, Samsung Electronics is currently in litigation over the same issue, and Apple just settled a similar dispute with Nokia. The original complaint from Apple listed 10 patents, with six being dismissed, and two of the remaining four found in violation by the ITC judge.

What’s even more interesting, at the heart of the software code in question is one Apple patent (no.: 5,946,647) filed back in the "beeper era" of 1996-way before the advent of the Smart phone. This is software code that highlights data like web links and phone numbers for quick access to e-mail or number dialing, by simply touching (or at the time clicking) on the relevant text.

For its part, Google seems committed to standing by its partner, HTC, with comments from Executive Chairman Eric Schmidt saying of the recent ITC ruling, "I’m not too worried about this… We have seen an explosion of Android devices entering the market and, because of our successes, competitors are responding with lawsuits as they cannot respond through innovations," ZDNet Asia reported from a Google mobile conference in Tokyo today. Schmidt also quipped, when asked if Google would lend financial support to HTC if they lose an appeal to the ITC… "We will make sure they don’t lose then…"

Google has long stated that the software patent system is broken, and they are not alone. Many in the industry believe the US Patent law for software is due for an overhaul. Books are written on the topic, including Innovation and its Discontents, (2004, Princeton University Press) and as recent as yesterday, a Techrights.org Blog headline reads: Microsoft Acknowledged Patent System is Broken. But they aren’t the only ones. There is an excellent background article This Apple HTC Patent Thing written by John Gruber that really gets to the heart of the issue. In his thoughtful piece he quotes software patent guru Tim Bray (www.tbray.org) who writes: "There are two aspects surrounding Apple’s patent litigation against HTC that demand further consideration. First, the severe problems with the U.S. patent system as a whole, particularly with regard to software patents. Second, the strategic implications of Apple’s decision to file suit."

In short Bray said, "…the fact is that it’s almost impossible for rational people to have a rational discussion about software patents. The reason is the insanely-dysfunctional behavior of the US Patent and Trademark Office, whose idiotic willingness to grant patents on anything without regard for prior art or the obviousness test has totally poisoned the waters of this discussion." And probably the best quote of the entire article, "The result, as I’ve argued before, is that the net effect of the software-patent system is to serve as a parasitic tax by lawyers on businesspeople."

Finally, Gruber quotes a warning to Apple in an open letter to Steve Jobs from Wil Shipley regarding the HTC litigation: "If Apple becomes a company that uses its might to quash competition instead of using its brains, it’s going to find the brainiest people will slowly stop working there. You know this, you watched it happen at Microsoft."

Some final thoughts, Apple has been around a long time, and is not new to patent litigation. The most memorable is its early-day suit against Microsoft over the "look and feel" of the Mac menu based "Finder O/S" vis-a-vis the early-day MS Windows. Apple lost that fight, and now decades later, finds itself, once again, at the top of the O/S heap-this time in Smart phones and tablets. The company did not get there by protecting patents, or accusing competitors of stealing its technology. And while Google’s Schmidt goes too far stating "…competitors are responding with lawsuits as they cannot respond through innovations," it underscores the point, that with all the innovation that Apple has developed over the years, fortunes built and empowering others-Apple’s good-will is at risk with this kind of "legal" action-and is indeed at risk of being perceived as attempting to win in the market by exploiting the weakness of others, not through its biggest asset, the innovation of its people.

Apple is a company that is winning in the market, and mindshare of its customers because it makes excellent products, that exceed user expectations, and delivering experiences (and behavior) its customers want to be associated with. The best example of this was Apple’s decision to make FaceTime, video calling software open source, for all OEM’s to adopt, and spread the standard that benefits everyone, particularly the hearing impaired. This is the company Apple users, and yes, Apple employees, engineers, marketers and sales people, are proud of. - Steve Sechrist

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