30 April 2012

Apple v Android Part V: Open standards, IP strategy, Resolution?

Chess knight. Photo: Petr Novák, Wikipedia
The patent landscape maps in part four of this series showed that the key Android advocates – including Samsung and Motorola/Google – are massively superior to Apple in terms of the sheer numbers of patents in their portfolios.

But, as we explain in this fifth and final part, many of these patents are encumbered by licensing obligations arising from their relationship to industry standards.  While the scope of these obligations is yet to be fully tested in court – and may differ from country to country – it is already clear that such encumbrances can significantly complicate the deployment of patents for both offensive and defensive purposes.

With neither Apple nor any of its Android-supporting rivals having clearly established an upper hand, we can no doubt look forward to more strategic manoeuvring on all sides before any final resolution of the ongoing disputes.

Samsung’s FRAND dilemma

Samsung’s patent portfolio is by far the largest in the mobile communications space. It is common wisdom now that one justification for building a portfolio is to provide a strategic defence against infringement suits brought by competitors – a.k.a. the MAD (mutually-assured destruction) theory of patent stockpiling. However, the ongoing litigation with Apple is revealing a strategic weakness of Samsung’s portfolio, in the form of the company’s involvement in the setting of industry standards for mobile communications protocols and technology. Samsung has been extensively involved with the 3rd Generation Partnership Project (3GPP), which is responsible for maintaining and developing standards for mobile communications from GSM onwards. Over time, it has developed and contributed many technical solutions to the various challenges and problems encountered in the implementation of workable, robust and widely supported standards. The R&D effort involved in making such contributions is not insubstantial, but also not without reward.

27 April 2012

Apple v Android Part IV: The IP Landscape

Lunar landscape. Photo - (c) NASA, Apollo 17We concluded Part III in this series with a chart showing the relative sizes of the relevant patent portfolios of some of the major players in the mobile marketplace.  This showed Apple to be substantially out-gunned by the likes of Samsung, Motorola and Microsoft, in terms of patent numbers.

But there is more to a patent portfolio than the sheer number of patents it contains.  It is also important to look at what the patents cover, since some will be strategically more valuable than others.  Of course, it is completely impractical to read nearly 60,000 patents to determine what each one of them is about.  Fortunately, there are visualisation tools, such as the ThemeScape mapping capabilities of the Thomson Innovation package, which allow us to get a view of the big picture, without the need to drill down into all the details.

Overview

The figures in the sections below show the results of patent landscape mapping based on the portfolios of mobile patents held by Samsung, Motorola, Microsoft, the Rockstar Bidco consortium, Apple, Oracle, HTC and Google, which were identified in the search described in Part III. 

The maps reveal the strengths and weaknesses of each company’s portfolio. In summary:
  1. The starkest contrast is between Microsoft and Samsung, which dominate completely different regions of the landscape, reflecting their strengths in software and hardware respectively.
  2. Google’s acquisition of Motorola Mobility will give its portfolio a profile that is very similar to Samsung’s, albeit on a smaller scale.
  3. While Apple’s portfolio is smaller, it has significant concentrations of patents in the critical region between the Microsoft-dominated software zone and the hardware zones which are heavily populated by Samsung, Motorola and Nortel.
The strength of Apple’s portfolio therefore appears to lie in areas that are essential to the user experience, including touch-screen and display technologies, image and audio processing, and user interaction – literally, as well as in the virtual geography of the map, at the interface between software and hardware. This is certainly an area in which Apple has contributed significant innovation and may well represent a strategic sweet spot in the mobile device space.

26 April 2012

Apple v Android Part III: The IP Armoury

Nuclear gravity bombs. Photo - Paul Shambroom
In the previous article in this series, we looked back at the struggle between Apple and Microsoft for ‘ownership’ of the desktop.  We argued that this was a confrontation between opposing ‘closed’ and ‘open’ models – not only of the software and hardware platforms, but also of the fundamental way in which the two companies do business.

There is no question that Microsoft was the clear winner, despite some of the uglier consequences of trying to support a huge range of different hardware and software configurations.  Yet despite this loss, Apple – and Steve Jobs – have persisted with the closed platform model.  So what did they learn from history?

25 April 2012

Apple v Android Part II: Old Rivals – Apple v Microsoft

Mac v PC CommercialIn the first part of this series of articles we introduced the current state-of-play between Apple and its Android rivals, particularly Samsung. 

This is not the first time that Apple has engaged in litigation with a competitor over who would gain a dominant place in consumers’ lives.

We are all familiar with the sometimes bitter rivalry between Apple and Microsoft.  But it is worth looking back at history to see what it might tell us about the origins of Apple’s apparent great animosity towards Android.


Background – the struggle for control of the desktop

Apple is no stranger to litigation over IP rights – or to accusations of copying. In 1982 Apple filed a copyright complaint against Franklin Computer Corp, alleging that Franklin’s ACE 100 personal computer included unauthorised copies of the Apple II operating system and ROM. In those days the reach of copyright law in relation to computer software was unclear and it was only on appeal that Apple was vindicated, with the Court of Appeals for the Third Circuit ruling that executable object code, as well as human-readable source code, was protected by US copyright law.

24 April 2012

Apple v Android Part I: Shall We Play a Game?

War Games - United Artists (1983)
Patentology recently contributed a long piece to IAM Magazine entitled ‘Apple vs Android – The Struggle for IP Supremacy in the Mobile Market’, which was published as the cover story of issue no. 52, March/April 2012.  We published an edited extract back in February as Apple vs Android – IP Supremacy and the Mobile Market, while some early results of the patent landscape mapping ultimately used in the article were previewed in How Apple Punches Above Its Weight in Smartphone Disputes in November 2011.

With issue no. 53 of IAM Magazine now on the shelves, we are free of our undertaking not to republish the full article.  We are therefore pleased to present the complete piece for readers of the Patentology blog.  Due to its length, we will be publishing it in five parts.

In this first part, we look at the present state of the complex relationship between Apple and Samsung: bitter rivals in the courts on one hand, multi-billion dollar supplier and customer on the other.

Shall we play a game?

In the 1983 film War Games a teenage computer whiz – played by a young Matthew Broderick – inadvertently sets the world on a path to Armageddon when he hacks into a top-secret military supercomputer and challenges it to a game of “Global Thermonuclear War”. Fortunately, the computer – named “Joshua” by its creator – is equipped with cutting-edge artificial intelligence, programmed to develop improved battle strategy by repeated simulation. When directed to play tic-tac-toe against itself, Joshua discovers that the game cannot be won by either player and, by extending the principle to the nuclear war scenarios that it has devised, learns the concepts of futility and mutually assured destruction (MAD). Disaster is averted and the world returns to the status quo of the Cold War standoff.

21 April 2012

Bar Raised, as IP Law Reforms Signed Into Law

ShieldLast Sunday, 15 April 2012, the Governor General of Australia, Ms Quentin Bryce AC CVO, signed into law the Intellectual Property Amendment (Raising the Bar) Act.

The majority of amendments to Australia’s intellectual property laws do not come into effect for another year, i.e. on 15 April 2013.  We have covered most of the major changes affecting patents in a number of previous articles (see, e.g., ‘Raising the Bar’ Moves Another Step Closer to Law, Major Australian Patent Reform Passes in Senate, Australian Patent Reform – Wrap-Up.) 

No doubt we will return to these provisions over the coming months, particularly with accompanying amendments to the regulations yet to be drafted.  IP Australia is promising that it will soon release draft regulations for public comment, ‘covering important aspects of the Act’s implementation including a shorter time period for examination, and other procedural changes for patents.’

There are, however, two changes which came into effect immediately the Act was signed into law.  These are new exemptions (i.e. defences) from patent infringement in specific circumstances:
  1. use of a patented invention in satisfying regulatory requirements for non-pharmaceutical products; and
  2. use of a patented invention for experimental purposes.

19 April 2012

Could Apple and Samsung CEOs Reach a Global Settlement?

MediationAs has been widely reported over the last 24 hours, United States District Court Judge in the Northern District of California, Lucy H. Koh, has issued orders for Apple and Samsung to participate in a ‘Magistrate Judge Settlement Conference’.  (See, e.g., US judge sends Apple, Samsung to settlement talks, via Reuters.)

On the face of it, the two companies are going willingly to mediation, although it is quite likely a case of Judge Koh having made clear that they could either attend voluntarily, or else she would make them go!  Nonetheless, the discussions will be taking place at the absolute highest levels of the two companies, with each being represented by their respective CEOs (i.e. Tim Cook of Apple, and Choi Gee-Sung of Samsung) and General Counsel. 

While pre-trial mediation is frequently unsuccessful, top executives of large corporations are not known for wasting their time on pointless exercises, and the fact is that the people in the room will actually have the power to make decisions which could terminate, or dramatically alter, the course of litigation between the two companies not only in the US, but in the other eight countries (including Australia) in which they are suing one another for infringement of patents and other intellectual property rights.

15 April 2012

Senior Patent Attorney Found Guilty of ‘Unsatisfactory Conduct’

Right and wrongThe Disciplinary Tribunal has found a former partner of a firm of patent and trade mark attorneys in Adelaide guilty of unsatisfactory professional conduct, for failing to resolve a conflict of interest between two clients, in breach of clause 3.2.8 of the Code of Conduct for Patent and Trade Marks Attorneys [PDF 190kB].  A second attorney – who was only recently qualified, and who had been working under the supervision of the senior attorney – was also charged by the Professional Standards Board, however that charge has been dismissed.

(For readers wanting more information about the disciplinary procedures in Australia, see our recent article So You Wish to Register a Complaint?)

Naming names?

We have avoided naming any of the parties involved in this case.  This is not to conceal the identities of the attorneys against whom the complaint was made, or their firm.  They are named in the Tribunal’s decision, which is available for all to read from the link below.

The Tribunal determined that no further orders of disciplinary action should be made.  In doing so, it took account of the fact that the powers to discipline a practitioner are intended to protect the community, rather than as a punishment.  There are, of course, inevitably punitive consequences to any adverse finding, for example damage to reputation, regardless of the extent of disciplinary action.

It is not our place to question the Tribunal on this finding, and there does not appear to be any reason to do so.  Naming the parties in a blog which tends to rank highly in web searches directed to Australian patent law and practice might result in unintended adverse – and therefore punitive – consequences for those parties.  We have therefore elected not to name names here, and trust that readers will understand and respect this decision.
Some of the key lessons from the Tribunal’s decision are:
  1. while it is common (probably unavoidable) that attorneys and firms in a market of Australia’s relatively small size may act for multiple clients which may be commercial competitors, there is no general agreement in the profession as to precisely how and when a situation of conflict arises with regard to such clients;
  2. the duty to avoid conflicts is fiduciary in nature, i.e. it arises from the duty of the attorney to give undivided loyalty to the client, and always to advise and act in the client’s best interests;
  3. a conflict therefore inevitably arises when two clients have conflicting interests, for example if advice given to one client may impact adversely on another, or if an attorney is aware of confidential information relating to one client which would influence the advice given to the other client;
  4. the duty to avoid conflicts is not limited to individual attorneys, but extends to a firm, even if there is no explicit information-exchange between different attorneys acting for the clients in question; and
  5. on a practical level, if a client decides that an attorney has a conflict, and asks for their files to be transferred to another firm, it is very likely that a great deal of trouble, expense and distress may be avoided by simply complying with the request, rather than arguing the point!
Despite the finding of guilt, no disciplinary action has been ordered against the senior attorney.  The Tribunal considered that the attorney’s conduct, ‘while serious, is at the lower end of the scale of seriousness for such misconduct’ and ‘is the only proven allegation of misconduct that has been made against [the attorney in a] very long career as a registered patent attorney.’ 

The Tribunal also concluded that the senior attorney (and presumably the junior attorney also) would now have a fuller understanding of the duty, and that of the firm, ‘to avoid situations of conflict, or possible conflict of interest and the duty to resolve any such situation.’

The Tribunal’s decision – which is available on the web site of the Professional Standards Board [PDF, 2.4MB] – should be compulsory reading for all Australian registered and trainee patent and trade marks attorneys.  It will also be useful to providers of legal and other professional services, in order to clarify the issues around conflicts of interest.

12 April 2012

Instagram, AOL … Are We Headed for an Intangible Meltdown?

‘Those who cannot remember the past are condemned to repeat it’ – George Santayana, Reason in Common Sense (1905)

Bubble burstingIn March 2000, Facebook co-founder Mark Zuckerberg was 15.  Instagram founders Keven Systrom and Mike Krieger were 16 and 14 respectively.  In the past week these three people – all still under 30 – have done a deal in which Zuckerberg’s company has acquired Systrom and Krieger’s for a cool US$1 billion.

At almost the same time, Microsoft has acquired 800 patents from AOL for just over US$1 billion.

These deals follow hot on the heels of last year’s acquisition of Motorola Mobility by Google for US$9.8 billion, and the purchase of 6000 former Nortel patents by the Rockstar Bidco consortium (Apple, Microsoft, RIM, EMC, Ericsson and Sony) for US$4.5 billion.

All of these deals have in common the fact that the entire valuation is based on intangible assets.  How do you put a price on a bundle of patents?  On a team of great employees?  On a loved brand?  Or on the future potential of a technology?

Are the recent valuations justified, or are we heading for another industry meltdown similar to the ‘dot-com’ bust of March 2000?  After all, the Zuckerbergs, Systroms and Kriegers of the world could be excused for failing to learn the lessons of history – they were little more than kids at the time!

09 April 2012

An Analysis of the CSIRO WLAN Patent

Patent front pageIn all of the debate over the past week around the CSIRO wireless LAN patent, there has been very little information – and much misinformation – about what the patent actually covers.

Various vague assertions have been bandied about, such as that the patent describes nothing much more than a few techniques that were well-known at the time (the priority date of the patent is 27 November 1992).

And some commenters on the various articles have complained that none of the authors have actually gone into any technical detail about the patent.

There is a good reason for this – it is not simple to explain in detail the technical and legal scope of a patent.  While patent attorneys actually do this all the time, in order to advise clients on various matters, we tend to charge significant sums for the service, because it takes great expertise and many hours to do it right.

The part of a patent that actually defines the extent of the monopoly is the section at the end containing a series of numbered statements, called ‘claims’.  If you do something which is actually within the entirety of the language of at least one claim, then you infringe the patent.  However, if you do something which is described in the patent specification, but which is not the entire subject matter of a claim, then you do not infringe.  Ideally, this would all be very clear-cut.  In practice, with the best will (and the best patent drafting) in the world, language is an imprecise and sometimes ambiguous tool!

Most patents describe many things that are not new.  However, granted patents (hopefully) describe and claim some combination of things which is new and inventive.

So in this article we will – at no charge, with no obligation, and with the strong disclaimer that this is not legal advice and cannot be relied upon for any purpose – take a look at what the CSIRO WLAN patent is actually all about.

07 April 2012

Five Reasons Why Ars Technica’s Savaging of CSIRO is Appalling

RantA few days ago Ars Technica published a piece by Joe Mullin entitled ‘How the Aussie government "invented WiFi" and sued its way to $430 million’.  At around the same time, we published a post on the same topic – the CSIRO WLAN patent settlement – broadly based on the same facts, and yet of a very different nature (see The Story Behind CSIRO’s Wi-Fi Patent ‘Windfall’).

The fact of the matter is that, even trying to set aside our own Australian bias, Mullin’s article is a nasty piece, replete with snide insinuations giving the overall impression that CSIRO is some sort of patent troll with diplomatic connections, seeking to extract a ‘tax’ on behalf of a foreign government, from hard-working US companies and consumers, on the basis of a patent of dubious merit.

Since every part of this characterisation of CSIRO’s position is demonstrably false, we can only conclude that Mullin’s piece is an appallingly poor example of journalism.  And we are not alone in this view.  The article received so many negative comments that Mullin felt compelled to post a ‘justification’ addressing the criticisms (Responses and clarifications on the CSIRO patent lawsuits).

Of course, Mullin does not concede that he might have been unfair, or got anything wrong.  But we think he was, and he did.  Here are our top five reasons – in no particular order – why Mullin’s article, and his subsequent ‘justification’, are deserving of strong criticism.

06 April 2012

Why My Hot Cross Bun Recipe Is Not Patentable

Glazed bunsI am sometimes asked – as I am sure most patent attorneys are – whether it is possible to patent a recipe.  This provides a sufficient connection to the subject matter of this blog to allow me, as a special ‘Easter report’, to post my recipe for hot cross buns, which is surely not patentable.  But first, for those who are actually interested, I shall explain how recipes are treated under the patent laws.

To put it simply, the answer to the question above is, in the vast majority of cases, ‘no’.

Gene Quinn over at his IP Watchdog blog wrote a nice piece on this topic back in February, explaining why most recipes are not patentable in the US (see The Law of Recipes: Are Recipes Patentable?).  In that country, the primary barrier to patenting of recipes is obviousness, i.e. lack of inventive step

While a new recipe for baking a cake, or making a cocktail, might be technically ‘new’ (i.e. pass the novelty test) because the particular combination and/or quantities of ingredients have never before been published, it will almost certainly be a variation on one or more existing recipes.  Under the US law of obviousness, you cannot invent something patentable just by trying various different combinations of known elements in a recipe until you have something that you swear is better than mum’s (or mom’s) version!

05 April 2012

The Story Behind CSIRO’s Wi-Fi Patent ‘Windfall’

windfall: noun 1. something blown down by the wind, as fruit. 2. An unexpected piece of good fortune. (Source: The Macquarie Dictionary.)

Wi-Fi LogoAs has been widely reported in recent days, Australia’s CSIRO has settled outstanding patent claims against US telecommunications companies including AT&T, Verizon and T-Mobile for around $220 million.  The case against these companies has been ongoing for almost two years, although litigation involving the patent in question, which relates to technology underlying all commonly-deployed wireless local area networking (WLAN) systems and components, has a far longer history than this. 

So far, taking into account previous settlements with numerous device and component manufacturers – including HP, Dell, Intel, Microsoft, Netgear, Nintendo, Belkin, D-Link, 3Com and others – CSIRO has reaped over $420 million in income from its WLAN patent.

CSIRO – which stands for Commonwealth Scientific and Industrial Research Organisation – is Australia's national science agency, which lays claim to being one of the largest and most diverse research agencies in the world.  It started life as the Council for Scientific and Industrial Research (CSIR) in 1926.

01 April 2012

A Sneak Peek at IP Australia’s New Online Services Portal

Portal Bookends from ThinkGeek.comWhen IP Australia released its Consultation Paper setting out details of proposed fee changes, it simultaneously revealed plans to expand online services, with some fees to be reduced when transactions are conducted online rather than via traditional payment channels (see IP Australia Proposes – Mostly – Modest Fee Increases).

Filing Services Coming Mid-Year

Many thanks to Paul Dobson at IP Australia for letting us know about an update to the video, and providing a replacement link.

Paul also informed us that the eServices Portal will be supporting trade mark registration payments this month (not filings, as originally reported), and that filing for all IP rights is expected to be supported by mid-2012.
It now seems that a new IP Australia ‘eServices Portal’ may be launched before the end of April, with the first services to be made accessible via the portal being IP rights (patents, trade marks, designs and plant breeder’s rights) renewals, and trade mark registration payments.  Although it is already possible to file patent and trade mark applications online, this is currently done through separate interfaces.  The longer-term plan appears to be to bring all online services within the single eServices Portal.

Once the portal launches, it will be possible for individuals and organisations to register for access to online services.  Registration will provide users with a username and password to access an account which will retain many commonly-required details, such as name, address and other contact information.  The account will also hold a history of past transactions, available for review.