What if there had been no Apple (AAPL) Macintosh?
It could have happened. Had laws on patents in the 1970s covered such things as software, Xerox would have owned all the basic elements of what we call windowing technology. The company created most of it at its Palo Alto Research Center (PARC).
Now imagine that Xerox, in 1975, had the same attitude about its intellectual property that Steve Jobs would have 35 years later. Would they have let the new Apple Computer Inc. hire away its innovators? Would they have allowed Apple to use those innovations?
If windowing interfaces were patented, and Xerox wanted to protect products like its Alto from competition, it could have acted toward Apple just as Apple is acting toward Samsung (SSNLF.PK) and the other Android OEMs. It could have filed patent suits, it could have refused licenses on its “base intellectual property,” it could have gone to the International Trade Commission to prevent imports of Japanese clones of the technology. It could even have stopped the development of Windows, and of IBM's (IBM) OS/2. (Or, perhaps, the first competition to the Alto would have been a 1990-era OS/2 machine.)
Patents are meant to protect how you kill mice, not the killing of mice. When they are reduced to software, they often do just that. And that's what has changed. Inventions have been reduced to software, courts have allowed the patenting of those inventions, and we have a host of patents now that you can't invent around.
Because digital technology made it possible to do things in an infinite number of ways, the patent court decided that the scope of patents would be extended, into every possible iteration of an idea, into the idea itself. That's not how it's supposed to work. It's supposed to be you show your mousetrap, you publish its design, you get protection on that design, and then someone else can make a better mousetrap.
The smart phone is the mousetrap of our time. Apple claims a monopoly on it. Microsoft (MSFT) also claims a monopoly on many elements of smart phone design, and has succeeded in getting Android OEMs to pay it money for those claims. Open source advocates like Jim Zemlin of the Linux Foundation are angry over that but Apple has yet to sue Microsoft over its Windows Phone, and at the end of the day that may be the only legal competition there is.
Unless, of course, Microsoft makes a Windows Phone that's worth buying. At which point the real legal war will start. And that war may be Steve Jobs' real legacy.
If you believe Apple's patent claims, in other words, buy Apple. Avoid Amazon (AMZN), avoid Google (GOOG), avoid Samsung and even avoid Microsoft. If you believe Apple has control over basic smart phone technology, then no one can compete with it until the late 2020s. Unless they create something completely different, at which point that company has a monopoly.
How fast will technology improve under that scenario?
Disclosure: I am long GOOG.
