Action on the patent battleground will be shaped by Apple's (NASDAQ:AAPL) recent $1 billion jury award for Samsung (OTC:SSNLF) violations in ways that could hurt innovation and ensuing wealth creation if the self-serving interests of giants such as Google (NASDAQ:GOOG) take over.
In the weeks since the stunning judgment, Google has begun discussions with Apple about ways to settle ongoing patent disputes between Apple and Android-based smartphones. At the same time, Google's Motorola Mobility subsidiary has filed a lawsuit against Apple for infringing on a series of patents involving features such as voice recognition and location-based reminders.
Motorola Mobility is calling for the ban on Apple Macs, iPads and iPhones to the U.S.
Like the Motorola patents in question, the Apple technology and design that mostly older model Samsung devices were found to have willfully copied are common to many smartphones. They are features like using double taps to enlarge the screen, distinctions between single and multi-touch gestures, rounded square icons on interface and ornamental designs.
During the same week, Google public policy director Pablo Chavez used a speech at a Technology Policy Institute conference to declare the patent wars "are not helpful to innovation" and called for a reform of increasingly controversial software patents.
Clearly, Google is seeking to avoid any chilling effect that the Apple-Samsung case could have on manufacturers' willingness to license and support the Android operating system. While there is speculation the judgment could eventually be reversed on appeal, even Google is weary of Apple's new impetus to unleash a new round of patent-protecting litigation.
Google's $12.5 billion acquisition of Motorola's domestic smartphone business and its 17,000 patents was an investment intended to minimize litigation risk rather than spawn more of the innovation that has put and kept Google on the map.
But there are reasons it may do little to blunt the negative impact of the Apple judgment on the entire Android ecosystem. Google is now under pressure to better differentiate the devices served by the Android operating system, particularly relating to Samsung, one of its more popular domestic partners, according to JP Morgan analyst Doug Anmuth.
The ruling could call into question the patents Google acquired from Motorola and their ability to protect the Android ecosystem, Anmuth observes. Alternatively, closer enforcement of existing patents could spur greater innovation within Android or it could force Google to increase Motorola's smartphone market share to maintain Android momentum.
Such potential liabilities aren't slowing the patent land grab.
Facebook (NASDAQ:FB), Microsoft (NASDAQ:MSFT) and Apple are among the other giants gobbling up patents for top dollar to build their bully arsenals. Amazon (NASDAQ:AMZN) also is expected to begin amassing patents for mobile devices and the delivery of digital content outside its staple e-commerce realm.
Apple acquired a plethora of patents last year as part of a multi-tech company contingent that paid $4.5 billion for patent assets from Nortel Networks (NRTLQ,PK).
This unwieldy dynamic of powerful companies binging on patents and then using them as combat artillery will have dire implications for enterprise. The patent wars are more about thwarting competitors and less about fostering innovation by individuals who fear their best ideas and work will not be protected. They are weakening the effectiveness of a legal system to preserve the process of invention that fuels new wealth creation.
It will take individual companies raising the bar on patent applications to save the day. Facebook and Yahoo (YHOO) recently settled their patent dispute by agreeing to partner on ad deals. The companies will work together to secure and integrate ads on both their platforms, while sharing and more effectively utilizing their related patents.
Facebook bought 750 patents from IBM (NYSE:IBM) in March and $550 million in patents from Microsoft months later. That was only after Microsoft outbid Facebook by paying $1 billion for 800 patents from AOL that it likely did not need.
Twitter recently adopted a Hippocratic Oath of sorts and urged other tech companies to do the same. Twitter says its patents will be used only for defensive purposes to protect its engineering patents and not to legally block innovation by rivals.
Barring major time-consuming reforms in what is universally regarded as our broken patent system, Google, Apple and Microsoft better utilize their resources and patents by joining forces. They could agree not to sue one another and unite in defending against troubling lawsuits by fringe patent-holders seeking to manipulate the system for their own gain.
Such simple self-policing solutions dedicated to the greater good could go a long way to ensure the intended use of patents: to up the competitive ante.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.