The sky is not falling: Navigating the smartphone patent thicket

By Jeffrey I. D. Lewis, President of the American Intellectual Property Law Association (AIPLA) and patent litigation partner at Patterson Belknap Webb & Tyler LLP (New York); and Ryan M. Mott, associate, Patterson Belknap Webb & Tyler LLP (New York)

You pick up your smart phone with its curved sides (US Patent No. D618,677), swipe your finger across the screen to unlock it (US Patent No. 8,046,721), check email that was “pushed” to the phone without a request to the server (US Patent No. 6,272,333), and type a text message using only a few touches as the phone automatically completes each word you start to spell (US Patent No. 8,074,172). Guess what? You may be accused of violating these patents or dozens more by using inventions without a valid license. This can occur whether you are using an iPhone, an Android-type device, some other smart phone, or even a yet-to-be-named technology.

If you have been following the news, then you know that there is not a single smart phone in the world that has not been accused of patent infringement. People are concerned. But, fear not. These smartphone wars are part of a cyclical technology event that should not be over-blown.

The smartphone wars

Most of us have been kept out of the smartphone patent firefight, at least when it comes to our personal day-to-day use. But to the parties involved, there is a war going on – with patent infringement accusations being fired regularly at Apple, Samsung, Google, Research in Motion, Microsoft, Nokia, Motorola, HTC and others. Where there are accusations of infringement, there are lawsuits.

Some of the warring parties have taken it quite personally. For example, Apple’s late founder Steve Jobs was widely quoted as having said that one HTC smartphone model was “grand theft” of Apple’s patented features, including multi-screen touches, the use of various alphabets when sending messages, and the infamous swipe-to-unlock feature: “I will spend every penny of Apple's $40 billion in the bank, to right this wrong. I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this,” Mr. Jobs said.

Of course, a smartphone isn’t just a simple, isolated swipe-to-unlock feature, it is a combination of technological components. Anyone who contributed a component, or at least has a patent on a component, is vying for a piece of the huge smart phone market by suing anyone who has a smart phone product.

Each patent holder owns an exclusive right to one or many small features of the smart phone, and can therefore try to prevent others from manufacturing the smart phone as a whole. As the numbers of players and patented features increase, the transaction costs of assembling a “completely licensed” smart phone become burdensome, because the manufacturer has to deal separately with the owner of each feature or patented component. Figure 1 offers a visual representation of just the lawsuits associated with smart phone patents, ignoring for instance the various publicly-disclosed license agreements and other arrangements.

Figure 1. Parties currently involved in lawsuits in the patent thicket.

Image credit: Courtesy of Mike Masnik at TechDirt.

A patent thicket

In the patent world, we sometimes refer to a “patent thicket.” Figure 1 looks very much like a “thicket,” in other words, a dense grouping of brush or branches.

The branching and overlapping intellectual property rights associated with smartphones have critics claiming that the patent system does not work and is not appropriate for modern times. They say innovation is hindered – and even blocked – by so many patents. History, however, does not support this assertion.

(Photo: Andrea Zanchi)

As the 19th century Spanish philosopher and writer, George Santayana, wrote, “those who cannot remember the past are condemned to repeat it.” This quotation is particularly apposite for those who point to the smart phone wars as evidence that the patent sky is falling.

An historical view

The good news is that the patent sky is not falling. This is not the first patent thicket, and it is not the first time that people have been concerned that a thicket is choking off technology. With time, thickets are cleared either by patent-based cooperation (licensing) or competition (lawsuits). Either way innovation continues. Smartphones will still be marketed (until the next new thing appears) and progress will continue unimpeded.

There are a number of historical instances in which patent thickets emerged and then dissipated as innovation continued. This was the case, for example, with the airplane, radio and crop-planting (harrow) industries as well as MPEG/DVDs. A quick look at the patent thicket that brought about the 19th-century “Sewing Machine War” as researched by Adam Mossoff in The Rise and Fall of the First American Patent Thicket: The Sewing Machine War of the 1850s (53 ARIZ. LAW. REV. 165, 171 (2009)) demonstrates that there is no reason to overreact about smartphones.

In the 19th century the sewing machine was as revolutionary as a
smartphone is today and was at the center of a legal storm similar
to the on-going smartphone firefight. (Photo: istockphoto @ Tomml)

At the beginning of 2013, we might not consider the humble sewing machine to be sufficiently high-tech to create a patent thicket, but in the 19th century the sewing machine was as revolutionary as a smart phone or a high-tech drug is today. It took several inventors nearly a decade to create the sewing machine.

Sewing machines wars

Some of the key players in the development of sewing machine technology were:

The person with the marketing advantage, however, was Isaac Merritt Singer, who combined the previously-developed elements and added features such as control pedals.

Singer Sewing Machine, US Patent No. 8,294.

As a result, Mr. Singer created and manufactured (US Patent No. 8,294) the successful Singer Sewing Machine. But as soon as his company turned a profit, he was sued by Elias Howe (a non-practicing entity (NPE) of his day – i.e. an entity that owns patent rights but does not manufacture the patented product or perform the patented method) who demanded a US$2,000 royalty payment. Mr. Singer responded by threatening to kick him down the stairs. “Howe is a perfect humbug,” Mr. Singer said, “He knows quite well he never invented anything of value.” (While he didn’t use the same words, Mr. Singer was expressing a sentiment very similar to that expressed by Steve Jobs some 150 years later.)

Messrs. Singer and Howe eventually settled for a royalty. In fact, Mr. Howe also granted licenses to other sewing machine manufacturers and went on to earn more than US$2 million in royalties (almost $30 million in today’s dollars). Mr. Singer’s company, on the other hand, soon found itself defending more than 20 separate lawsuits filed in four different locations by numerous patent owners. In addition, it also filed its own lawsuits against competitors. Each litigant claimed the right to one or more patented features of the marketed sewing machine, but none could assert patent claims to the whole thing. In other words, a patent thicket had emerged.

In a day before typewriters, let alone high-speed printers, over 30,000 pages of printed testimony were taken in the multiple suits. The financial burden of this litigation caused some to question whether the sewing machine could succeed as a commercial product, and one modern historian comments that at the time “the continuing court litigation over rival [sewing machine] patent rights seemed destined to ruin the economies of the new industry.”

Patent pool

On the eve of an important trial that was to turn the tide of the sewing machine war, attorney Orlando B. Potter had a revolutionary idea. He recommended that the sewing machine companies pool all their patent rights and license them as part of a commercial trust. The trust, called the Sewing Machine Combination, fostered cross-licensing between the competitors and created a patent pool that could issue licenses or bring suits. By putting aside their differences and pooling their respective patent rights, the competitors overcame the patent thicket problem. This, however, did not occur right away, but only after the parties had exhausted their will to fight and huge costs had been incurred.

Howe Sewing Machine, US Patent No. 4,750

Throughout these litigations the sky did not fall and the sewing machine industry did not collapse. No one with the benefit of history would assert that the rise of inexpensive, sewn clothing or the expansive use of sewing machines was thwarted by the litigations pitting the patents of Messrs. Howe, Bachelder, Blodgett, Wilson, and Singer against each other and against the various companies attempting to launch these machines. This is an appropriate framework to consider the present smart phone wars.

Possible patent wars of the future

No one can dispute that the current smart phone patent thicket is a mess of patents and lawsuits. It involves more parties, more patents, more money, and more consumers than ever before. Although more patents are involved in smartphones than in sewing machines, the current wave of lawsuits does not appear to have prevented smartphones from flourishing any more than the manufacture of sewing machines was affected by the legal strife centered on it in the 19th century.

Some have used the smartphone wars to claim that the patents in suit are generally invalid or are for insignificant advances, but a recent US Patent and Trademark Office (USPTO) study has shown that this is not the case. USPTO Director David Kappos noted in November 2012 that an internal USPTO study showed that courts have ruled that more than 80 percent of the patents granted on smartphones are valid. This, he concluded, is a positive sign demonstrating that the patent system is wired for innovation and that the smartphone patent developments are “both natural and reasonable.”

Final resolution of the smartphone thicket may seem far away. It may also be the case that, in the future, we will confront new thickets in the fields of biotechnology, nanotechnology, social networking, digital rights management (DRM), radio frequency identification (RFID), and even Alzheimer’s treatments. Thickets appear to occur each time there is a major technological advance and would seem to be an inevitable part of reaching marketplace equilibrium.

As for smartphones, no one can predict when the litigations will subside or if that is a condition required for advancement. A recent roundtable discussion at the International Telecommunication Union (ITU) in Geneva, however, suggests that a truce may well be a possibility. Just over a month after the roundtable, Apple and HTC settled their patent disputes, apparently putting an end to their “thermonuclear war” (as Steve Jobs called it).

Regardless of what happens with smartphones, history has shown that an invention typically is not made from a single “flash of genius,” but from an assembly of incremental innovative developments. Patent thickets should not be viewed as a block on innovation but rather a milestone of progress and a natural part of the evolution of a complex, marketable and successful product. The current smartphone patent thicket is no different. Ultimately, the issues will be resolved, and in the meantime technology will continue to advance and the sky will not fall.