War has been declared in the technology industry. Thousands of executives and companies are stomping on the patent battleground in a seemingly endless battle to gain financial or market advantages over rivals by taking them to court over claims of patent infringements.
But, according to several federal judges, economists, policy makers and technology executives including Jeff Bezos, Amazon CEO and Pablo Chavez, Public Policy Director at Google, this situation has come about because of fundamental flaws in the current patent system and is stifling innovation. Java's James Gosling has also voiced his concerns stating that "ridiculous litigation, really trivial patents, and a landscape where you can't know what is patented" is to blame for the flawed system.
Recently, there have been several high profile patent disputes, and the latest companies to face expensive lawsuits include Apple and Microsoft. Apple has recently lost its Facetime patent lawsuit to VirnetX, who alleged that four of its patents, registered between 2002 and 2011, had been infringed by Apple. VirnetX was awarded £231 million for the infringement, but the ruling could have more serious consequences if it carries out its threat to block the further use of its innovations. A lawyer from VirtnetX has suggested that Apple developers do not pay any attention to anyone's patents when developing their products.
Whether this is true or not, it's clear that the burgeoning, complex and flawed patent landscape is making it difficult for companies to identify potential patent infringements of their own and other's intellectual property. However, simply ignoring the problem and failing to conduct comprehensive searches for existing patents, could leave companies facing a continuous stream of expensive lawsuits, which can not only affect R&D, but also stock prices and consumer opinions. For smaller businesses than Apple, the consequences could be potentially disastrous.
Microsoft is also facing a lawsuit from Surfcast over its Windows 8 Tiles, which was launched in October. Surfcast states that Microsoft infringes on four patents that were issued to the company in 2004, 2006, 2008 and 2011. However, this case differs from the Apple/VirnetX case, as Surfcast doesn't market any products or services. Companies who file patent infringement lawsuits but do not sell any products or services, are often received with some cynicism. Many are referred to as "patent trolls" looking to take advantage of the flawed patent system for their own monetary gain. This further adds to the complexities of identifying potential patent infringements, and is leading to a situation where organisations are filing an increasing number of patents each year in an attempt to protect their intellectual property.
It is clear to see the scale of this challenge when you consider that the World Intellectual Property Organization (WIPO) states that more than half a million patents are granted each year, but almost three times as many - 1.5 million - are filed in the same time. This is a great deal of information for companies to sift through and analyse. The task is complicated further by the fact that much of the information surrounding patents now takes the form of unstructured information, which many businesses are still not equipped to properly analyse.
However, while fundamental flaws in the system have left it open to exploitation by patent trolls and warriors, it is the sheer volume and complexity of the information around today that is exacerbating the problem. This is making it extremely time-consuming and expensive for businesses to accurately identify potential new patents or breaches, and not only leaves the company vulnerable to expensive law suits, but also detracts from R&D efforts. Apple has seen this first hand in its case with VirnetX. Whether suggestions that Apple's approach to simply ignore existing patents is correct or not, in this case the company did not identify potential breaches prior to the development of its Facetime application and is now suffering the repercussions.
Without tools to accurately index and categorise information, R&D departments may find it difficult to cross check patents they hold against potential breaches of their patents. Similarly when searching for existing product content, businesses need to pull in all sorts of data sources in various formats and from a myriad of sources including their own databases, as well as the patent database and competitor websites, in order to make sure they're not about to infringe on existing patents. Not having these tools has proven to be costly for several high profile organisations, including Apple and Google, who have admitted to spending more on patents than they have on R&D.
These recent Apple and Microsoft cases are not the last, and many more businesses will be brought into battle in the patent wars. Both these companies have the financial clout to pay up or appeal against judgements that are not in their favour. But for many other companies a patent lawsuit could be catastrophic and can result in bankruptcy. This was the case for Mr Phillips, who was the co-founder of voice recognition company Vlingo. A lawsuit was filed against Vlingo by Nuance, a much larger voice recognition company, which accused Vlingo of infringing on a broad voice recognition patent. Even though Mr Phillips won the case, the suit had cost the company $3 million and Mr Phillips ended up having to sell his company due to the financial damages caused by the suit.
For companies like Vlingo, the ability to analyse vast amounts of unstructured information surrounding patents and identifying any supposed or potential patent infringement prior to the filing is key to their ongoing success. With proactive action, businesses can take steps to avoid being taken to court, saving valuable time and money in the process. It is the analysis of unstructured information surrounding patents that could prove to be the secret weapon in a war that looks set to continue for decades.
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