Saturday, December 03, 2011

America as A Legal System Operating Behind Closed Doors Tries to Camouflage the Greediness, Selfishness and Absurdity of the Patent Wars

As reported by Dan Levine and Carlyn Kolker at Reuters in RPT-INSIGHT-UPDATE 2-Apple vs Samsung suit full of secret combat, Apple has sued to stop Samsung from selling its Galaxy products in the United States. Worse, the legal process is to a great deal being conducted behind closed doors, allegedly to protect "trade secrets".


The American legal system is making a great mistake by permitting "backroom justice" -- which has nothing, absolutely nothing to do with the basic principles of the Anglo-American legal system, and this applies in particular to patents, which must be open for all to see, including litigation about them.

If individuals and firms -- who themselves are in many cases not paying their fair share of the nation's tax burdens -- want society to spend lots and lots of taxpayer money to protect THEIR alleged intellectual property rights, rights that they are INVOKING against others-- -- then they should be required to be clean and be above board in all their corporate dealings, which they are not.

It does not surprise this observer that these people choose backroom justice. Backroom antics fit this ugly crowd and it is a sorry thing when apparently clueless judges become handmaidens to this return of  law to the dark ages. American legal practice currently has a clear track -- backwards.

These Apple suits -- in our opinion -- are all part of a patent-abusive and monopoly-exploiting antitrust law-violating campaign (where are the responsible federal agencies ??!!) by Apple not only against Samsung but against Android in general, as announced not long ago by its former CEO Jobs:
"[A]ccording to the Walter Isaacson biography of the recently deceased CEO Steve Jobs just published, Jobs is quoted as saying:
"I’m going to destroy Android.... I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank...."
The irony is that many of Apple's so-called alleged inventions and technology are themselves stolen from others, "tweaked" minimally and then claimed to be proprietary to Apple, abetted not only by an often clueless USPTO but also similarly enabled by other world patent agencies granting patents on obvious and foreseeable state-of-the-art developments of normal technological advance -- see The True Story of Apple "Patents", "Designs" and "Inventions": Steve Jobs Took the Idea for the iPad From an Engineer at Microsoft etc.

If we look at Apple, moreover, the company itself manufactures almost nothing but has the vast majority of the parts of its products made overseas, e.g. see iPhone: Who's the real manufacturer? (It isn't Apple), which points to 30 known companies on 3 continents who deliver parts for the iPhone.

This has not prohibited Apple from following monopoly practices on its products. Indeed, that is its modus operandi: see Apple Inc. - A Monopolist in Action: YOU Belong to US.

LawPundit has numerous past postings on the Samsung vs. Apple saga. See e.g. for a list that is not exhaustive, there are more in our archives.

One can not fault companies like Apple alone for the backward state of intellectual property law, but must put the blame primarily on legislatures and courts, who do not seem to understand that the NORMAL progress of technology should not be patentable! Only real inventions and discoveries that are not obvious to someone versed in the state of the art should be patentable, but in fact, many things have been and are being patented that are obvious -- even  to a normal person not versed in the state-of-the-art -- as being foreseeable developments of modern technological advance.

In the case of the iPad, Apple is trying to enforce against Samsung design and other patents on a rectgangular framed electronic device with rounded corners that has thousands of precursors in prior art over the ages for putting information on a flat surface or for otherwise enclosing text or graphics. Something as simple as a picture frame comes to mind.

NOTHING has been invented and NOTHING has been designed originally. Geometric forms come from God, they did not come from some corporate head. When the world realizes this, things will improve.

Patent Troll (NPE) Litigation Focused on Software and Related Technologies Has Cost Half a Trillion Dollars in Lost Wealth in the Last 20 Years and Decreased Innovation Incentives

Litigation by patent trolls, also called non-practicing entities (NPEs) because they produce or manufacture nothing but merely manage patent portfolios, has cost a half a trillion dollars in lost wealth in the period from 1990 to 2010 or $80 billion per year according to a study by James Bessen, Jennifer Ford and Michael J. Meurer in THE PRIVATE AND SOCIAL COSTS OF PATENT TROLLS, Boston University School of Law Working Paper No. 11-45 (September 19, 2011), Revision of November 9, 2011. The authors write in their Executive Summary:
"[A] self-described new crop of NPEs has emerged that asserts patents and litigates them on an unprecedented scale, involving thousands of defendants every year in hundreds of lawsuits. Do these litigating NPEs improve markets for technology and increase incentives for small inventors? Or are they “patent trolls” who exploit weaknesses in the patent system?

This paper makes several findings about this litigation.
First, by observing what happens to a defendant’s stock price around the filing of a patent lawsuit, we are able to assess the effect of the lawsuit on the firm’s wealth, after taking into account general market trends and random factors affecting the individual stock. We find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010. During the last four years the lost wealth has averaged over $80 billion per year. These defendants are mostly technology companies who invest heavily in R&D. To the extent that this litigation represents an unavoidable business cost to technology developers, it reduces the profits that these firms make on their technology investments. That is, these lawsuits substantially reduce their incentives to innovate.

Second, by exploring publicly listed NPEs, we find that very little of this loss of wealth represents a transfer to inventors. This suggests that the loss of incentives to the defendant firms is not matched by an increase in incentives to other inventors.

Third, the characteristics of this litigation are distinctive: it is focused on software and related technologies, it targets firms that have already developed technology, and most of these lawsuits involve multiple large companies as defendants. These characteristics suggest that this litigation exploits weaknesses in the patent system. In our book Patent Failure, we argue that patents on software and business methods are litigated much more frequently because they have“fuzzy boundaries.” The scope of these patents is not clear, they are often written in vague language, and technology companies cannot easily find them and understand what they claim. It appears that much of the NPE litigation takes advantages of these weaknesses.

We conclude that the loss of billions of dollars of wealth associated with these lawsuits harms society. While the lawsuits increase incentives to acquire vague, over-reaching patents, they decrease incentives for real innovation overall."
[emphasis added by LawPundit]

Read the whole thing here.

The paper has been referenced by the blawg

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