Friday, February 14, 2014
Location, Location, Location
In recent years, there has been a large increase in the number of patent litigation cases held in the Eastern District of Texas. While this seemingly random district would not be where people would think to file for lawsuit, it is popular for a number of reasons.
To start, the district has a number of local rules that expedite the trial process. For patent cases, having an expedient trial can make all the different because as large corporations know best, time is money. With shorter trials, it is much easier for the plaintiffs to win because the defendant must put together a solid defense, which is pricey. This has caused Eastern Texas to be a place that the defendant wants to avoid altogether, while the plaintiff wants to file in this district.
The Eastern District is also infamous for favoring plaintiffs during trials as well as local technology. This has caused a number of companies, including Exxon, to form "Texas LLC's" in order to win favor with local courts.
Perhaps the most telling reason that the Eastern District of Texas has become so popular is because of the demographic. This region of Texas has a less education population than many other districts and is on average, an older population as well. This combination allows for a less technical audience to jury these cases, allowing for a better chance that the plaintiff will win.
I hope that districts across the map can become more universal in ruling. With districts like Eastern Texas, litigation becomes more of a strategy game than about the intellectual property.
Source: http://arstechnica.com/tech-policy/2013/01/east-texas-courts-are-back-on-top-for-patent-lawsuits/
To start, the district has a number of local rules that expedite the trial process. For patent cases, having an expedient trial can make all the different because as large corporations know best, time is money. With shorter trials, it is much easier for the plaintiffs to win because the defendant must put together a solid defense, which is pricey. This has caused Eastern Texas to be a place that the defendant wants to avoid altogether, while the plaintiff wants to file in this district.
The Eastern District is also infamous for favoring plaintiffs during trials as well as local technology. This has caused a number of companies, including Exxon, to form "Texas LLC's" in order to win favor with local courts.
Perhaps the most telling reason that the Eastern District of Texas has become so popular is because of the demographic. This region of Texas has a less education population than many other districts and is on average, an older population as well. This combination allows for a less technical audience to jury these cases, allowing for a better chance that the plaintiff will win.
I hope that districts across the map can become more universal in ruling. With districts like Eastern Texas, litigation becomes more of a strategy game than about the intellectual property.
Source: http://arstechnica.com/tech-policy/2013/01/east-texas-courts-are-back-on-top-for-patent-lawsuits/
Return on Investment
When Google bought Motorola in 2011 for $12.5B and then sold it in 2014 for about $3B, many people viewed it as a huge loss. Despite Motorola being used as leverage against Samsung and the benefits from that, Motorola also proved to be much more of a profit than is seen on the surface.
At face value, the purchase of Motorola is seen as about a $10B loss. When a closer look is taken, however, it can be seen that Google had much more up its sleeve. According to Gordon Kelly, "What it misses are the $3.2bn Motorola had in cash, $2.4bn saved in deferred tax assets and two separate Motorola unit sales totalling $2.5bn in 2013. Factor in Lenovo’s purchase against roughly $2bn of Motorola losses during Google’s ownership and Google has still only paid $3bn for what it retained."
Fortunately for Google, this were tens of thousands of Motorola patents that totaled in value at about $5.5 billion. These patents will serve Google for years in lawsuits against mobile phone manufacturers. In addition to this value is the intangible value of now owning Motorola's research and facilities. These facilities will serve to promote Google hardware, which is what the company is lacking. Google will now become less dependent on other companies to use their operating system and the autonomy that Google now has is priceless.
This purchase goes to show that there is much more to purchasing a company that the purchase price and the sales price. Motorola had many assets that Google could claim, which made the purchase of Motorola a net gain in the end.
At face value, the purchase of Motorola is seen as about a $10B loss. When a closer look is taken, however, it can be seen that Google had much more up its sleeve. According to Gordon Kelly, "What it misses are the $3.2bn Motorola had in cash, $2.4bn saved in deferred tax assets and two separate Motorola unit sales totalling $2.5bn in 2013. Factor in Lenovo’s purchase against roughly $2bn of Motorola losses during Google’s ownership and Google has still only paid $3bn for what it retained."
Fortunately for Google, this were tens of thousands of Motorola patents that totaled in value at about $5.5 billion. These patents will serve Google for years in lawsuits against mobile phone manufacturers. In addition to this value is the intangible value of now owning Motorola's research and facilities. These facilities will serve to promote Google hardware, which is what the company is lacking. Google will now become less dependent on other companies to use their operating system and the autonomy that Google now has is priceless.
This purchase goes to show that there is much more to purchasing a company that the purchase price and the sales price. Motorola had many assets that Google could claim, which made the purchase of Motorola a net gain in the end.
Google's Best Purchase?
Many people believe that Google's purchase of Motorola Mobility in 2011 was overpriced and ineffective. Buying Motorola, however, turned out to be an extremely worthwhile purchase, as it allowed Google to lock in a partnership with Samsung all while gaining patents and resources.
Samsung was the premier ship that carried the Android platform. About 80% of the marketshare for Android came from Samsung devices but Samsung had other plans in mind. Despite using the Android operating system, Samsung started to develop their own apps and slowly started replacing the Android apps with their own. Google feared that eventually, Samsung would remove Android altogether and without prominent hardware in the market, Google would lose an incredible amount of money. To counteract this, Google made a hefty purchase of Motorola for $12.5B. With Motorola, Google acquired tens of thousands of patents that they used as leverage against Samsung.
In addition to litigation, Google also acquired all the Motorola facilities and began working on the Moto X and Moto G. Now that Google was able to make successful phones, it showed Samsung and other companies that they did not need other phones to carry their OS.
Samsung had no choice but to settle with Google. In late January, they signed a 10 year deal with Google that would prevent Samsung from continuing to replace the Android OS. Within two days, Google was already on its way to selling Motorola to Lenovo. Clearly, Google had one intention when it came to Motorola and once that dispute was settled, sold it right off.
Samsung was the premier ship that carried the Android platform. About 80% of the marketshare for Android came from Samsung devices but Samsung had other plans in mind. Despite using the Android operating system, Samsung started to develop their own apps and slowly started replacing the Android apps with their own. Google feared that eventually, Samsung would remove Android altogether and without prominent hardware in the market, Google would lose an incredible amount of money. To counteract this, Google made a hefty purchase of Motorola for $12.5B. With Motorola, Google acquired tens of thousands of patents that they used as leverage against Samsung.
In addition to litigation, Google also acquired all the Motorola facilities and began working on the Moto X and Moto G. Now that Google was able to make successful phones, it showed Samsung and other companies that they did not need other phones to carry their OS.
Samsung had no choice but to settle with Google. In late January, they signed a 10 year deal with Google that would prevent Samsung from continuing to replace the Android OS. Within two days, Google was already on its way to selling Motorola to Lenovo. Clearly, Google had one intention when it came to Motorola and once that dispute was settled, sold it right off.
Friday, February 7, 2014
Design In Patents
I was surprised to find during my research of the Apple and Samsung patent war that the vast majority of the patents each holds is for interface design. I also found that it was from these patents that most of the lawsuits stemmed.
Design has been more and more revered in the technological world in the past decade. Today, understanding user needs and how a user will interact with a technology is vital in its success. In this regard, Apple is very much an exception. Apple is notorious for not conducting user testing, however, they are still usually successful with product releases and software updates. Samsung conducts a lot of user testing and collects much data about UI designs. Design is definitely headed in a human-centered direction and despite Apple not conducting extensive testing, it would not surprise me if the two company's designs started to converge over time. Both companies make consumer products, and because consumers are at the center of their design process, two companies can easily adopt similar user interfaces in certain aspects.
Both companies also use litigation to slow down the other's innovation. If one company goes after the other for infringement and there are millions, or even billions, of dollars are on the line, the company will be sure to proceed with extra caution when innovating. This hindrance can result in huge revenue for the company that files the lawsuit. When both companies utilize this technique, it becomes an all out patent war and the lawsuits become less about the patents and more about the time. With design being such a center of innovation on both sides, it quickly becomes the focal point of litigation. Even something as basic as bouncing icons can be grounds for a lawsuit.
With this in mind, it becomes difficult to not fall into the "patent war" mentality, because if a company does not file for a lawsuit, they can be quickly overrun by competitive companies.
Design has been more and more revered in the technological world in the past decade. Today, understanding user needs and how a user will interact with a technology is vital in its success. In this regard, Apple is very much an exception. Apple is notorious for not conducting user testing, however, they are still usually successful with product releases and software updates. Samsung conducts a lot of user testing and collects much data about UI designs. Design is definitely headed in a human-centered direction and despite Apple not conducting extensive testing, it would not surprise me if the two company's designs started to converge over time. Both companies make consumer products, and because consumers are at the center of their design process, two companies can easily adopt similar user interfaces in certain aspects.
Both companies also use litigation to slow down the other's innovation. If one company goes after the other for infringement and there are millions, or even billions, of dollars are on the line, the company will be sure to proceed with extra caution when innovating. This hindrance can result in huge revenue for the company that files the lawsuit. When both companies utilize this technique, it becomes an all out patent war and the lawsuits become less about the patents and more about the time. With design being such a center of innovation on both sides, it quickly becomes the focal point of litigation. Even something as basic as bouncing icons can be grounds for a lawsuit.
With this in mind, it becomes difficult to not fall into the "patent war" mentality, because if a company does not file for a lawsuit, they can be quickly overrun by competitive companies.
The Benefit of First to Market
After researching the patent war that is ongoing between Samsung and Apple, it is apparent that certain liberties can be taken when a new and innovating product hits the market. In 2007, when Apple first released the iPhone, there was nothing like it. It was built in a way that was drastically different than even other touch screen phones at the time and users interacted with it in a way that was groundbreaking. Naturally, Apple wanted to patent as many components and design features as they could, but being such a revolutionary product, they were able to overshadow some controversial patents.
For instance, Apple filed a patent for a, "thin rectangular cuboid with rounded corners" ( US patent D504889). For many people, this seems like an obvious design characteristic, however, Apple was still able to file patent on it. With so many other claims and features they were trying to patent, Apple could throw in some that some people would argue were obvious. With these claims, Apple was able to file suit against companies like Samsung for infringing on their patents, but it raises the question that if a competitors design cannot be a thin, rectangular, cuboid, what is it supposed to be shaped as?
First to market is such a critical business strategy because not only can one gain a majority shareholding of the market, they can also take drastic control of the intellectual property surrounding future technology. Today, almost every smart phone could be described as a thin, rectangular cuboid, but at that time, only the iPhone had those characteristics in the almost non-existent smartphone world.
Perhaps greater care should be taken when reviewing patents. This is difficult because with so many claims, it is easy for some more general ones to slip through the cracks. It is clear, however, that the first to market product is definitely on an easier path than a future technology, but that is not to say the later competitor cannot put up a good fight.
For instance, Apple filed a patent for a, "thin rectangular cuboid with rounded corners" ( US patent D504889). For many people, this seems like an obvious design characteristic, however, Apple was still able to file patent on it. With so many other claims and features they were trying to patent, Apple could throw in some that some people would argue were obvious. With these claims, Apple was able to file suit against companies like Samsung for infringing on their patents, but it raises the question that if a competitors design cannot be a thin, rectangular, cuboid, what is it supposed to be shaped as?
First to market is such a critical business strategy because not only can one gain a majority shareholding of the market, they can also take drastic control of the intellectual property surrounding future technology. Today, almost every smart phone could be described as a thin, rectangular cuboid, but at that time, only the iPhone had those characteristics in the almost non-existent smartphone world.
Perhaps greater care should be taken when reviewing patents. This is difficult because with so many claims, it is easy for some more general ones to slip through the cracks. It is clear, however, that the first to market product is definitely on an easier path than a future technology, but that is not to say the later competitor cannot put up a good fight.
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