GD QuickRant: Why Apple is Correct to Aggressively Litigate IP Issues

This week Google Chairman Eric Schmidt made a widely covered statement:

“The big news in the past year has been the explosion of Google Android handsets and this means our competitors are responding,” Schmidt reportedly said. “Because they are not responding with innovation, they’re responding with lawsuits. We have not done anything wrong and these lawsuits are just inspired by our success.”

In other words, if it was some small company or a marginal OS like Windows Phone 7, Apple wouldn’t bother – except that they HAVE done this: remember Psystar? Apple has aggressively sought patents on their technologies and them protected those patents.

Many folks ask why Apple is so lawsuit-happy. The answer is simple – the way that patent law works, if you knowingly allow an infringing product to exist, you are ceding your rights to that area of coverage. So when Apple sued Samsung or HTC, it was based on what they considered to be infringing products that would limit Apple’s ability to operate in the space they carved out for themselves by patenting their ideas.

As a great example of what happens if you fail to protect: The inventor of the ATM failed to properly protect his invention and as a result was knighted for his contribution to banking but never made ANY money from it!

This week I saw two examples separately in which a company has filed suit based on one type of infringement or another. Here is one position statement issued by a company regarding the protection of their IP:

I’d like to use this situation to remind us of some fundamental truths about _____, our commitment to innovation and the protection of our intellectual property.

First, _____ inventive capacity – our legacy of innovation – is at the core of what makes us unique; it provides us with a sustainable competitive advantage. Our leadership in _____ testifies to this; it was built over the past _____ on a foundation of investment, collaboration and innovation. But _____ faces competitors who lack _____ technological know-how and business ethics. These companies seek to “leap frog” the technology development cycle by taking what’s ours and using it in their own _____.

This is why we’ve taken action. We will not tolerate situations where we believe our intellectual property has been compromised or infringed upon. And we will continue to take whatever steps are necessary to protect the integrity of our intellectual property.

Companies spend years – and I mean YEARS – developing products. I have been out of the semiconductor industry from more than three years, and am seeing things hit the market that I was working on five years ago or more. As a result, it is critical that the millions (or billions) of dollars invested before a product is commercial are properly protected.

And while Apple is always the easy target because it is so visible in suing huge players like Samsung, let us not forget two things:
– Every Android device from HTC, Velocity Micro, General Dynamics, Onkyo, Wistron puts at least $5 in Microsoft’s pockets, which netted them $1 billion last year – 5 times more than they made from Windows Phone 7! This is entirely based on Android (via Linux) making liberal use of Microsoft property right down to source code copy & paste!
– Let’s not forget that the Motorola Droid, the first million-selling Android device, was NOT supposed to come with Google Maps for navigation! There is an ongoing lawsuit by Skyhook Wireless against Google , which in part says:

In complete disregard of its common-law and statutory obligations, and in direct opposition to its public messaging encouraging open innovation, Google wielded its control over the Android operating system, as well as other Google mobile applications such as Google Maps, to force device manufacturers to use its technology rather than that of Skyhook, to terminate contractual obligations with Skyhook, and to otherwise force device manufacturers to sacrifice superior end user experience with Skyhook by threatening directly or indirectly to deny timely and equal access to evolving versions of the Android operating system and other Google mobile applications.

Wait – aren’t Google the guys who just said that folks should innovate rather than use other means to stifle competition and innovation?

Yeah … right! Anyone who thinks that Google doesn’t control Android almost as tightly as Apple does iOS is living in a fantasy world.

Finally, and I knew it would get in there at some point – Schmidt went on to specifically state that he thinks that HTC didn’t violate the Apple patents and will win on appeal, but more interestingly:

“Litigation that attacks open-source products limits consumer choice, hurts the economy, and discourages innovation,”

In other words, ‘Open Source’ is some part of the ‘greater good’, and issuing a lawsuit against anything related to ‘Open Source’ is bad for everyone? Let’s not forget that Google already wields very non-open control over Android, uses part of the Linux core which infringes on literally HUNDREDS of Microsoft patents, and on and on.

Eric Schmidt is just blowing hot air, trying to misdirect everyone into thinking Apple is ‘being evil’ by protecting IP rights. He shouldn’t worry – Apple does enough evil things on their own without needing someone to attribute good legal process and procedure with evil overtones.

But the bottom line is this – Apple is absolutely correct to enter patent litigation whenever and wherever they see potential infringement. And Google might talk about envy – but what is clear is that while others might be jealous of their market share, it is Google who is becoming increasingly nervous as more and more companies begin to see significant revenue streams based on patent infringements in the Google OS.