Are Patent Wars Stifling Creativity?

by LitFunder on January 23, 2014

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patent wars creativityWith the ongoing legal wrangle between Samsung and Apple in the news, lawyers and consumers alike are questioning the impact that patent laws have on creative output and progress in Europe and indeed throughout the globe.

On August 13, 2013, “Money Morning” discussed patent wars and their effects and noted that they unquestionably stifle creativity:

“Patent wars are needlessly destructive. No one wins. They have been shown to actually stifle growth and creativity, and they can be a terrible drain on corporate coffers, to say nothing to tying up courts’ time. Instead of broadening frontiers and pushing the creative envelope, companies are content now to sit back and sue the living daylights out of anyone who gets in their way.”

Samsung and Apple’s latest dispute resulted in new headlines, and new action. The case brought President Obama into the dispute – following an International Trade Commission ruling that Apple had violated patents owned by Samsung, Obama took Apple’s side and vetoed the ITC’s sanctions.

With the President of the United States stepping into the complex world of patent law, many experts are wondering what the next stage of patent disputes – whether between Samsung and Apple or other parties – could be.

While Apple and Samsung’s dispute might make patent wars seem like an entirely modern phenomenon, disputes regarding intellectual property have been going on for decades – in some cases, even centuries. Today’s patent disputes are, however, particularly vicious and costly, particularly in terms of innovation and creativity.

Other companies in the high-tech industry, such as Google and Microsoft, use the same tactics in their own patent disputes. One of the most recent tactics to have emerged is the amassing of patents as both a defensive and offensive measure – from a strategic standpoint, it’s not far removed from the Cold War-era race to stockpile nuclear weapons and other destructive technologies.

From 2010 to 2013, smartphone manufacturers spent an estimated $20 billion on patent purchases and litigation. Google alone is believed to have spent $12 billion solely on patents, while rival Microsoft reportedly owns an incredible 21,000 different patents.

Instead of stopping conflicts, however, the patent arms race has had the opposite effect. From 2004 to 2009, patent-related litigation increased 20% as companies rushed to sue each other for perceived violations. With the average claim costing $2.5 million to defend, today’s companies aren’t engaging in inexpensive warfare.

Today, most technology companies spend significantly more on patent litigation and purchases than on research and development – a frustrating reality for the creative, intelligent people that entered the industry to change the world. The amount spent on patents certainly adds weight to the accusation that patent wars stifle creativity in the world of technology.

While it’s easy to point the finger at patents, the technology giant do have reasons for pursuing such strong intellectual property protection. Defending itself against accusations of aggressive patent litigation, Apple has said:

“Apple has always stood for innovation. To protect our innovations, we have patented many of the new technologies in these ground-breaking and category-defining products. If we can’t protect our intellectual property, they we won’t spend millions creating products like the iPhone.”

Apple’s usage of the iPhone in their statement is interesting. Smartphones – a type of product defined by Apple’s popular device – contain an average of 200,000 or more patents. The massive number of patented components of smartphones and other devices has fuelled criticism that far too many dubious patents are issued, particularly amongst high-tech companies such as Apple.

Some of these patents are clearly defined, while others are vague and allow for an unprecedented level of ownership. An example of loose requirements for patents can be seen in the approval of a patent for “a software system devised to calculate online prices.”

Many in the legal community have criticised the rush to patent anything that could be of value to businesses. The Federal Reserve Bank of St. Louis noted that there is “no empirical evidence that more patents or stronger patent laws contribute to productivity. Instead, products are used to protect incumbents in mature industries from new competitors.”

Despite the criticism, the patent wars are raging as fiercely as ever before. Attempts to achieve peace between competitors have largely been fruitless, while measures to limit the time periods or definitions of patents have also been unsuccessful. Both the high-tech industry and others need to reach a balance between protection of unique technology and an environment that encourages innovation and creativity.

Ironically, the truest words on the subject are from an executive vice president of Samsung, Apple’s chief rival:

“Legal battles with Apple have been ‘a loss’ for both the industry and innovation as a whole.”


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This article was written by Vannin Capital. A flexible and innovative funding organisation, which is well capitalised and recognises the potential in the litigation funding market.

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