Patent Laws Take a Bite Out of Apple

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UPDATE 10/17/15:

The Daily Mail reported the actual cost of the suit to be ruled at $234 Million.

Apple was charged with patent infringement this week, says PC Mag. The Wisconsin Alumni Research Foundation, or WARF, is the body behind the charges. WARF manages patents for The University of Wisconsin-Madison (UWM). The cost of the patent suit they are pursuing against the tech giant could reportedly reach $862 million.

WARF previously settled out of court with Intel, who they also sued over their Core 2 Duo processor back in 2008. In this case, the jury has already ruled that Apple was guilty of patent infringement for the chips used in their recent iPhone models. Despite Apple’s plea to have the patent reviewed, all that remains is to determine the amount Apple should pay up.

This is just one example of how patent enforcement can disincentivize innovation and business development. Apple is being sued by the alumni foundation of a university. Clearly, the suit is not about trying to remove competition. The university is not in the smartphone market, and they aren’t likely to roll out their own smartphone anytime soon. It’s hard to think of a reason behind the suit, other than a simple cash grab.

Patent trolling has become a rampant issue as more and more patents are being granted every year, reaching 326,033 patents granted in 2014. The number of patents on the books is growing exponentially, making it extremely difficult to do anything without infringing on someone’s patent somewhere, particularly in developing industries like tech. Consequently, there is no way anyone can keep track of every existing patent without a large and skilled legal team. Even then, it is unlikely that most patent infringements are intentional or are carried out knowingly.

Patents were originally thought up as a way to incentivize innovation, or at least that’s the effect their designers claimed to be hoping to achieve. People wanted to be sure that they would have a way to make money from their ideas, and that their competitors wouldn’t be able to make an exact copy and lower the price, forcing the originator out of business. On the other hand, infringing on someone’s patent might provide consumer benefit, if a competitor was able to lower the cost and maintain the quality, indicating that either the initial price was artificially high or that the competitor improved the process or both.

It is clear though that patents were originally meant to encourage the implementation of new ideas. The thought process has flipped now. The way to make money by owning patents is to sue when someone infringes it, rather than actually implementing it to create a valuable product. Today, companies like Apple who seek to use technological advances to create better consumer products, pay the price. They are actually disincentivized from developing new products because they must always be wary of being sued for using someone else’s idea.

Even if you happen to believe that patent law is necessary and should be enforced, it is becoming impossible to deny that patent enforcement has gotten out of hand. Patent trolling discourages businesses from implementing new ideas and it slows innovation. It rewards people for being miserly with their ideas instead of using them to create better products.

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