Last year, the world's largest technology companies spent billions of dollars buying patents related to smartphones. This year, they're suing one another for patent infringement, behavior that has inspired a sharp critique of the U.S. patent system from Richard Posner, the prolific 73-year-old 7th Circuit judge, a founding father of the law and economics school, and one of the most respected and influential jurists on the federal bench.
Not only did Posner post a short essay entitled "Why There Are Too Many Patents in America" on The Atlantic's website in July, but he also went out of his way to hear a lawsuit in which Apple Inc. and Motorola Mobility LLC sued one another for infringing patents related to smartphones. The judge's writings also served as commentary on the similar litigation between Apple and Samsung Electronics Co. Ltd. in California federal court, in which a jury last month awarded Apple $1 billion in damages.
Posner has taken on a wide range of topics in his scholarly and popular writing, but he had to make a special effort to hear the case between Apple and Motorola Mobility. Posner is an appellate judge, but all appeals of U.S. District Court rulings involving patent law go to the Court of Appeals for the Federal Circuit, or the CAFC, in Washington, whose decisions must be appealed to the Supreme Court. But appeals court judges may sit as District Court judges by designation, and Posner let it be known that he was interested in hearing patent cases.
He was assigned a choice one. Smartphones implicate thousands of patents in areas ranging from semiconductors to software to touch screens, and the rapid innovation and immense consumer demand in the sector have turned patent ownership into another front in the war for smartphone supremacy between Apple and the various producers of phones that operate on Android software designed by Google Inc., which in May closed its $12.5 billion purchase of Motorola Mobility. That deal was Google's response to losing out to a consortium led by Apple that in June 2011 paid $4.5 billion for 6,000 patents and patent applications owned by the bankrupt Nortel Networks Inc.
Both deals were driven by the need to build a patent portfolio as a pre-emptive defense against lawsuits claiming infringement rather than by the desire to develop products defined in the patents. In other words, Google and the Apple group bought patents to protect aspects of products the companies had already designed -- the reverse of the way the system has historically worked.
In The Atlantic article, Posner cites defensive patenting and patent trolls, the most notorious of which is Nathan Myhrvold's Intellectual Ventures, as "two wasteful phenomena" that have resulted from a system that issues far too many patents. "Most industries could get along fine without patent protection," Posner writes, the exception being pharmaceuticals, which are very expensive to develop.
In contrast, he contends, the cost of invention is generally modest "in an industry in which teams of engineers are employed on a salaried basis to conduct research on and development of product improvements."
Posner posted his piece on The Atlantic's website three weeks after he issued an opinion dismissing the claims of Apple and Motorola against each other. The judge saw Apple's suit as mere gamesmanship since it asked for an injunction barring Motorola from selling its phones until it found "a new way of performing the functions now performed in an allegedly infringing manner" rather than a potentially lucrative ongoing royalty that Motorola would have to pay to license the patents at issue in the case.
And though the issue would have been one for the jury had it gone to trial, Posner was skeptical both of the claims of infringement and of their value even had infringement been found.
"Apple is complaining that Motorola's phones as a whole ripped off the iPhone as a whole," Posner writes. "But Motorola's desire to sell products that compete with the iPhone is a separate harm -- and a perfectly legal one -- from any harm caused by patent infringement."
Posner's skepticism echoes the attitude U.S. courts tended to take toward patent law before the CAFC was established in 1982. The CAFC has adopted a far more pro-patent stance, though the Supreme Court has attempted to rein in the CAFC in recent years. Apple may appeal Posner's decision to the CAFC, but his stance could resonate with judges tasked with overseeing similar litigation, a group that ultimately includes the nine Supreme Court justices.
David Marcus covers legal matters for The Deal magazine.