SMARTPHONE LITIGATION
system they like, they tend to stick to that technology. Tere’s a huge fight to get customers in, because typically once they’re there, they stay a repeat customer with that one smartphone or operating system.”
Competition to attract these consumers is fierce and patent litigation represents another avenue— like product differentiation and marketing—for companies to out-compete their rivals.
Not afraid to converge
Te litigation surrounding smartphone patents is symptomatic of the number of technologies required to create the device itself. David Carey is vice president of technical intelligence at UBM TechInsights, an advisor to technology companies. He manages the team that deconstructs, analyses and reports on the design and make-up of integrated circuits and the systems in which integrated circuits are found.
He says: “Te smartphone is richest in all the constituent technologies of cellular communications, memory and storage, processor technologies, display, sensors and touch screens. All those bits and pieces that make it a high-end
device—smartphones have to draw on a larger pool of technologies to become the end product.”
This means that companies that have not traditionally operated in telecommunications have entered the market, according to Mike McLean, vice president of IPRs, professional services at UBM TechInsights. “There’s been a disruption in terms of the market players,” says McLean. “Companies that traditionally have not played in the cell phone arena have now become engaged and own significant market share. Whenever that happens, the incumbents are going to be looking to leverage their patent portfolios to protect their legacy businesses.”
Te convergence of technology into a single product has happened in other industries. Joe Chernesky, vice president of licensing at Intellectual Ventures, a non-practising entity (NPE) and patent investment company, previously held management positions at semiconductor manufacturer Intel.
In the 1990s, the microprocessor began incorporating lots of technology, including graphics and video. “Once this happened, Intel
was potentially infringing or had liability to lots of patents,” says Chernesky. “We actually did a study to determine this. Ten we developed a strategy to go out and address that invention gap. I think you see the same thing today.”
Litigating to license
Patent litigation offers companies the opportunity to achieve a commercial aim. Jane Mutimear, a partner and IP litigator in Bird & Bird LLP’s IP group, says that litigation is always a means to a commercial end, and the litigation surrounding smartphone patents is no different.
“Te claimants are either seeking higher royalty rates than those which they have been able to achieve in negotiation,” she says. “[Or claimants] are trying to prevent a competitor from using technology which was developed to differentiate the patentee from its competitors.”
Te value of a licensing royalty is oſten lower than the value of the lost profit associated with a lost sale to a competitor, according to Paul Sutton, a founding partner of New York-based firm Sutton Magidoff LLP. Tis means that protecting the
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World Intellectual Property Review March/April 2011
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