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Some critics say the US patent system is in the midst of an lively battle, or patent warfare. We’re listening to of 1 significantly egregious offender: commonplace important patents for smartphones.
But empirical information on patent litigation doesn’t assist this narrative. Actually, it flatly contradicts it. Smartphone patents and SEPs are to not blame for the traditionally modest quantity of patent litigation taking place within the US.
There’s room to reground the dialog on the state of patent litigation within the smartphone {industry} by specializing in the information, fairly than hyperbolic anecdotes, to disclose what the smartphone patent warfare alarmists are lacking.
Decreased Litigation
To grasp the extent of patent litigation within the smartphone {industry}, we examined the key cell wi-fi system suppliers, which we outlined as smartphone authentic gear producers with over 5 million shipments in a minimum of one yr between 2005 and 2020. There are 53 such OEMs.
Subsequent, we reviewed patent litigation in each US federal district courts and the Worldwide Commerce Fee, occurring amongst these main smartphone firms, discovering 85 instances involving 321 distinctive patents.
This novel information set exhibits the variety of smartphone patent lawsuits between 2005 and 2020—when normalized to the scale of the smartphone market— is definitely declining.
Credit score: Cravath, Swaine & Moore and Qualcomm
Subsequent, we normalized by each the variety of US smartphone shipments and the full greenback quantity of US smartphone gross sales. In each instances, the normalized patent litigation price exhibits that smartphone patent litigation has really decreased since its peak in 2005.
In different phrases, the present whole smartphone patent litigation docket is smaller in proportion to the scale of the smartphone market than it was in 2005.
Moreover, smartphone patent litigation includes lower than 0.5% of all patent instances—on the peak of smartphone patent litigation, there have been solely 20 smartphone patent instances amongst nearly 4,000 whole patent instances.
By comparability, biotechnology and biopharmaceutical instances account for practically 15% of the full US patent docket. To make use of the nomenclature of critics, any perceived patent warfare within the smartphone {industry} is considerably deescalating, not escalating.
We additionally should take into account that members within the smartphone {industry} should not monolithic, and the patent litigation that does exist within the {industry} is essentially confined to some market members.
For instance, smartphone patent litigation spikes in 2010-2012 and 2016 may be attributed overwhelmingly to Apple. Of the 58 whole instances occurring in these time intervals, Apple was concerned, as both plaintiff or defendant, in 37 (or 63.8%) of those instances.
Apple’s outsized function in smartphone patent litigation is unsurprising given its enterprise technique has most well-liked litigation over licensing.
Boris Teksler, former head of patent licensing at Apple, defined in The Economist that “environment friendly infringement, the place the advantages outweigh the authorized prices of defending towards a go well with, may nearly be seen as a ‘fiduciary duty,’ a minimum of for cash-rich companies [such as Apple] that may afford to litigate with out finish.”
Credit score: Cravath, Swaine & Moore and Qualcomm
SEPs Not Accountable
On the middle of the overhyped debates are SEPs, which shield expertise that commonplace growth organizations have deemed important to an industry-adopted technical commonplace. In response to critics, SEPs are a root reason for, and probably the most devastating weapons utilized in, smartphone patent wars.
Critics declare that SEP homeowners abuse SEPs, referring to this theoretical danger as patent “holdup”: the danger that the SEP proprietor coercively calls for—underneath risk of a damages declare or an injunction—an unjustifiably excessive royalty price from implementers in search of to make use of the {industry} commonplace.
Nonetheless, the bulk (53%) of smartphone patent litigation instances didn’t contain any SEPs. Furthermore, of the 321 distinctive patents concerned in smartphone litigation, solely 115 (or 36%) had been SEPs. Plainly, SEPs should not the driving power behind smartphone patent litigation, as they don’t seem to be even asserted generally.
Credit score: Cravath, Swaine & Moore and Qualcomm
Conclusion
For years, critics have warned that so-called patent wars are engulfing American innovation and particularly the smartphone {industry}. These critics have misinterpreted or ignored the empirical information, which paints a starkly completely different image.
It’s excessive time our science-based coverage returns to discounting non-factual rhetoric, and as an alternative takes heed of info and information. Let’s take a primary step in direction of this by calling out smartphone patent warfare rhetoric for what it’s: patently fearmongering.
This text doesn’t essentially mirror the opinion of Bloomberg Business Group, Inc., the writer of Bloomberg Legislation and Bloomberg Tax, or its homeowners.
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Creator Data
David J. Kappos is a accomplice within the company division of Cravath, Swaine & Moore. Beforehand, Kappos served as Beneath Secretary of Commerce and Director of the US Patent and Trademark Workplace.
Kirti Gupta is vice chairman and chief economist at Qualcomm and senior adviser at Middle for Strategic and Worldwide Research.
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