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  (Source: New Line Cinema)
Patent reform is crucial or electronics industry will be consumed in self-destructive chaos

It's simple math.  And it illustrates how broken the international patent registration and court system is when it comes to intellectual property.

I. The System is Broken

Microsoft Corp. (MSFT) recently revealed that tentative Google Inc. (GOOG) acquisition Motorola Mobility wanted $22.50 per device for a series of video codec patents.  This request was clearly ridiculous -- as Microsoft states, the typical licensing rate for a collection of standards patents under fair, reasonable, and non-discriminatory (FRAND) terms is around $0.02 USD per device.

FRAND is actually a model system in that it is inherently an exemplar in the world of intellectual property.  It represents fair compensation to innovators, yet opens key developments to the masses, allowing them to push the envelope.

The issue is that FRAND is on the verge of dying.

FRAND patents are for friends
[Original Image: Cayusa/Flickr; modifications: Jason Mick/DailyTech]

The would-be murderer is patent litigation.  Keep that $0.02 USD patent licensing figure in mind.  Now imagine you patent a trivial user interface gesture, which is essentially some sort of variant on drag and drop.  Suddenly you can ban a competitor's device which retails for $200.00 USD.

That's right -- based on recent court decisions, almost trivial non-FRAND patents [1][2][3] are being rewarded with rulings worth 10,000x or more the cost of traditional licensing fees.

This abysmal state of affairs not only encourages patent trolling, it offers a strong financial incentive to stop any FRAND related work.  If your competitors go non-FRAND and your company works cooperatively under FRAND guidelines, your firm will almost certainly be dealt a series of crippling court rulings under the current patent atmosphere.  Try explaining that to investors.

II. Some Suggestions for Improving the System

User interface patents, firmware patents, and their ilk certainly represent a philosophy of protecting software innovators.  That's a noble goal.  However, in the future, it would be good for the patent system to consider a couple of points:

1. The potential for alternatives

Apple recently patented sending an interrupt to a processor in order to underclock it.  Now, interrupts have been used for decades as the fundamental firmware mechanism to deal with immediate events.  And a processor's power circuitry must receive some sort of guidance in order to underclock a chip.

Thus, while Apple's patent may be novel (assuming a lack of prior art), there are few feasible alternatives.  The patent system should note this kind of situation and put a higher pressure to reach a fair licensing situation in this kind of case.  You can't patent the laws of physics, so to speak, and even if you could, the least the system can do is to force you to license it.

2. The importance of a patent

Thus far Apple has secured short bans on Android products for relatively trivial features -- swipe to unlock, fast scrolling algorithms, and a "bounce" animation when performing drags or pinches.

In terms of the iPhone's net worth these represent maybe 1/500th or less of the total software innovation in the device.  Thus it might be fair to charge collectively $1.00 USD per device for them, but seeking a ban or exorbitant fees from competitors who use similar effects/inputs is extremely punitive and unfair.

3. Eliminating repetition

The mobile industry is awash in a deluge of repatents -- companies taking personal computer innovations, putting a mobile spin on them and then filing for a patent.  Apple's swipe to unlock is essential a touch screen version of the time immemorial drag-and-drop.

Motorola unlock
Motorola's forbidden swipe to unlock gesture [Image Source: YouTube]

If such repeats are allowed, the patents should at least be flagged.  Again such a flag could be used as a basis to force a licensing settlement and/or reduce the maximum damages a company can seek to collect in a suit.

4. Force Companies to Reach Licensing Settlements

Barring a handful of patents where the IP describes essentially an entire product, there should be strict guidelines forcing companies to settle software IP disputes.

A reasonable place to start would be to charge x10 the going FRAND rate (e.g. $0.20 USD for licensing a portfolio of IP).  In FRAND terms, this would not be fair and reasonable.  But the approach would bring into line the risk-vs-reward equation of the FRAND-vs-non-FRAND filings, versus the current hyper-inflated value scenario which essentially tilts the value scale in the direction of non-FRAND so far that the balance bar breaks.

III. Don't Want to Fix the System?  Prepare for a Dying Industry

As the industry stands right now, FRAND is on the verge of collapse.  Google and its partners are fast learning that playing fair does not work.  Their FRAND suits illustrate a willingness to play dirty.  And that new perspective will likely soon manifest in a cessation of FRAND work.

This is a horrible state of affairs for the industry.  By allowing injunctions that exceed FRAND payouts 10,000-fold, the global intellectual property sphere is revelling in the creation of an anti-competitive, anti-technology environment.

This system promises an ugly future in which mobile communications are slow (as it would be uneconomical to participate in FRAND communications standard development), there interfaces will be clunky (a company will be limited to a handful of UI elements for fear of infringement), and product quality will be decreased to offset an inevitable slew of licensing fees.

Cavemen fire
Prepare for the future of technology if the patent system is not reworked.
[Image Source: Museum of Natural History]

This is a system where nobody wins.  And this is the system that will result if drastic action is not taken, right now.

Is Google/Motorola/Samsung playing dirty?  Yes.
Is Microsoft milking the licensing system [1][2]? Yes.
Is Apple acting as an anticompetitive litigation abuser? Yes.

In a macroscopic sense, the problem is not these companies.  The problem is the intellectual property system.  This argument must not be lost amid our personal prejudices, lest the increasingly hyperlitigious atmosphere destroy the innovative devices we enjoy today, regardless of who makes them.

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RE: Who is surprised...?
By Master Kenobi on 2/29/2012 8:06:51 AM , Rating: 5
I'm in favor of banning lawyers completely. They add nothing to society and benefit greatly from causing problems for everyone else to contend with. I'm also in favor of banning "career politicians". Take it back to the way it was where you served a term or two and then went back to having a real job, an interesting idea is cap people from holding any elected positions for more than say 8-10 years of their total life. Lawyers and Politicans do not hold "real jobs", it's a house of cards that is self sustaining at this point.

RE: Who is surprised...?
By fhornmikey on 2/29/12, Rating: -1
RE: Who is surprised...?
By Master Kenobi on 2/29/2012 8:33:40 AM , Rating: 4
I have the unfortunate distinction of dealing with attorneys and their "good ideas" on a near daily basis. I will stand on my earlier statement that they are functionally useless. Lawyers do NOTHING except further saturate a legal system already bogged down by decades of precedent and rules which were generated by yet more lawyers. They are self sustaining at this point and are causing more harm than good. Granted there are criminal attorneys that are unfortunately necessary based on a persons rights, but most other types of attorneys (Tax attorneys, are you kidding me?) really need to be eliminated in an effort to trim the fat.

RE: Who is surprised...?
By Goothry on 2/29/12, Rating: -1
RE: Who is surprised...?
By bug77 on 2/29/2012 10:14:40 AM , Rating: 2
Please, enlighten us.

PS: Not all lawyers are bad. It's just 99% that ruin the reputation for all of them.

RE: Who is surprised...?
By jahinoz on 3/1/2012 2:20:44 AM , Rating: 2
Role of the tax attorney:

1. Hire a forensic accountant to do the work
2. Invoice client half his net assets.
3. Pocket the difference.
4. Drive around in Ferrari with undeserved sense of accomplishment.

RE: Who is surprised...?
By jnemesh on 2/29/2012 11:55:09 AM , Rating: 2
"The Legal System runs much faster now that they have abolished all lawyers!" -- Doc Brown BTTF2

RE: Who is surprised...?
By The0ne on 2/29/2012 3:08:08 PM , Rating: 1
Like Reclaimer77, I think you need to open your eyes and mind to what there are out there. You only have to look no further than the state of Texas to find these type of lawyers, in fake towns, in fake offices and in fake names; all for the sake of being able to sue anyone and any company for rights they have.

Sure there are "good" lawyers out there doing their job but don't kid yourself that there aren't tons more "bad" lawyers that will eat anyone alive given the chance. Your statement almost matches Reclaimers claimed that 10+ million Wii users are idiots for having bought into a fad that is the Wii and is NOT a game system. He has it in his head that he is more special because he has this X instead of the Wii and that 10+ million people are wrong :)

And lastly, he keeps telling people to open their eyes like you are right now. The irony, the stupidity and the igorance!

RE: Who is surprised...?
By drycrust3 on 2/29/2012 9:43:38 AM , Rating: 1
Lawyers and Politicans do not hold "real jobs", it's a house of cards that is self sustaining at this point.

Unfortunately, as much as we may loath them, the fact is we do need to have rules, regulations, laws and contracts and stuff like that, and we need to have consequences when people don't follow those rules, regulations, laws, contracts, etc.
Societies have different ways of deciding how people should or shouldn't behave, and one way is to have lawyers and politicians do it. If you don't have them, then you need priests and religious law to do it.
Like it or not, we have one can of worms, and if you don't want that can of worms and get rid of it then you'll end up with another can of worms.

RE: Who is surprised...?
By RedemptionAD on 3/1/2012 1:24:37 PM , Rating: 2
Problem is just like ruling power like a "career politician" will hold it too long and become corrupted. I am in favor of term limits on all politician, not just the president. Something like 8-12 years would suffice. As far a lawyers go, the politicians need to follow a K.I.S.S. policy and in cases of murder, child molestation, or rape, the client attorney privilege needs to be revoked in times when a defendent has admitted to the crime. Call it a clear conscience law where the lawyer will have the option to switch sides. Just my 2 cents.

RE: Who is surprised...?
By nafhan on 2/29/2012 10:21:18 AM , Rating: 3
Complex legal system = lawyers are a necessary evil. The law is sufficiently complex that only an individual with years of legal training has any hope of thoroughly understanding it.
Banning lawyers would give us "legal consultants" or something who would serve the same exact function as a lawyer, but possibly be less regulated, etc. Similar issues arise with getting rid of career politicians. The "problem" here is both difficult to define and way more complex to solve than "Lawyers and politicians are bad! Let's get rid of 'em!"

RE: Who is surprised...?
By bigdawg1988 on 2/29/2012 10:39:16 AM , Rating: 3
Complex legal system = Archaic and needlessly complex rules written by lawyers for lawyers to make it necessary.
Most laws should be written to be easily understood by the average person. A high school graduate should be able to understand most laws. And no, it's not necessary to make them so complex, that's the lawyers (and politicians) who make it so to prop up their "system." Sounds like they all need a freshman level writing course....

RE: Who is surprised...?
By Solandri on 2/29/2012 12:01:05 PM , Rating: 2
I'm no fan of lawyers; I think we're badly in need of legal reform too. But the problem with legal language being difficult to understand is something that crops up any time you need to be precise. Mathematical proofs have the same problem.

Any time you have to phrase things so that there's one and only one possible interpretation, it starts to get very complex and sound like lawyer-speak.

RE: Who is surprised...?
By nafhan on 2/29/2012 12:57:36 PM , Rating: 2
Couldn't agree more. Implementing it is the key though, and we might need to call in some legal experts to make sure we get it right... :)

RE: Who is surprised...?
By bigdawg1988 on 2/29/2012 10:33:58 AM , Rating: 3
The real problem is that the law is written by lawyers, therefore the laws are written so that only lawyers can understand them. If the laws were rewritten to remove latin terminology (why the hell?) and obscure and outdated terminology they would be clearer for the average person to understand. Right now the law is for lawyers, not for the average person.
Thing is, only lawyers, judges, and politicians (all lawyers!) will be able to do anything about it; but job security says they won't do it. Why is it necessary for a lawyer to do a title search? With all the technology we have now it should be fairly easy to do it with computers so the average person can do it and not have to pay lawyers to do it.
I wonder how much we could save in society by rewriting the laws so that average people could do much of what lawyers do now?

RE: Who is surprised...?
By nafhan on 2/29/2012 1:12:40 PM , Rating: 2
The real problem is that the law is written by lawyers
Except, the "average" person (in my experience) generally has a pretty poor grasp of things like logic, much less the legal system.
If the laws were rewritten to remove latin terminology (why the hell?) and obscure and outdated terminology they would be clearer for the average person to understand
Those terms aren't there just to confuse you. They generally are there because they have extremely specific meanings. The same thing happens in science and engineering. Plenty of terms get used that aren't part of the common lexicon :)

Further, historically speaking, having a simple legal "code" means you end up with a lot of law based on precedent, which WILL end up getting very complex, very quickly; and guess who handles complex legal issues? Yep, lawyers.

I agree that there are definitely areas where the US legal system should be and can be simpler (taxes for instance). However, laws can only be as simple as the situations they legislate, and those situations will likely never be simple enough to completely eliminate the need for legal experts.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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