Looks like it may be time to update our patent thicket graphic. Another company that's not actually doing anything in the space is suing everyone who is. A company named H-W Technology apparently holds a patent (7,525,955) on an "Internet protocol (IP) phone with search and advertising capability" and has sued Apple, RIM, Google, Amazon, eBay, HTC, LG, Smasung, Microsoft, Nokia, Verizon and others for violating it. Because, you know, I'm sure no one possibly could have figured out how to put search and ads on a phone without this patent.

A few folks this week sent over a story in the Guardian by Josh Halliday and Charles Arthur with a graphic purporting to show who was suing who in the smartphone space, following the news that Microsoft had sued Motorola. You can see that graphic here: Meanwhile, someone in our comments had pointed to a very similar graphic.

The problem is that both of these graphics are wrong. The Guardian one admits that it was built off of the NY Times post from back in March that that showed a similar graphic, which we wrote about at the time. Here's that graphic: However, Joe Mullin quickly pointed out that the graphic was wrong and included a bunch of lawsuits that never happened. NY Times blogger Nick Bilton posted a correction to his story way back in March... so I'm unclear on why the two Guardian reporters were still using that as the basis of their own drawing.

Either way, with Motorola suing Apple for patent infringement, the already wrong graphic was now also out of date. So, I figured why not create my own, correcting the original errors and adding in the new information.

I ended up spending many hours on it, because once I started, I realized that to really show the state of the patent thicket, I couldn't just include the big name companies that were suing each other, because that's only a part of the story. What about all of the non-practicing entities (so-called "patent trolls"), who were suing lots of these companies for infringement as well? Doesn't that matter in understanding the thicket? Of course, there are lots of them, so I focused on the higher profile NPE lawsuits -- the ones involving multiple defendants -- and added them to the chart too (in green). And then, I added in a few other companies who actually make stuff but have been suing as well. Once you start, it's difficult to know where to stop. There are so many companies involved in so many lawsuits, some you just have to leave out. However, I believe the image below gives you at least some sort of picture of the lawsuit situation concerning smartphones. Some of these lawsuits have settled, but many are still ongoing. Now, here's the crazy part: this is just lawsuits. I thought about showing licensing deals in this chart as well, but that would have killed my whole weekend (in fact, just as I was finishing up this post, I saw that Microsoft has just licensed 74 smartphone patents from Acacia). And then I thought about including companies like Intellectual Ventures which apparently are sitting on a bunch of other smartphone patents but haven't yet sued over them. However, I'd already wasted hours that could have been spent doing other, less brain-damaging work, and decided to leave it like this and move on.

Anyway, I'd say this does a damn good job demonstrating the concept of a patent thicket. It also explains how such thickets are hindering innovation. Anyone who wants to get into the smartphone business knows that they're facing lawsuits from a large number of the companies listed on the graphic.

Update: Someone just pointed out that Ars Technica apparently made their own graphic, which is really pretty.... but also relies on the same bad data that the NY Times used and corrected months ago.

Update 2: Apparently everyone had the same idea. The folks at Information is Beautiful made another version of the same chart... again including the incorrect information from the NY Times (though, at least they admit those lawsuits are about LCD price fixing, not patents).

NTP, a patent holding firm that is really just a bunch of lawyers with incredibly broad and questionable patents, is at it again. As you probably know, NTP was locked in a long and contentious patent fight with RIM over NTP's claimed patents covering the concept of mobile email. Even as the US Patent Office was telling the world that NTP's patents almost certainly weren't valid, pressure from investors (and the judge in the case who refused to wait for the Patent Office's final rejection of the patents) resulted in RIM settling the case for $612.5 million. For RIM, it became something of a no brainer. Even though its legal position was strong, its investors were killing the company over the uncertainty (there were threats that the judge could issue an injunction shutting down the entire Blackberry network). Settling the case helped RIM's stock price jump up (increasing its market cap more than the cost of the settlement).

But, from a legal perspective, the lawsuit and the end result became the centerpiece of attention for efforts at patent reform. While I still think that the patent reform process in Congress has been misguided and the end result probably a lot more damaging than helpful, many of the politicians involved will point to the RIM-NTP case as evidence of the problems with the patent system. You might think, then, that NTP's investors might sit back and enjoy the spoils of the RIM settlement, but the company quickly went back out and sued all the major mobile operators in the US for violating its patents. However, judges in those other suits said (unlike the judge in the RIM case) that those trials should wait until the Patent Office has made a final decision on the validity of NTP's ridiculously overbroad patents.

However, NTP is not waiting around. It's now suing again. This time, rather than the mobile operators, it's going after device makers and platform vendors, suing Apple, Google, Microsoft, HTC, LG and Motorola. Basically, it appears that NTP has decided that if anyone does email on a phone, they have to pay NTP.

There might not be a better example of how incredibly screwed up the patent system is than this. NTP was involved in an attempt to do mobile email ages ago (and it wasn't the first actually... but NTP paid off some folks who had prior art). The idea itself wasn't new or all that innovative, and the timing was off, so NTP failed. In a functioning free market, that's a good thing. If a company can't execute, it should fail. Unfortunately, thanks to a ridiculously overbroad patent award, NTP has been able to live on as a bunch of lawyers suing any company that does figure out how to execute.

Perhaps the only good thing coming out of this is that it may help draw more attention to just how broken the patent system is.

Back in February, we noted the rapid explosion of patent lawsuits in the smartphone realm, with pretty much everyone suing everyone, and began to wonder if it was even possible to build a smartphone without getting sued. As it continued to play out, it became clear that the smartphone market was a living example of the problems of a patent thicket -- where a new technology is so locked down by patents, as to slow down the pace of innovation in that market -- directly the opposite of the intended purpose of patents. Patent thickets have been demonstrated in many areas, with smartphones just being the most recent.

Wired Magazine has now taken on the issue, with a good article detailing the patent thicket mess in the smartphone space, and why it's a problem. There isn't much new in the story if you're a regular Techdirt reader, but it's an excellent summary of the situation and why it's a mess:

Underlying much of this litigation is a broken patent system that increasingly churns out weak patents, concomitantly strengthening the rights of those who hold them. Patents described in vague, abstract terms are the source of most infringement lawsuits as they provide more leeway for subjective interpretation. Patent examiners grant weak patents because administrative structures are overloaded and understaffed. And in an age of rapid product development, a market niche can be identified and a product manufactured, retailed and retired before a patent is even granted.

The article also discusses the fact that patent litigation storms like this one had been avoided in the past when big companies came up against each other through "gentlemen's agreements" not to sue each other. But that's been flipped around a lot through a combination of non-practicing entities getting big awards, and companies arguing over who's in the stronger position for such an agreement not to sue.

The end result, though? Money that could go towards productive investment, instead is being wasted on litigation. It's exactly the opposite of what the patent system is supposed to do.

With Apple and Nokia already locked in a patent nuclear war involving lawsuits filed back and forth and back and forth, it looks like the same thing may be happening now in the Apple-HTC dispute. The difference, of course, is that Apple initiated the lawsuit against HTC. But now HTC has responded in kind, claiming that Apple violates a bunch of its patents, while using the ITC loophole to get the iPhone barred from the US.

What we're really seeing is what happens when you get a patent thicket in a highly competitive, dynamic area. Suddenly, rather than focusing on competing in the marketplace, and continually outpacing each other by offering new innovations and benefits to consumers, companies start wasting millions upon millions of dollars trying to block competitors from doing the same thing. It leads to a massive net negative impact on society and consumer benefit. What a shame.

At the very least, it appears that HTC recognizes this:

"As the innovator of the original Windows Mobile PocketPC Phone Edition in 2002 and the first Android smartphone in 2008, HTC believes the industry should be driven by healthy competition and innovation that offer consumers the best, most accessible mobile experiences possible."

Either way, it's yet another nuclear war in the patent world, taking money away from actual innovation. What a shame.

Ah, the patent games Microsoft plays. For years, it's spread FUD, claiming that open source operating systems, such as Linux, violate its patents -- though it has never detailed what patents or really sued anyone directly over those patents (though some have argued that it has done so with a couple patents tangentially). Now it appears that Microsoft is also claiming that Google's Android violates its patents. Of course, it's not doing so by going after Google. Instead, it's part of what came out in an announcement concerning Microsoft licensing certain patents to HTC specifically to allow HTC to run Android.

Seems a bit strange, right? Why should Microsoft have any say in whether or not HTC can put Google's Android operating system on its phones. The whole thing seems even odder when you realize that HTC was, for a long time, one of the major makers of smartphones running Windows Mobile operating system. But, the complicating factor here might be Apple. Apple, of course, famously went on the patent offensive and sued HTC over its Android phones a couple months ago. So now, with Microsoft doing this deal, it seems to very publicly be entering the patent fight between Apple and Google, which for bizarre reasons is playing out with HTC as the pawn getting bounced around between them all.

Of course, Microsoft's press announcement on this particular deal is hilarious in how disingenuous it is:

The licensing agreement with HTC underscores the important role IP plays in ensuring a healthy and vibrant IT ecosystem.

Uh, no. It underscores the exact opposite. It underscores just how totally screwed up the smartphone market is because of the absolutely ridiculous patent thicket that's been built up around pretty much everything that goes into a smartphone. This deal doesn't show "the important role IP plays." It shows how a big company that has nothing whatsoever to do with a particular fight can suddenly throw its weight around on the topic in an attempt to cause confusion in the marketplace and potentially scare off competitors. It's the exact opposite of what the patent system is supposed to do.

Small patent holding firm Klausner Technologies has sued HTC for infringing the patents on visual voicemail it says it holds, adding the phone maker to a long list of companies that have been attacked with the overly broad patent. Just as in the previous cases, it's not clear how this system actually helps anybody that's doing any actual innovation; the company with the patent, but which has never apparently done anything to actually bring it to market, gets to assess an innovation tax on companies doing the actual legwork. Meanwhile, the idea underlying the patent -- displaying voicemail info on a screen -- really isn't much more than a foreseeable progression of technology. So carry on, patent system, holding back innovation and misaligning incentives.

Another day, another story of a company no one's heard of who seems to produce nothing but patents, filing a lawsuit against a ton of companies in East Texas (of course). This one, sent in by the Bored SysAdmin, involves a company called The Pacid Group, suing Asus, Samsung, Sony, Sony Ericsson, Fujitsu, LG, Gigabyte, GBT, MSI, Motorola, Research in Motion, Nikon, Microsoft, Nintendo, HTC and Palm, claiming that they all violate two of its patents (5,963,646 and 6,049,612) on encryption. While it's often difficult to find any information on the no name companies who sue big companies for patent infringement, at least The Pacid Group has a website, where it clearly shows the company's only products: patents.

As we've seen in other similar lawsuits, the company appears to think that pretty much every bit of modern technology violates its patents. According to the lawsuit, all of the following types of products may violate these patents: laptops, mobile phones, printers, routers, digital cameras, Blu-ray disk players, gaming devices, wireless adapters and portable media players. Now, sure, you could make the claim that all of these companies found these patents from a company no one had heard of, and decided to "copy" the idea into their product. Or, the fact that this basic idea appears in so many places might lead you to conclude that the idea was the natural progression of the technology and obvious to those skilled in the art, and thus not deserving of a patent. But that would make sense.

A bunch of news sites have been playing up a minor item in a Deutsche Bank note to clients about how Apple has a lot more patents than Google or HTC. I have to say, this is one of the most meaningless bits of data out there, and it's getting way too much attention for its import. First of all, it looks like the report counted overall patents -- not even patents just in the spaces where these companies overlap. Second, the number of patents one holds is absolutely meaningless when it comes to actually being able to enforce the patents.

More troubling is the report's conclusion:

"While litigation appears to be an increasingly common cost of doing business," he concludes, "we view Apple's willingness to aggressively defend its patent portfolio favorably and welcome the defense of its IP."

Historically, this is generally not a good sign. It's usually a sign that a company has run into an innovation stumbling block, and doesn't think it can really continue to innovate at the pace the market is expecting, so it seeks to hold back competitors and pump up revenue through litigation, rather than innovation. A smart research report would note that breaking out the offensive patent lawsuits is generally a warning sign. But, then again, this is a research report that thinks the overall number of patents a tech company has is a meaningful metric.

Well, well, well. We've discussed recently how it seemed effectively impossible for any smartphone maker to survive the patent gantlet, as there are so many patents held by so many different parties, and they all seem to have recently started suing each other. The latest, sent in by a whole bunch of you (though Phillip was first) is that Apple is suing HTC, again both in the courts and using the ITC loophole. What's interesting here is that, despite Apple playing up the fact that it had over 200 patents on the iPhone, for the most part, it hadn't gone on the offensive with them. The recent patent lawsuits that Apple has been involved in have all been on the defensive side -- which we thought was a smart move for Apple. The fact that it's now going on the offensive on patents is unfortunate. It's usually a sign that a company is worried that it can't keep up with the competition.