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.

Nokia, who used to absolutely dominate the mobile phone market, has definitely seen better days. The iPhone really took it by surprise and the company really hasn't done a particularly good job reacting to the rise of the smartphone market. So, like plenty of companies who once innovated, once it started losing in the market, it shifted to litigation. Just a week after the company's first ever quarterly loss, it sued Apple for patent infringement over the iPhone. It actually took two cracks at Apple in that it also used the ITC loophole to go after the company twice.

Of course, in true patentland fashion, when a big tech company sues another big tech company for patent infringement, patent nuclear war ensues, as Apple sued back claiming that Nokia infringed on its patents. While the various lawsuits are still ongoing, it appears that Nokia's first shot via the ITC loophole has been a big failure, as the judge has ruled that Apple didn't infringe at all. It's worth noting that many consider the ITC to also have a lower bar, so this might not bode well for Nokia's lawsuit. Of course, Apple's lawsuit against Nokia remains as well... meaning that this little attack on Apple could conceivably end very, very badly for Nokia.

Probably should have focused on innovating, huh?

This is from a little while ago, but I'm just catching up on some older stories. Reader Rabbit80 points us to the news that Nokia has finally put its "Comes with Music" program out of its misery and shut it down. Comes with Music was actually an interesting idea: you buy a phone and for 12 months you get free music downloads. At a conceptual level, this sounds great: you're using the abundant (free music!) to make the scarce (mobile phone!) more valuable. But, like everything, a good idea can be marred by the execution. And, in this case, the execution involved the major record labels demanding that "Comes with Music" really mean "Comes with DRM'd Music." A year and a half ago we pointed out that Comes With Music was really getting very little uptake, and the decision to kill it off just confirms how weak the pickup was.

Nokia says that it was the DRM that was the real killer:

"The markets clearly want a DRM-free music service."

And, of course, there was nothing stopping the labels from allowing a DRM-free service, but they still have this infatuation with DRM, even though they finally came around to ditching the DRM on MP3 sales.

That said, this little real world experiment once again seems to highlight how the claim that "people just want stuff for free" is a myth. Here was a case where people could get the music they wanted for free... but it came limited and so they weren't interested. It's rarely about people just wanting stuff for free. It's often about the restrictions or the convenience of things. The price is nice, but it's rarely the key factor, despite what some industry folks would like to claim.

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).

It's no secret that Nokia hasn't really done that well in capturing the modern smartphone market. With the proliferation of iPhones and Android devices around the world, Nokia has seemingly stumbled quite a few times. Even if it's made some cool phones with good software, it hasn't really captured the public imagination. This has resulted in some people asking if Nokia wouldn't be smarter to just adopt Android itself, and give up on Symbian. However, a Nokia VP (who's actually leaving the company) reportedly responded to such a question by claiming that phone makers who embrace Android are like young boys who "pee in their pants" to stay warm during the winter. In other words, such a strategy may have (very) short-term benefits, but can lead to much bigger problems in the long run. I'm not sure that's actually true, however. And, from a company that hasn't been achieving much of anything on this front for quite some time, I doubt that those who have embraced Android sense that they're just wetting their pants right now either...

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.

Ah, the patent nuclear war in action. After Apple roundly destroyed Nokia's reputation as being the leading innovator when it came to smartphones, Nokia got petulant and sued Apple for patent infringement. In response, in typical patent nuclear war fashion, Apple turned around and sued Nokia back for patent infringement. Nokia's response? Find some more patents and sue again and also use the ITC loophole to get two shots at Apple with the same patents. And why stop there? Now that there's an iPad on the market, Nokia has sued Apple yet again for patent infringement. Isn't it great to see how two companies compete in the courtroom rather than the marketplace? Just like the creators of the patent system intended...

We've seen how Nokia's troubles in keeping up in the smartphone market have resulted in suddenly filing a whole bunch of patent lawsuits, including the big one against Apple over the iPhone. Of course, as usually happens in these types of situations, Apple fired back with a patent infringement lawsuit of its own against Nokia. Welcome to patent nuclear war.

And, of course, if you thought the battles would end there, you haven't been paying attention to how patent battles work these days. For years now, we've been pointing out that many patent holders actually get two cracks at companies over the same exact patents. They sue in the courts, and they use the ITC loophole to get a second crack, which could have even worse consequences. You see, the International Trade Commission is supposed to watch out for unfair trade practices. So many patent holders go to the ITC and claim that companies that infringe on patents are using unfair trade practices and should be barred from importing those goods into the US. Of course, the ITC could rely on the courts to determine if the products are actually infringing, but it does not. It decides for itself. And while the ITC cannot issue fines, it can issue an injunction barring the import of these products. With so many high tech products being manufactured overseas, this creates an effective injunction against selling many high tech products in the US... even as the Supreme Court has made clear that injunctions don't always make sense. But, the ITC is not bound by the Supreme Court on this and can do what it wants. A recent study has shown that this ITC loophole is frequently abused.

So, it's not at all surprising that (yes, indeed), Nokia has jumped in with both feet and has filed a complaint with the ITC as well over the Apple iPhone and its alleged infringement on Nokia patents. So now we have two totally seprate processes, either of which could conceivably bar Apple from selling iPhones in the US, just because Nokia's been too slow in coming up with its own iPhone competitor. That's not encouraging innovation at all. It's proactively trying to use the US government to slow it down.

When Nokia first sued Apple for patent infringement over the iPhone, we noted that it appeared like yet another case of a company getting beat in the market suddenly whipping out some patents to sue over. This seemed to anger the usual bunch of patent system defenders -- along with a group of Nokia defenders -- but it appears that others are noticing as well. The NY Times has an article discussing Nokia's sudden aggressiveness in the patent realm, noting that the company has been facing some business troubles, and it's notable that its patent aggression seems to have shown up at just the same time as its own performance trouble. Funny that.

Of course, this is a major issue. As with so many high tech areas today, there are giant patent thickets. It's effectively impossible to launch a product that doesn't violate dozens, if not hundreds, of patents. And (despite claims to the contrary) it's got absolutely nothing to do with companies "stealing" from each other. It's got plenty to do with companies making the next logical step in the innovative process, and coming up with products that meet what the market wants. But with patent offices around the world being willing to hand out patents on minor changes, it's impossible to actually build a useful product that doesn't violate patents. This has nothing to do with innovation. At this point, patents are just a weapon that can be flung against anyone who does innovate if you can't compete.

We've discussed in the past how many large companies now view patent accumulation as something of a nuclear stockpiling technique. That is, if you accumulate enough patents, other large companies won't sue you for patent infringement, because you'll just sue them right back for infringing on your patents. As ridiculous (and obviously against the basis of the very patent system) as this is, it has certainly limited some patent lawsuits between large tech companies. But every so often, a nuclear battle breaks out. Earlier this year, Nokia, jealous over the success of the iPhone, sued Apple. Apple, of course, has bragged about all those patents it holds on the iPhone... so... the obvious next step has occurred, and Apple is lobbing back charges of patent infringement against Nokia. In the end, the two sides will probably work out some sort of settlement, but the whole process is a huge waste of time and resources. Wouldn't we all be better off if they just focused on competing in the marketplace by creating better products?