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?

Funny how this works, right? Just a week or so after it's first ever quarterly loss and an admission that it totally screwed up in the smartphone market, Nokia suddenly sues Apple for patent infringement over the iPhone. It looks like the old adage is true again: if you can't innovate, litigate! It's the same story all over again. A company that was a leader in the market but got complacent and lazy, suddenly finds that it lost its lead to a more innovative upstart. Since it's so far behind, even scrambling around doesn't help it to catch up, so it just starts suing over patents.

This story nicely highlights a few other points as well. We keep hearing from patent system supporters how the patent system is necessary because, without it, the market leader would always just immediately copy the upstart and "steal" their idea. Of course, Nokia has had two plus years to "steal" Apple's idea, and where is it in the smartphone market? It's not so easy to just copy someone else's idea -- especially if you're a huge player like Nokia, who will often view the disruptive innovator as not being worthy of paying attention to (which basically was Nokia's reaction to the iPhone).

Separately, remember how confused we were when Steve Jobs proudly hyped up the fact that Apple had over 200 patents on the iPhone concept? We've pointed out that it's hardly done anything to stop lawsuits. Apple has been sued over and over and over and over and over and over again for patent infringement. Welcome to the tragedy of the anti-commons, where it becomes impossible to do pretty much anything innovative without facing massive legal costs. Basically, if you build anything even remotely innovative these days, you're going to get sued for patent infringement, probably multiple times. It's become a massive tax on innovation, rather than a lever for innovation.

Nokia got a lot of attention when it launched its "Comes With Music" concept -- where you buy a phone that comes with "free" all-you-can-eat music downloads for one year. Of course, the music comes wrapped in annoying DRM, though the music will keep playing (thankfully), after the year is up. Still, it seems like people aren't buying for the most part. A recent report shows only 107,000 users worldwide. This must be a blow to the major record labels who always seem to insist that "free music" drives pretty much every other business model. For example, BPI continues to insist that ISPs are basing their own business model on people sharing "free music." And you have record labels who are pissed off because they think that video games Rock Band and Guitar Hero aren't paying enough for all the benefit they get from the music. And, of course, there are all those collection societies claiming that every business that plays any kind of music needs to pay more, because it must be all that music that brings in the business. Well, it looks like Nokia is proving them all wrong. The music, by itself, doesn't seem to attract all that much business at all. Perhaps everyone should be asking for a refund.

If you have an old Nokia 1100 phone, maybe it's time to dust it off and try selling it in Germany where hackers claim to have figured out a way to use certain Nokia phones to steal authentication codes for bank transactions. There are a few reports that these old phones (if they were made in a very specific factory, not just any old model...) are selling for ridiculous amounts -- ranging from $700 to $30,000 -- presumably because the handsets are so hard to find and are valuable to hackers prone to crime. So far, Nokia says it can't imagine any way for these old phones to be hacked for banking fraud. But not surprisingly, security vendors are quick to point out the plausibility of this type of phone hacking -- since security firms can obviously benefit from unfounded fears that encourage consumers to buy security software regardless of the actual need for it. Is it really that hard to ask a security vendor what the likelihood would be for a criminal to actually succeed in such a scam? Hopefully, the odds of actually stealing any money with these ancient phones are approaching zero -- especially now that the tools to implement the fraud are known and apparently getting quite expensive. Perhaps the real suckers in this story are the gullible hackers who are buying old phones in shady forums for prices that are well more than the phones are worth?

Qualcomm and Nokia have been involved in a long-running series of patent disputes over chips in mobile phones. The two companies settled the bulk of their disputes last summer, with Nokia throwing a chunk of change at Qualcomm and the two making nice. This week, the two companies announced they'd work together to put Qualcomm chips in Nokia devices. Nokia, the top global handset vendor, has never used Qualcomm chips, and the work will first be focused on devices for the US market, where Nokia's market share lags far behind its share in the rest of the world. So Qualcomm gets a big new chip customer, Nokia strengthens its offerings for the US markets, and consumers benefit from increased competition. Sounds good all around, and makes you wonder why the companies resisted such an approach in favor of the patent fight for so long.

It pretty much goes without saying at this point that any DRM can and will be cracked -- and, of course, once cracked, the content is now freely available pretty much anywhere. It still makes you wonder why anyone bothers. The latest is that Nokia's hyped up "Comes with Music" offering (which has been a commercial disappointment) has had its DRM cracked, and it's unlikely that much can be done to block the DRM cracking system. Once again, you have to ask why Nokia even bothered?

A local report says that Nokia is considering setting up an MVNO in Japan, focused on its high-end Vertu line of handsets. Nokia has a small presence in Japan, making it one place -- along with the US -- where its market share lags badly behind its 40 percent or so global share. It would be surprising to see Nokia make a big move into becoming a virtual operator in any market, given that it sells most of its handsets through operators, and wouldn't want to jeopardize those relationships in any way. However, for its Vertu line, it could be a useful model. Vertu devices aren't your typical mobile phone: they cost upwards of several thousand dollars, and often don't include features common on much cheaper devices. They eschew many technical features in favor of expensive build materials and a concierge service for its deep-pocketed customers. Vertu handsets aren't going to be sold by or subsidized by operators, so Nokia could benefit by bundling service with the device as a virtual operator, making the Vertu brand the only one that has any contact with the customer. Given the small number of devices it sells, operators aren't likely to mind too much. But if Nokia made a bigger grab for the mass market, they'd certainly take exception.