While Apple and Samsung still haven't been able to settle their global patent dispute, they do agree that patent assertion entities (PAEs), or "patent trolls", cause serious "problems that continue to plague innovators". In September the world's two largest smartphone makers were already among an impressive group of signatories of an open letter to European policy-makers that warned against an increasing patent troll problem in Europe and, especially, the ways in which the problem could exacerbate as a result of shortcomings in the rules of procedure of the Unified Patent Court system that is at the preparatory stage.
Apple and Samsung's concerns were already shared back then by other major players such as (a non-exhaustive list in alphabetical order) adidas, Cisco, Deutsche Post DHL, Google, HP, and Microsoft. This morning the UPC Industry Coalition released another open letter addressing the issue, and notable new members include Broadcom, Dell, Huawei, and Vodafone. Here's the letter (this post continues below the document):
25 February 2014 - UPC Industry Coalition - Open Letter by Florian Mueller
Once again, these companies -- mostly but not exclusively tech giants -- stress their support of "an effective and balanced unified patent system", but they apparently think that more work still needs to be done on the rules of procedure in order for Europe to "achieve the stated purpose of the UPC to defend 'against unfounded claims and patents,' 'enhance legal certainty,' strike 'a fair balance between the interests of right holders and other parties,' and allow for 'proportionality and flexibility.'"
The signatories have read with concern "[r]ecent press reports suggesting that some PAEs welcome bifurcation within the UPC further show that a system with perceived loopholes has the potential to open the floodgates to a detrimental form of patent litigation", pointing to an IAM (Intellectual Asset Management magazine) article entitled "Why the US's most litigious NPE is a huge fan of the German patent system".
The two primary issues that have tech-producing and tech-using companies concerned are that without clarity in the procedural rules, the UPC might grant injunctions too readily, and especially do so over patents that shouldn't have been granted in the first place. The second problem, which exacerbates the first one dramatically, is also called "bifurcation": validity and infringement remedies are addressed on separate tracks, with validity often taking considerably longer and even a short window of opportunity to enforce an actually-invalid patent giving a patentee enough leverage to obtain a settlement (which then includes the withdrawal of the bogus patent, so it remains a threat to everyone else).
Programmers of multi-threaded software call this a "race condition": a system will work properly only if the worked performed by one thread (here, the invalidation proceedings) is indeed concluded before a certain critical stage of a second thread (here, the infringement proceedings that can result in a sales ban) is completed -- but the system will fail if, for whatever reason, the second thread gets ahead of the first one because, which is simply a flaw, there is nothing in the system that makes the second thread wait for the first if necessary.
I'd like to say something here about my personal experience in discussing patent policy matters with the European Commission years ago (and based on what I hear, things haven't really changed in this regard). There are some great people working for the Commission who perfectly understand the economic dimension of these legal issues and are committed to balance and reasonableness. But there are also some people who are very dogmatic about IP enforcement and, unlike most researchers, have not yet understood how serious certain problems caused by the excesses of the patent system (too many invalid patent, overly powerful enforcement) are -- or maybe they don't even want to understand because they have a strong interest in growing the patent (including patent litigation) industry, not so much the real economy. The ultimate, high-level decision makers will hopefully listen to those who have a strategic and economic perspective, not to the ones whose dogmatic approach is that if there's any problem about the patent system, the system itself will solve it anyway.
There are also some who deny that Europe faces a PAE problem and that things may get a whole lot worse. I will talk about this in more detail on another occasion. I'd just like to say that PAEs are definitely not a US-only phenomenon. Case in point, on Friday the Mannheim Regional Court will rule on three cases brought by patent licensing firm IPCom, two against Apple (including a case in which a "partial" damages claim of EUR 1.57 billion ($2.2 billion) has been brought) and one against HTC. I attended the combined trial in the two Apple cases and I believe the complaints will be rejected. The court was noticeably unconvinced of there being an infringement of the patent in its narrowed form, if properly construed, after a recent decision in an opposition proceeding before the EPO. IPCom is not seeking an injunction against Apple anyway. But if IPCom had done so, and if the case had not been stayed to await the outcome of the opposition proceeding, it could have won, due to the way patent litigation works in Germany, a sales ban against the iPhone and all 3G-capable iPads in Germany.
With the Unified Patent Court, unless sufficiently clear rules of procedure are put in place, such lawsuits could result in Europe-wide injunctions on a premature basis (i.e., before the validity of a patent-in-suit has truly been ascertained). This would make Europe a patent trolls' paradise, and the policy-makers who can rein in the extremists now should so so, lest they will be responsible for massive damage to the European economy that will also affect European consumers.
[Update] I just saw this post on Google's EU policy blog by Catherine Lacavera, Google's litigation director, on "Curbing patent trolling in Europe", and also wish to recommend strongly this Technet blog post by Microsoft's deputy general counsel and corporate vice president Horacio Gutierrez who says very clearly that "[m]ore work [is] needed to protect [the] European Union from patent trolls" . [/Update]
If you'd like to be updated on the smartphone patent disputes and other intellectual property matters I cover, please subscribe to my RSS feed (in the right-hand column) and/or follow me on Twitter @FOSSpatents and Google+.
Share with other professionals via LinkedIn:
