Apple’s “pinch-to-zoom” patent invalidated by U.S. Patent and Trademark Office

News today that a second prominent Apple smartphone patent — this one on “pinch-to-zoom” (allowing the user to zoom in or out by moving two fingers apart or closer together while touching the display) has been invalidated by the U.S. Patent and Trademark Office.  This is the second PTO invalidation of a big Apple patent in a few weeks — the last one to be knocked down by the PTO, back in early December, was Apple’s “bounce-back” or “rubber-banding” patent (i.e., the bounce that you get when you scroll to the end of a smartphone’s screen).

In both cases, the PTO ruled that the Apple patent is both non-novel and obvious based on the existence of prior patents that disclose a very similar feature.

Here’s the most important question: The Apple “bounce back” and “pinch-to-zoom” patents were among the patents that the jury in federal court in San Jose ruled Samsung had infringed. But considering that the PTO has deemed that these patents are worthless, what should the San Jose court do now? Apple will likely appeal the PTO’s determination in both cases, so in a sense the validity of the bounce back and pinch-to-zoom patents is still up for grabs. But should a damage award based in part on patents that are of no current effect stand? Or should the court vacate the damage award and order a new trial on the question of damages? Or should the court at least suspend the damage award pending resolution of the patent validity questions?

One thing the San Jose court should not do is make final an award that may be based in part on bad patents.

Apple and HTC call a truce in one battle in the smartphone war

News today that Apple and the major Taiwanese smartphone company HTC have reached a settlement in their long-running patent battle. Apple had won several important rounds, including a patent judgment in the U.S. International Trade Commission that enjoined HTC from importing into the U.S. several of its popular phones.

Now HTC can get back to business. But notice that the terms of its licensing deal with Apple are secret.  So watch closely. Will HTC re-emerge as a vigorous competitor in the smartphone market, as it was before the ITC ruling?  Or has Apple succeeded in imposing on HTC such a significant “patent tax” that its competitive vigor will be reduced?

Time will tell.

The Federal Trade Commission investigates Google’s use of patents

Federal Trade Commission headquarters, DC

News in today’s NY Times that the Federal Trade Commission has opened an antitrust investigation into Google’s use of “standards essential patents” — i.e., patents that are necessary to the basic operation of smartphones and tablet computers. Google has represented to standards setting organizations (private industry groups that define and adopt rules meant to allow devices from different manufacturers to work together on a common standard) that if standards were adopted that would require smartphone and tablet makers to use its patents, that it would license them on “fair, reasonable, and non-discriminatory” terms. Many standard setting organizations require this sort of “FRAND” licensing commitment as a condition of participation in the standard setting process. In any event, the article suggests that the FTC is investigating to see whether Google is living up to these commitments, or whether they are using their standards essential patents to disadvantage rivals.

This is an important issue. Abuse of standards essential patents can harm competition. And the FTC is well aware of that fact. In Senate testimony in July, Edith Ramirez, an F.T.C. commissioner, speaking of the potential abuse of standard-essential patents, said, “Holdup and the threat of holdup can deter innovation by increasing costs and uncertainty for other industry participants, including other patent holders.”

Stay tuned.

W.H. Auden and the patent system

From today’s NY Times Bits Blog, a short follow-up on Monday’s long article on the dysfunctions of the patent system. Today’s entry briefly tells the story of Apple’s early-1980′s patent entanglement with IBM, the then-dominant computer maker. IBM had a stack of PC-related patents, and it was using them partly to collect licensing fees, but mostly to fence out competitors. Big Blue brandished their patents against Apple and demanded licensing fees. But in the negotiations that followed, it emerged that IBM was concerned in particular that Apple not be competing against it in the mainframe computer business. As a condition of the patent license, IBM demanded that Apple never manufacture a computer larger than a government worker’s desk.

I’m surprised that the Apple people didn’t burst out laughing. In any event, the IBM threats apparently left an impression — Apple learned that if you aren’t a patent aggressor, you might be a patent victim. And that reminds me of this famous and wonderful bit by Auden:

“I and the public know
What all schoolchildren learn,
Those to whom evil is done
Do evil in return.”

The Knockoff Economy in Wired

We have a piece in Wired looking at court fights over smartphones (Apple/Samsung) and stilettos (Louboutin/Yves Saint Laurent). You might think these spats have nothing in common. But in fact, both are about a critical frontier in copying and competition: using design to gain control over function – and thereby gain control over markets. (Photo credit: Ariel Zambelich/Wired).

The Knockoff Economy in Forbes

Kal does a Q&A for Forbes re: Apple/Samsung and how imitation can be good for innovation. Check out the Forbes cover at left — it’s from 2007, when Nokia was the king of the cellphone marketplace. Now the Finnish company is down to a single-digit market share in smartphones, although they are still a major player in the market for lower-end cellphones (dumbphones?).  That Forbes cover shows that how fierce competition can be in technology markets, and how innovation can change the game in an instant. In any event, here’s Kal on the central irony of the Apple/Samsung fight — while Apple condemns Samsung as a copycat, Apple itself has a long and proud history of innovation through imitation:

What’s most interesting about the verdict is that Apple itself is a serial imitator—as many great innovators are. Steve Jobs famously visited the Xeros Palo Alto Research Center in 1979, where he saw a Xerox prototype that used a mouse and a graphical user interface. Jobs adapted the ideas he saw at Xerox in what eventually became the Macintosh. And the rest is history.

In the current dispute, Samsung was surely imitating aspects of Apple’s designs. But so too was Apple imitating previous designs. The rectangular shape of the iPhone and iPad, for instance, strongly resemble the ur-reading device of paper. And there were many iterations between the invention of paper and the invention of the rectangular phone.

So while Samsung probably deserves some of the sweeping verdict, what Samsung did is really normal practice in many fields, including electronics. And it is a good thing, because it yields more competition.

Samsung wins one in Japan

In the wake of its billion-dollar patent loss to Apple in federal court in California, Samsung has won a parallel court battle in Japan — and both are just preliminary skirmishes in what could turn out to be a protracted and world-wide Apple/Samsung patent war.

The Tokyo District Court ruled that Samsung’s Galaxy smartphones and tablets did not violate an Apple patent on technology that synchronizes music and videos between devices and servers. And a court in Korea recently issued a split decision that, on balance, favored Samsung. Nearly a dozen other cases are still grinding away, with perhaps many more to come.

So what does this all mean? Well, it’s too early to say how this is going to end, but here are a couple of early observations.  First, the U.S. is the only jurisdiction in which patent claims are heard by juries.  Everywhere else they are dealt with by judges. And it seems to us that judges, with their greater experience and perspective, are less likely to hand Apple the sort of outsized patent victory that the ten jurors in San Jose gave Apple with their billion-dollar verdict.

Second, and importantly, while these court cases are slowly proceeding, there is fierce competition out there in the marketplace between Apple and Google’s Android smartphone operating system, which runs on Samsung’s phones, as well HTC’s, LG’s, Motorola’s, and many others. And in the competition outside the courtroom Android is doing very well.  Since 2008, when they first appeared, smartphones running Android have surged to a 68% worldwide market share. That’s 4 times greater than the iPhone’s 17% worldwide share. (Microsoft’s Windows mobile operating system and Nokia’s Symbian are each left with a paltry share of around 4%). Even in the U.S., where Apple is stronger than it is abroad, Android phones own over 50% of the market, with Apple trailing at about 35%.

We doubt that the litigation is going to change these competitive realities all that much. Which shows the limits of patents as the foundation of a business model, either in the smartphone space or anywhere else.  Apple’s success in the marketplace depends more on its ability to rapidly and reliably introduce new and better versions of its iPhone. And if its worldwide patent battle distracts it even one bit from that job, it will lose far more momentum than any patent victory could ever give it.