A confluence of complex smartphone technology and a competitive platform...
A confluence of complex smartphone technology and a competitive platform market have resulted in today’s patent wars and inefficient patent litigation, said Fiona Scott-Morton, deputy assistant attorney general for economic analysis in the Justice Department’s Antitrust Division, at a European…
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competition policy conference Wednesday in Brussels. Vertical integration of operating companies into IP ownership somewhat overcame perceived flaws in the U.S. patent system, she said, according to a prepared version of her speech. “If the parties to a license agreement both manufactured widgets and both owned and licensed IP, then the natural outcome was a cross-license at low royalty rates. Litigation was often not a practical way to gain advantage because the other side could retaliate symmetrically.” That has since changed, and now there is litigation among competitors and by firms that do not compete, Scott-Morton said. While software patents and the rise of “patent assertion entities” have contributed to the problem, complex technology and platform competition have also been major factors, she said. Smartphones combine telecom, Wi-Fi, computer hardware, operating systems and software applications into one device, Scott-Morton said. “With so much going on in one little device, the device could end up implementing hundreds of standards and reading [sic] on many thousands of patents.” Meanwhile, the owner of a mobile platform owns only one piece of the ecosystem, drawing on many complementary products that are necessary for it to be popular with consumers -- a situation similar to what happened with Microsoft Windows and the PC industry, Scott-Morton said. “Symmetry and long-run cooperation aren’t relevant in this game the way they may have been in years past. It is therefore critical for players in this marketplace to use every possible tool at their disposal to gain a competitive advantage for their platforms while they have a chance of tipping a platform in their favor or stopping tipping against themselves” (http://xrl.us/bn4yka).