Apple may hurt shareholders with Android patent war or something

“Steve Jobs, the co-founder of Apple Inc., told his biographer that he’d rather wage ‘thermonuclear war’ with Google Inc. than make deals to share its technology with the maker of the Android operating system,” Peter Burrows reports for Bloomberg.

“That was no empty threat. In the 18 months before Jobs died on Oct. 5, Apple sued HTC Corp., Samsung Electronics Co. and Motorola Mobility Inc., the three largest Android users,”
Burrows reports. “It alleged that the phone makers stole Apple’s technology and asked courts to make them stop.”

Burrows reports, “Now, as rulings start coming in, it might be time for a détente that helps Apple maximize the value of its patents, said Kevin Rivette, a managing partner at 3LP Advisors LLC, a firm that advises on intellectual property. When courts side with Apple and impose bans on infringing products, competitors can often devise workarounds; in cases where Apple doesn’t win import restrictions, it would be better off striking settlements that ensure access to a competitor’s innovation, he said.”

MacDailyNews Take: Let’s pause to fill in what Burrows conveniently left out: Jobs vowed “thermonuclear war” against Google because he viewed Android as “a stolen product,” not because he relished patent wars over making “deals to share its technology.” Apple is a vertical integrator; they control the whole widget for the end users’ benefit. They don’t license iOS or “share” patented inventions for a reason. Burrow’s mischaracterization of Steve Jobs’ reason for protecting Apple’s patented IP is either intentional or simply sloppy. We’d bet the former: Twisted “reporting” in order to set up quotes from whichever blithering idiot he’s lined up on for a phone interview today. Just because Steve’s gone, Pete, doesn’t mean you can start to suck as a journalist.

Burrows continues, “‘A scorched-earth strategy is bad news because it doesn’t optimize the value of their patents — because people will get around them,’ said Rivette, whose clients include Android licensees. ‘It’s like a dam. Using their patents to keep rivals out of the market is like putting rocks in a stream. The stream is going to find a way around. Wouldn’t it be better to direct where the water goes?'”

MacDailyNews Take: There’s the quote that Burrow’s introductory mischaracterization was intended to set up.

Burrows continues, “The question on the minds of many patent lawyers isn’t whether Apple should adapt its legal stance, but when. For now, the company’s approach is costing rivals millions of dollars in fees, distracting management and preventing them from emulating Apple’s products more boldly, said Ron Epstein, a former attorney at Intel Corp. who now runs patent licensing firm Epicenter IP Group.”

“Apple’s patent portfolio remains strong compared with those of rivals, thanks both to the innovations that went into groundbreaking products such as the iPhone and iPad, and to the effectiveness of Apple’s legal department in obtaining patents for those innovations, said Christopher Marlett, chairman and co-founder of MDB Capital Group, an investment bank that advises companies on buying and selling patents,” Burrows reports. “‘Apple has the patents, the money and the expertise to go to war,’ Marlett said. ‘I just don’t see why Apple would seek détente, since they’re the clear leader. Until they’re hit with an injunction by Google or Samsung, they don’t need to get serious about licensing.'”

Read more in the full article here.

MacDailyNews Take: Marlett has it exactly correct. Despite the Bloomberg headline, “Apple May Hurt Shareholders With Patent War,” and Burrows’ ham-handed attempt to bolster his phoner’s quote, this article could just as easily be headlined, “Apple has the patents, the money and the expertise to go to war,” but it likely would have generated fewer hits. So, bully for Bloomberg, we guess.

Related articles:
Apple vs. Android patent war: HTC forced to drop one feature, Motorola may have to drop another; more to come – December 23, 2011
Apple likely to win German ruling against Motorola in February – December 22, 2011
HTC testing new Android models due to infringing Apple iOS patent – December 21, 2011
U.S. ITC backs Apple in patent ruling against HTC that hits Google – December 19, 2011
Steve Jobs: ‘I’m going to destroy Android, because it’s a stolen product; I’m willing to go thermonuclear war on this’ – October 20, 2011

14 Comments

  1. All of this begs the questions of what the hell good is a patent if anyone can steal your technology, and, further, the courts to nothing to prevent other companies from violating or circumventing the patent?

    1. Exactly right. This isn’t the Apple of the 90s. Apple singlenandedly rebooted the smartphone industry and unlike the Wintel hegemony of the 90s, Apple isn’t going to sit and watch other poor competitors make money by ripping off Apple’s IP.

  2. MDN’s takes say it all .

    Barrons has a new agenda in the past few months , check itbut and expect the FUD machine to spew full speed ahead in the present and possibly long future.

    Barrons predictably slanted financial reporting or the opportunistic kind.

  3. ‘It’s like a dam. Using their patents to keep rivals out of the market is like putting rocks in a stream. The stream is going to find a way around. Wouldn’t it be better to direct where the water goes?’

    Oh, is THAT why Lake Mead is a figment of my imagination?

    Build the dam well enough, and high enough, and the water is going to pretty much stay put.

  4. I think that Apple is coming to the conclusion that the courts are not a very effective way of protecting intellectual property. Apple has been let down badly by the courts, who have failed to adequately protect Apple from having their products copied.

    I don’t think that Apple will ease up on it’s pursuit of cases against those who copy, but I think that they will become more reliant on other ways of making copying impossible.

    We have seen Apple buying up small companies with cutting edge technology skills ( PA semi, Anobit etc ). By using their expertise, Apple can design powerful chips that are extremely frugal in terms of power consumption. They will manufacture those chips solely for their own products and there is no way that other manufacturers will be able to get them.

    The same idea works with things like displays, batteries and revolutionary case manufacturing technology. If they develop their own technology and bring products to market, they will be able to design products that exploit the specific advantages of all those technologies and which would be very difficult to replicate using conventional parts.

    It would only be possible to do this if you are confident of selling something like fifty million units. Apple can be pretty certain that they will, but others would not be able to commit to custom manufacture on that scale.

  5. as a shareholder that’s my opinion.

    (no more Windows stealing crap. the young Jobs and Pepsi CEO got the same shat advice from lawyers and ‘experts’ and didn’t go nuclear and see what happened… )

  6. Years ago when Jobs was not there, Apple licensed their technology (Mac OS) with Radius and PC Computing. Within a year the two companies drastically ate up Apple’s market share of Mac OS computers. A few years later reduced revenues almost lead to Apple’s bankruptcy. Apple needs the high revenues to finance its continuous development of new technologies. Licensing Apple’s patents will just lead to its downfall. Burrows is just too young to remember Apple’s early experiences.

    1. Exactamundo. Apple learned years ago from quite painful experience that the whatever may be the initial upside to be gained from licensing its technology to others, the long term costs associated with supporting those licensees and with seeing those licensees undercut Apple’s brand identity with cheapo knockoff junk that leverages off the good will Apple has built over the long term is a really pool long term bargain. Typical short sighted Wall Street BS – can’t see past the next quarter’s results.

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