Patent Filings Rising Over the Top – Other side of the coin

The flow of patent applications filings in the recent years has been quite strong. This communicates two things – there has been a surge in global inventions and an increase in intellectual property rights awareness.

There is an old saying ‘every coin has two sides’. Today, a patent is not only an exclusive limited period right to practice an invention, but also an asset used by companies to gain competitive advantage in the market. In other words it is an asset used by inventors to monetize their intellectual property without actually practicing the invention.

For instance, in the ongoing high profile litigations between Apple Inc. and Samsung Electronics Co. Ltd., the former sued the latter in various countries such as the U.S.A, Germany and Australia. Apple claims that Samsung has infringed on its intellectual property rights in the making of the Samsung Galaxy Tab which is the arch nemesis of Apple iPad.

Another high profile case is that of the auction of patents owned by the bankrupt Canadian telecom company, Nortel Networks Corporation. The patents, many of them in the field of telecommunication were being eyed by companies including Google, Inc.. Google wanted the patent with an intention of protecting its Android operating system from litigation, since Android was never free from attacks. The bidding for the patents was intriguing with Google appearing to be the winner. But a dark horse named Rockstar Bidco defeated Google in the final round of the auction. The winning bid was approximately $4.5 billion. Interestingly, Rockstar Bidco was supported in the auction by Apple, Inc., Google’s rival in mobile operating system. Rockstar Bidco is a consortium of several companies; one of them being Microsoft Corporation, another rival of Google, Inc.. The Android operating system had rung the knell for Windows’ phone operating system. The other companies that Rockstar Bidco is comprised of are RIM, EMC, Ericsson and Sony. With Rockstar Bidco’s win, the position of Android operating system is no longer safe as Google wanted it to be

Monetization of intellectual property is no longer an uncommon practice. Today, an inventor or a company may develop a technology, get it patented, and license it to interested companies in exchange for royalties. The licenses may be enforced upon companies that implement the patent teachings without permission. Needless to say, the path of litigation is taken to enforce licenses upon the infringing companies. Monetization of intellectual property by means of enforcing licenses upon infringing companies has been subject of many debates. Some say that the process affects inventions since companies that are financially weak but innovative may not be able to afford litigation since it is highly expensive. There are demands to limit non-practicing entities (companies that are exclusively into patent licensing) by making suitable provisions in the Leahy-Smith America Invents Act, but not with much success.

On one hand we have a drive of inventions noticed in the increased number of patent applications globally. On the other hand we have companies and individuals using patents to enforce and gain competitive advantages, which according to some will damage inventions by the small companies. The increase in patent applications filing and patent acquisitions reflects the increase in inventions and intellectual property rights awareness. It also reflects the extent to which patents are being used for monetization and for gaining aggressive competitive advantages.