Lawsuits in the Mobile Industry: It’s a Battle Royal

I came across this article about a lawsuit against Apple’s iPhone 4S for violating a VPN patent.  The patent was awarded to VirnetX on November 1, 2011.  The lawsuit was filed by VirnetX on November 1, 2011.  That’s not Internet speed, that’s mobile computing speed.

It seems like we’re constantly hearing about patent-oriented lawsuits in the mobile industry.  Apple was able to temporarily block sales of Samsung Galaxy Tab in most of Europe.  HTC sues Apple, Motorola sues Microsoft, and the list goes on.  It’s a real melee.  You can’t tell the players without a program.  Or without a few cool infographics:

• Thompson Reuters: Mobile Patent Suits
• Mashable Tech: Patent Wars

Truth is, there is money to be made.  Microsoft reportedly receives $5 from HTC, $15 from Samsung, and more money from a dozen other companies for every Android device sold.  Who would have thought that Android sales would generate revenue for Microsoft?  Microsoft actually makes more from these royalties than they do from Windows Phone.

It’s serious money.  Google spent 12.5 billion for Motorola Mobility at least in part to obtain some 24,000+ current and pending patents.  This dwarfs a record $4.5 billion that Apple, Microsoft, Research In Motion, and others paid for some 6,000 Nortel patents.

There’s also the aspect of a “defensive patent” portfolio.  From my limited legal understanding, it appears that another reason to build up your patent portfolio is to have counter-suit strength to deter other companies from suing you in the first place.  Sort of like the nuclear arms race during the Cold War between the United States and the Soviet Union.  History repeats itself, but not quite as drastic.

While the patent wars have heated up in the past few years, this is nothing new.  Those who have been around the mobile industry remember the 2001 patent lawsuit against RIM by NTP, a patent holding company.  Things came to a head in 2005 when a deal fell through and the threat of an injunction against RIM loomed over customers.  Companies were scrambling to find alternatives in the event that BlackBerry service would be shut off.  The lawsuit was finally settled in 2006, but not before causing anxiety for many IT organizations.  And NTP hasn’t stopped.  They have lawsuits with Apple, Google, HTC, LG, Microsoft and Motorola for wireless email patents.

So, what’s the impact on the enterprise?  Most are at least considering the use of multiple OS platforms and devices which can reduce the risk of an OS platform or a group of devices shutting down an organization’s entire fleet.  This is one aspect where the consumerization of IT trend can have a positive benefit for the organization.  However, it seems like an awful lot of money is being put towards legal fees that could be put to better use developing innovative products or adding enterprise-oriented capabilities to these consumer devices.  I think the mobile industry will eventually reach some type of compromise similar to the nuclear arms reductions during the post-Cold War era.  I just hope we get there at mobile computing speeds.

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