The Varieties of Patent Infringement

blackberry & motoq It happens a lot. One technology company sues another firm for patent infringement, with hopes of reaching a large settlement that will help it revive flagging fortunes, launch a business, or protect the status quo.

Struggling companies hope to open up a new stream of revenue -  it’s usually the equivalent of a corporate Hail Mary pass. For small patent holding firms that sue massive multinationals, it’s a lottery ticket with better odds. These firms, sometimes known as ‘patent trolls’, don’t produce goods or deliver services. Instead, the firms try to keep the business afloat with the aid of the legal system. 

These types of patent infringement lawsuits can often times be easily dismissed as the plaintiff’s claims are opportunistic and sometimes frivolous (from what I’ve seen though a plaintiff’s chances vary on a case-by-case basis).

One notable exception of course is NTP Inc., the small patent holding company based in Richmond, Virginia, that squeezed US$613-million out of RIM in a settlement reached in November 2006.

Then there are the largest of companies that believe its patents have been legitimately violated by another large company. One recent and prominent example is the suit by Verizon Wireless against Vonage Holdings Corp. that netted the wireless service provider an award of about US$120-million last year.

These types of suits are tougher to call. One thing’s for sure - when companies in the same sector launches a suit in the direction of a competitor, it’s a move to slow down or injure the company.

The suit and countersuit involving RIM and Motorola, uncovered yesterday by the Wall St. Journal, is one such example. Motorola alleges its WiFi patents are being infringed RIM believes its being charged unfair licensing fees for use of Motorola’s patents related to WiFi on mobile devices.

RIM claims the licensing fees commanded by Motorola, for use of its patents related to WiFi, are excessive.

The background to the dispute is much more interesting - the companies are running into each other more on the competitive battleground. Motorola and RIM, which have collaborated in past, now appear to have  the high-end consumer in their sights.

Motorola also happens to be a company that’s struggling to find its way. Ed Zander was forced out as chief executive in the fall after a series of poor quarterly performances. The beleaguered company’s new CEO, Greg Brown, has said the company may sell its handset unit. RIM, meantime, wants to maintain its Cadillac status in the wireless e-mail/device field - a lawsuit against a competitor is one way to do it.

I’m no lawyer but my guess is that the companies will settle and likely on terms both companies view as a compromise if not fair. Better to have the competition settled in the playing field where the better company usually wins.

February 19, 2008 | Filed Under News Items and Commentary 

Comments

Leave a Reply