Judge who shelved Apple trial says patent system out of sync
Thu Jul 5, 2012 8:42am EDT
By Dan Levine
CHICAGO (Reuters) - The U.S. judge who tossed out one of the biggest court cases in Apple Inc's (AAPL.O) smartphone technology battle is questioning whether patents should cover software or most other industries at all.
Richard Posner, a prolific jurist who sits on the 7th U.S. Circuit Court of Appeals in Chicago, told Reuters this week that the technology industry's high profits and volatility made patent litigation attractive for companies looking to wound competitors.
"It's a constant struggle for survival," he said in his courthouse chambers, which have a sparkling view of Monroe Harbor on Lake Michigan. "As in any jungle, the animals will use all the means at their disposal, all their teeth and claws that are permitted by the ecosystem."
Posner, 73, was appointed as a federal appeals court judge by President Ronald Reagan in 1981 and has written dozens of books, including one about economics and intellectual property law.
Posner, who teaches at the University of Chicago, effectively ended Apple's lawsuit against Google Inc's (GOOG.O) Motorola Mobility unit last month. He canceled a closely anticipated trial between the two and rejected the iPhone maker's request for an injunction barring the sale of Motorola products using Apple's patented technology.
Apple is in a pitched battle with its competitors over patents, as technology companies joust globally for consumers in the fast-growing markets for smartphones and tablet computers.
Posner said some industries, like pharmaceuticals, had a better claim to intellectual property protection because of the enormous investment it takes to create a successful drug.
Advances in software and other industries cost much less, he said, and the companies benefit tremendously from being first in the market with gadgets - a benefit they would still get if there were no software patents.
"It's not clear that we really need patents in most industries," he said.
Also, devices like smartphones have thousands of component features, and they all receive legal protection.
"You just have this proliferation of patents," Posner said. "It's a problem."
The Apple/Motorola case did not land in front of Posner by accident. He volunteered to oversee it.
Federal appellate judges occasionally offer to preside over district court cases. Posner had alerted the district judges of his interest in patents, so after part of the smartphone battle landed in Wisconsin federal court, the judge there transferred the case to him.
When Posner began working on the smartphone case, he told the litigants he was "really neutral" because he used a court-issued BlackBerry made by Research In Motion Ltd RIM.TO. He soon accepted an upgrade to an iPhone, but only uses it to check email and call his wife, he said.
"I'm not actually that interested in becoming part of the smartphone generation," he said.
Posner's corner office is filled with the requisite library of law tomes, and a row of books he wrote sits alongside his family photographs. He also has a signed photograph from the late Supreme Court Justice William J. Brennan Jr., for whom he clerked in the early 1960s.
Judges rarely speak openly to the press, but Posner is outspoken on a range of topics. Last week in online magazine Slate, he penned a withering critique of U.S. Supreme Court Justice Antonin Scalia's recent dissent in the Arizona immigration case.
"It wouldn't surprise me if Justice Scalia's opinion were quoted in campaign ads," Posner wrote.
MOTOROLA V. APPLE
Motorola sued Apple in October 2010, a move that was widely seen as a pre-emptive strike. Apple filed its own claims against Motorola the same month.
In canceling the trial, Posner said an injunction barring the sale of Motorola phones would harm consumers. He also rejected the idea of trying to ban an entire phone based on patents that cover individual features like the smooth operation of streaming video.
Apple's patent, Posner wrote in his June 22 order, "is not a claim to a monopoly of streaming video!"
Not all judges in the patent wars share Posner's skepticism of injunctions. U.S. District Judge Lucy Koh in San Jose, California, granted Apple two critical pretrial injunctions against Samsung Electronics Co Ltd (005930.KS) last week: one against the Galaxy Tab 10.1, and the other against the Galaxy Nexus phone.
In Friday's 101-page ruling barring the Galaxy Nexus, Koh cited the harms to Apple due to competition from phones that infringe its patent on the Siri search feature. Samsung is appealing both injunctions.
Posner said he had not read Koh's orders.
In his own ruling, Posner also barred Motorola from seeking an injunction against the iPhone because the company had pledged to license its patent on fair and reasonable terms to other companies - in exchange for having the technology adopted as an industry standard.
Posner's idea of examining whether industries like software should receive patent protection is a mainstream one, especially in the computer industry, said John Allison, a professor at University of Texas at Austin who studies intellectual property rights.
However, recent patent law reforms passed by the U.S. Congress did not directly address the issue, and Allison said classifying industries for the purposes of intellectual property protection - as Posner suggests - was "completely impractical" because talented lawyers could game the system.
When it comes to the smartphone litigation wars, Posner said tech companies should not be blamed for jumping into court since they are merely taking the opportunities that the legal system offers.
Given the large cash reserves in Silicon Valley, high legal fees are not a deterrent. Apple, for instance, had $110 billion in cash and securities as of March 31.
"It's a small expense for them," Posner said.
Posner said he had been looking forward to presiding over a trial between Motorola and Apple, but had no other choice than to toss the case.
"I didn't think I could have a trial just for fun," he said.
(Editing by Martha Graybow and Lisa Von Ahn)