200+ Patents on the iPhone, but Does Apple Really Need Them?

Over on the Tech Liberation Front, the Show Me Institute's Tim Lee is questioning my post on the role patents played in the development of Apple's new iPhone.  Unfortunately, it seems that Mr. Lee has been brainwashed by the mythology of the anti-software patent crowd.  While I don't have time to go through all the logical and historical inconsistencies of his post, the best place to begin is probably the rhetorical question that he poses near the end of his post:

Even if Nokia does a lot better than Microsoft and manages to clone the iPhone interface in, say, 2 years, that still means that they'll be perpetually 2 years behind. Why would consumers buy a knockoff of the 2007 iPhone from Nokia when they can buy the 2009 version from Apple?

Why? Because consumers always do!  The vast majority of consumers aren’t buying cutting edge technology, and Nokia’s phone will inevitably be cheaper (because reverse engineering is less expensive than inventing and less risky), integrate additional features, and be otherwise “good enough.”  And “good enough,” often wins in the marketplace. 

In case there is any doubt, let’s take a closer look at the Mac vs. Windows example, Mr. Lee presented here:

But cloning a breakthrough new user interface is actually quite difficult. Just ask Microsoft, which spent six years trying to clone the Macintosh interface in the late 1980s. Microsoft didn't succeed in matching the functionality of the first Macs until at least Windows 3 in 1990, and arguably not until Windows 95. In the meantime, Apple had ample opportunities to reap big profits from its innovation.

Sure, the Mac OS was light years ahead of Windows 1.0, and it took Microsoft until Windows 3.1 or even Windows 95 to get to near feature parity.  Did that translate into the immense marketshare and "big profits" for Apple Mr. Lee's theory would predict?  Funny enough, no it didn’t.

In fact, it took Apple nearly 7 years to sell its first 5 million Macs.  On the other hand, Microsoft sold 10 million copies of Windows 3.0, “a usable, less expensive alternative to the Macintosh platform,” in less than 2 years!

Apple has long been stuck in the role of creating markets, while others come in later to dominate them.  They spend millions in R&D innovating.  They spend millions market testing each product.  They take on all the risk that consumers might not even WANT a GUI-based operating system.  In the end, their competitors take advantage of all their hard work and gobble up marketshare.

Apple tried using trade secrets and even copyrights to protect their innovations to no avail. In 1998, Apple sued Microsoft and HP to protect the “look and feel” of the Mac OS with copyright, but they failed in the courts. Many believe that if they had patented some of those concepts, Microsoft would not be the dominant player in computing today.

Based on Mr. Jobs’ presentation of the iPhone, it seems that Apple has learned from its mistakes in the past.  Copyright and trade secrets are valuable IP protections, but patents are the only way to protect true, paradigm-shifting innovations.

Comments

[Richard Bennett]

I agree with you on the basic point regarding the importance of patents and Tim Lee's Kool-Aid drinking habits, but I'd like to correct the record on the Mac vs. Windows question. The truth is that both Apple and Microsoft stole overlapping windows from Xerox, who had used it on a variety of experimental workstations such as the Alto before productizing it on the Star and the 1100. There was no question of Apple patenting this invention because it was Xerox's from the beginning.

Patents being out of the question, Apple tried to do the next best thing and copyright their implementation. That didn't help, of course. And the look-and-feel case was a non-starter because of Xerox.

Early versions of MS Windows had tiled windows because they were afraid of impinging on Xerox's patents for overlapping windows, but they worked out some kind of deal as I recall.

Both Apple and Microsoft hired people from Xerox to do their windowing: MS got Charles Simonyi, the architect of Word and later of Windows, and Apple got Larry Tessler.

[Noel Le]

Richard, I see the philosopher in you.

Check out the book, Open Innovation, by Professor Henry Chesbrough. http://weblog.ipcentral.info/archives/2006/08/print/003338.html.

Chesbrough talks of the early tech industry days, when firms like Xerox and IBM undertook massive R&D, but if the resulting work did not tie directly into their revenue chain, it would simply sit on the shelf. However industry practices have changed. Such R&D would be patented and licensed to external firms today, thereby benefitting the industry and consumers.

If Chesbrough went back in time, he would tell the execs at Xerox Parc to make sure and patent their work and then get these guys, Gates and Jobs, to sign a license

[Richard Bennett]

Xerox PARC did patent much of the work they did. I know for a fact they filed patents on Ethernet, and it was necessary for early Ethernet vendors to pay them a fee of $1000 to build adapters. The fee also bought a block of 16 million addresses.

Some of the overlapping windows stuff goes back to Doug Englebart at Stanford in the 60s, so they obviously weren't able to patent all of it.

Apple seems to have a unique perspective on IPR: they believe that the first big company to steal ideas from a small company gets exclusive rights. It's odd, but they have lots of supporters.

[Mark Blafkin]

Richard, you're definitely right on the Xerox point. I chose not to get into the history of how that particular company squandered its investment (from a corporate POV) in R&D, because it was time I didn't have... That said, the point I was trying to make was that the GUI and mouse-based computer controls are the kind of innovations that can only be protected by patents. Copyright and trade secrets are not enough in that context.

Your final point about "the first big company to steal ideas from a small company gets exclusive rights" is an interesting one. I'm not sure I would call Xerox a small company (then or now), but patents are more critical for small businesses than large ones. That is why we spend so much of our time at ACT advocating for small innovators to protect and defend their innovations.

[Richard Bennett]

Good point about big and small companies. Apple has a history of ripping off the big, slow guys as much as the little guys. Much of the iPhone was taken from LG, to cite another example.