The Creative Zen/Apple patent infringement settlement shows the value of patents to innovators in smaller companies. Thank god the system encouraged Apple to compensate Creative for at least some of the damage done. From where I sit the patent system in the United States works pretty well to protect the little guys against the big guys. The system is not perfect, but it is, like democracy, much better than the alternatives.
The patent process protects inventors and small companies
It is good for creative people
to generate ideas and make inventions that solve important social problems and enrich our lives.
Inventions require work–they are in Mr. Edison’s words the result of 1% inspiration and 99% perspiration.
Most inventors cannot commercialize their own inventions. Inventing merely requires time and talent. Commercializing is a daunting, capital intensive business. So most inventors work directly as employees of large companies. For those few who are independent or, as is customary in biotech, work for research and development think tanks, patent protection is essential.
The patent process provides legal protection to inventors, so that when they take their
ideas to companies for possible commercialization, the inventors are
not cheated out of the intellectual assets they have created. All inventors face the following “disclosure dilemma”: in order to sell his or her ideas, in order to gain investors, and in order to collaborate with others, the inventor must disclose his or her ideas. Once his or her ideas have been disclosed, the ideas can be easily stolen and copied.
The patent system resolves the disclosure dilemma by providing inventors with a formal, registered, time-stamped way of disclosing their ideas. Inventors disclose their ideas in preliminary patent applications, which are filed with the US Patent and Trademark Office. Once a preliminary patent is filed, folks can share and publicize their
ideas, knowing that if they are indeed the first inventor of record,
they will be able to eventually gain rights to their invention.
Within a year of filing a preliminary application, an inventor must file a finished application. This application in turn is made public by the patent office approximately 18 months after the date of the first preliminary application, or disclosure. Thus
the patent system promotes publication. After disclosure, an inventor can share his or her ideas widely. After 18 months of first disclosure anyone in the world can go to the USPTO site on the web and read the entire application. Here is a link to the USPTO search site. Here is a link to the Creative patent.
If an invention is deemed valuable and original, and the inventor is first, a patent may be issued after a process that typically requires three to six years. This process entails publication by the patent office and work with a patent examiner and the patent office.
The rights of a patent are analogous to the real estate title to a home or land. You have the exclusive rights to use your home or land–within some limits (zoning, etc.)–and you can lease, sell or otherwise convey rights to others. Just as titles to homes and land are granted through a systematic process, and become a matter of public record, so patents are issued after a multi-year process and are available to the public beginning eighteen months after they are first filed.
Apple is a technology follower, and Creative was an inventor and required protection
Creative did in fact create/invent the
digital music control before Apple.
While Creative is not a tiny company, it is not Apple.
The settlement is a boost for Creative, which created the first digital
music player in 1999. Recently, Creative has struggled to be
profitable. During the last Christmas shopping season, Creative, like
other consumer technology companies, faced a dearth of flash memory,
which Apple bought up. Creative was forced to buy flash memory at a
high price, and had to take a write-off as the price plummeted as
supply caught up to demand. San Jose Mercury News, Aug 24, 2006
As long as they are properly aware and focused, large companies almost always have tremendous advantages over
small companies and independent inventors when it comes to commercialization. These include
financial resources, organizational capabilities, distribution
networks, and the ability to achieve scale quickly. They also include, as noted above, the occasional ability to corner the supply of key components and deny them to competitors. Apple under Steve Jobs is focused.
spinning off the portable-device line into a new company with Apple as
investor. (You know the rest of that story.) Paid Content August 24, 2006
When Apple met with Creative to explore collaboration, what
protection did Creative have against being ripped off by Apple? None. Without patent protection independent inventors and small companies
are totally at the mercy of larger companies who steal their ideas and
bring them to market.
Apple the innovator has brought to market
technology ideas from Xerox Parc in the Mac, from Carnegie Mellon
University and UC Berkeley contributions in the Mac OS, and from Creative Labs and from Dave Winer and
others to do the iTunes/iPod/Podcasting combination. Apple is a fast follower, and has been for most of its history. The
reason it has a reputation as an innovator is that in comparison to
Microsoft it is a faster follower. Apple has a design sense that is
remarkable, and a marketing talent that is without equal, but it has
usually used these capabilities to integrate the fundamental inventions
of others. Thus the issue of intellectual property ownership and
licensing has been a central issue for Apple at least since the days of
the early Mac.
Is Apple an innovator or a follower in digital music?
Matthew Ingram and others argue that Apple is a technology innovator in digital music, and that
the Creative suit unfairly penalizes Apple. I beg to differ. Apple is a technology integrator. Moreover, it has used its market influence to tightly control the music download
business, and to move it firmly into the closed world of proprietary
standards and oligopoly suppliers.
Here is the thumbnail business history of iTunes and the iPod: Apple worked with the mainstream music studios and created a
closed, proprietary download service, established non-standard
proprietary Apple encoding and DRM standards, and made them work with
exactly one device–the iPod. Apple then poured several hundred
million dollars into marketing its music solution. Given its massive
investment and existing distribution advantage–as well as a good
product–Apple crushed the opposition. Now it has sucked in
podcasting, as well, becoming the de facto feed burner for podcasts.
Far
from being an innovator, Apple made a deal with the music industry that
gave it a powerful and decisive initial chockhold on legal popular music downloads. Having
secured the content that people wanted, Apple bundled up key
innovations made by true pioneers, including music downloading
(Napster, MP3.com), microcontent commerce (ring tones), recommendations
(Amazon), encoding and DRM (Bell Labs), local digital music storage and
jukebox controls (Creative Labs).
Simultaneously the mainstream music industry launched a legal blitz
at MP3-based music downloading sites, as well as a campaign of
intimidation against individual MP3 downloaders. The open business
ecosystem–based on MP3 players and companies like Creative labs–was starved of legal content, condemned in the press as a haven for pirates,
and its hardware products relegated to the back of consumer electronics stores, and its software products to free downloads on the web.
The result is that the Apple ecosystem–which is closed and has membership tightly controlled by Apple–dominates the music player landscape. Indeed the settlement with Creative Labs includes Creative into the closed club of iPod accessory suppliers:
The deal also gives Creative, a Singapore company, membership in
Apple’s “Made for iPod” program, in which companies are allowed to
build accessories for the iPod and other Apple products.
“This was a very broad settlement,” said Craig McHugh, president
of Creative Labs, a subsidiary of Creative based in Milpitas. Creative
Labs is responsible for the worldwide marketing, sales and operations
for Creative Technology. “We have the opportunity to now enter the
iPod ecosystem and sell our accessories such as speakers and head
phones. It’s wonderful. We felt this was for the best.” San Jose Mercury News, Aug 24, 2006
Speakers and headphones? Did I hear that right? Unfortunately, yes. Creative goes from being a co-leader of its own ecosystem–a keystone species–to an accessory maker in Apple’s.
Sim Wong Hoo, chairman and CEO of Creative. “Apple has built a huge
ecosystem for its iPod and with our upcoming participation in the Made
for iPod program we are very excited about this new market opportunity
for our speaker systems, our just-introduced line of earphones and
headphones, and our future family of X-Fi audio enhancement products.” Apple and Creative joint press release, by way of Paid Content August 24, 2006
Apple paid a small price for maintaining its dominance against what was perhaps its only near-term threat:
“It vindicates Apple’s place as a leader,” said Michael
Gartenberg, vice president and research director at Jupiter Research.
“Creative is now a made-for-iPod licensee, which really drives home
Apple’s position in the marketplace.”
Worldwide, Apple’s iPod is indeed the leader in digital music
players with 26 percent of the market. Creative trails as a distant
second with 6.6 percent. San Jose Mercury News, Aug 24, 2006
What is Apple’s patent strategy for Web 2.0?
Apple is pro-patent, for itself.
Apple has recently been issued patents in the Web 2.0 space, and has filed a number of new patent applications related to RSS and the blogging space over the past couple of years. The good news is that you can read these applications right now. They are public, like all applications. Many of the filings can be found under “Steven P. Jobs” et al:
In addition to the applications pending above, there are other applications that appear to be tied to Apple, though they are not consistently identified as such, but rather appear under the names of Apple senior engineers.
Follow this search link, or pursue the links directly below. Today when I posted these links the patent office database was having some difficulty, but I assume it will be resolved soon.