This weekend, the New York Times ran an article on patents in the new economy. There are some interesting bits in there, but it probably isn’t anything new to those already following the patent space. One quote in the article really got me thinking though:
In the smartphone industry alone, according to a Stanford University analysis, as much as $20 billion was spent on patent litigation and patent purchases in the last two years — an amount equal to eight Mars rover missions. Last year, for the first time, spending by Apple and Google on patent lawsuits and unusually big-dollar patent purchases exceeded spending on research and development of new products, according to public filings.
Is this really so surprising? Aren’t Apple, Google, and the rest of the players bypassing some R&D costs when they purchase these huge patent portfolios? I would love someone ask in an interview with Mark Zuckerberg or Tim Cook whether the companies attempt to apply/implement any of the patented technologies protected by the patents they acquire. That is, do engineers at the acquiring companies consider the patented technologies that have been acquired when designing new products, or are the patents simply added to the war chest for use in licensing and litigation.
Also, the article fails to mention that because a patent has a 20 year life from its earliest filing date, the benefits of ownership of patent extend much further than the year in which the patent was acquired, thus it may not be fair to simply compare patent acquisition and litigation costs to R&D budgets. Further, the cost of patent acquisition and litigation should probably be set off from the benefits acquired, such as freedom to operate, damages and licensing fees.