Distribution, Competition, and Antitrust / Intellectual Property (IP) Law

Is the Apple-Samsung Verdict Anti-Consumer?

I’ve shied away from writing about the Apple-Samsung patent verdict, in part because I don’t know the details of the patents involved or the evidence that went to the jury.  And so I offer no opinions on the specific patents.

However, this recent post by Randy Picker entitled “Apple v. Samsung: What Are Patents Good For?” and found on the University of Chicago Law School’s faculty blog seems spot on.  Randy makes the point that patents are inherently exclusionary.  They confer a negative monopoly — the right to exclude others.  As Randy writes, “[t]he only way to use a patent is to enforce it against someone else or to at least be able to threaten to do so, so that they will license rights from you.”

Randy goes on to talk about three “flavors” of the “we have too many patents” argument that has surfaced recently.  First is the “patent thicket” problem — many small patents are granted and an actual innovative product in the area needs access to all of them, but the issues only become apparent after the product has proven itself in the market and is subject to hold-up.  But this problem doesn’t really apply to Apple/Samsung.

Second is the argument that patents are supposed to induce R&D, but if relevant innovation would occur anyway, the patent isn’t really inducing anything meaningful.  And the third argument is closely related — that an invention’s reward is sufficiently large that society doesn’t need to reward its inventor with a new property right.  As Randy points out, we could try to run the patent system to take these notions into account, but we don’t, and so they really aren’t relevant to the Apple/Samsung verdict.

(My own view is that it’s much easier to talk about trying to take such notions into account than to actually do so.  How would the PTO or a court determine, for example, that a firm would have innovated anyway even if a patent were not issued?)

Randy concludes that Apple is a “hardcore” vertically integrated firm, producing and enforcing its IP rights against another very successful producing firm.  “We can undertake to revamp the patent system, and that could be within-patent reforms about the balance of utility patents and design patents or larger scale reforms that focus on the incremental incentives question, but given the system we have today, it isn’t at all surprising that an innovative firm like Apple holds patents that, by design, make it possible for Apple to block sales by competitors to eager customers. That is, after all, the point of the patent system in the first place.”

This general conclusion strikes me as entirely correct.

P.S. — for more about patent and R&D incentives in the context of patent tying and price discrimination, see my prior posts here and here.  My concluding thoughts on this issue are here.

Enhanced by Zemanta

Related posts:

Leave a Reply

Optimization WordPress Plugins & Solutions by W3 EDGE
%d bloggers like this: