By Adam Mossoff via The Daily Signal | December 19, 2024
When President-elect Donald Trump announced his intent to nominate Abigail “Gail” Slater to lead the Department of Justice’s Antitrust Division last week, he expressed a return to his first administration’s policy of supporting innovation and rejecting support for predatory patent infringement by Big Tech companies.
In his statement in support of Slater’s nomination, Trump recognized that, “Big Tech has run wild for years, stifling competition in our most innovative sector,” and that it has trampled on “the rights of … Little Tech!”
As I have written about many times, Big Tech companies now regularly engage in predatory infringement of patents owned by individual inventors, startups, and universities—exemplars of Little Tech. Little Tech are key drivers of economic growth, new jobs, and flourishing living standards.
Perhaps no company is a better (or worse?) example of a predatory infringer than Apple. Apple was called out by a British judge in 2022 for engaging in practices that qualify as “hold out,” a business strategy of infringing patents and refusing to pay for the use of someone else’s property in a negotiated contract—called a “license” in patent law—and forcing the patent owner through years of court litigation to just pay what a judge orders it to pay.
Just ask Masimo, an American medical tech company that has been a victim of Apple’s predatory infringement policy for many years with no end in sight. Joe Kiani, the founder of Masimo, which has been in litigation with Apple for many years following Apple’s theft of Masimo’s technologies in the Apple Watch succinctly stated the point: “When Apple takes an interest in a company, it’s the kiss of death.… [Y]ou realize that the long-term plan is to…take it all.”
Other victims of Apple’s predatory infringement policy are owners of patents on the technologies used in our mobile devices, such as 5G and WiFi.
In the first Trump administration, the DOJ issued a policy statement in 2019 that explicitly rejected the abuse of the antitrust laws by the Obama administration in supporting Big Tech companies’ theft of these patents (called “standard essential patents” in patent law parlance).
Just as Big Tech companies like Apple and Google were a lobbying force behind the use of antitrust laws to attack patent owners in the Barack Obama years, Apple opposed the Trump administration’s 2019 policy statement. Apple also filed comments supporting the Biden-Harris administration’s proposed new policy reversing course on Trump’s 2019 policy statement.
There is no question that Apple has engaged in a yearslong campaign to devalue patents like those on 4G and 5G, crippling American innovators’ ability to invest, develop, and then deploy in the global innovation economy new technologies like 5G and 6G.
In the 13 years since the loss of Steve Jobs, Apple has made it clear that its policy is to take a wait-and-see approach and pay only when ordered by a court. In one of the patent infringement trials against Apple, an internal company document stated its policy is to only “license as adjudicated”—this is patent-law talk for paying for the use of another’s patented technologies only when directed to do so by a court order after years of fighting through appeals all the way to the Supreme Court sometimes. This works well for Apple, but it is terrible for inventors. Apple has deep pockets and Little Tech finds itself accepting below-market payments instead of trying to fight Apple in years-long court battles.
Since it has a longstanding practice, if not an explicit policy, of predatory infringement, Apple applies this strategy to all patented innovations that it uses in its devices from iPods to iPhones. For example, PanOptis is a company that owns patents covering 4G cellular technologies. It has become embroiled in a multi-year global legal battle with Apple over the unauthorized use of its patents. PanOptis only seeks to be paid properly for the use of its technologies.
After years of drawn-out negotiations for a license, PanOptis finally felt compelled to sue Apple in many jurisdictions to seek its legitimate compensation for the use of its patented technology. Apple is using these fundamental technologies to facilitate mobile connectivity of its iPhone and other cellular-enabled devices. Apple’s infringement of PanOptis’ patents is not really in question—they have been using these inventions since the beginning of the iPhone.
Over the past 15 years, courts around the world have been actively dealing with litigation arising from Apple’s and other companies’ uses of these patents on these foundational telecommunications technologies. Given the evisceration of U.S. patent rights in the years of the Obama and Biden-Harris administrations, prompting a significant patent reform movement, other countries are now leading the way in addressing the problem of predatory infringement. The United Kingdom has become one of the leading jurisdictions in resolving these worldwide disputes. At least two major U.K. court decisions have recognized the problem of predatory infringement and required payment of proper damages (royalties) by the infringing company: Unwired Planet v. Huawei and InterDigital v. Lenovo.
As an aside, InterDigital is an American innovator in mobile telecommunications—it is a pure research and development company that makes all its revenues from licensing its patents. InterDigital is very successful now, but compared toLenovo, it is still the equivalent of Little Tech in a legal fight that has three times its market capitalization. The fact that InterDigital pursued its legal claims for compensation against Lenovo in the U.K., instead of in the U.S., is further confirmation of President-elect Trump’s observation that Big Tech companies have for too long trampled on “the rights of … Little Tech” through lobbying and years-long litigation tactics in their predatory infringement strategies in the U.S.
The PanOptis v. Apple case is currently pending on appeal in the U.K. with a decision expected in 2025. Innovators in the U.S. and around the world are watching it closely. The question on appeal is what damages should be awarded for Apple’s use of PanOptis’ patented cellular technologies in its mobile devices like its iPhone. If the U.K. appeals court applies the proper legal rules set forth in prior decisions in Unwired Planet and InterDigital, it will overrule the trial court’s decision favoring Apple. PanOptis should win on appeal—as a matter of law and justice—and Apple should be held to account for billions of dollars in royalties that it owes to PanOptis.
While PanOptis may not recover this full amount, it (and many other innovators) are still owed significant royalty payments from Apple. Instead of paying for its use of others’ inventions, Apple’s policy of waiting until it’s ordered to pay by a court has paid off for Apple, but at what cost to innovation? Such a policy causes irreparable harm to the high-tech sector of the U.S. innovation economy, undermining incentives for future R&D contributions for 6G and beyond.
In a chapter titled “The Crisis of the American Patent System,” Ian Fletcher and Marc Fasteau state in their recent book, “Industrial Policy for the United States”: “[Apple has] sorely tested our intellectual property system by incenting their producers and others into assaults on the patent system that have ramifications far beyond their own products.”
The president-elect’s statement last week is encouraging to American innovators. It signals his intent to return to the historical protection of reliable and effective patent rights. It is this unique American approach to securing patents as property rights on par with any other property right that made the U.S. the land of Thomas Edison, Alexander Graham Bell, and the Wright Brothers—and the land of the personal computer revolution with patented technologies on everything from the first Apple computer to the iPhone. Jobs even bragged at the product launch of the iPhone in 2007 about the patents on his new smartphone invention.
The U.S. and its democratic allies like the U.K. should send a strong signal that the intellectual property rights of innovators and creators will be respected and protected. Meaningful protection of patent rights in the U.S., including protection of patents on foundational cellular technologies in mobile devices, will set the stage for the U.S. to serve as a leader again in the global recognition of the importance of reliable and effective patent rights.
It is heartening to read Trump signal that he understands that intellectual property rights are a key part of the American innovation engine—creating its unprecedent growth in its innovation economy and its status as a global tech leader.
Adam Mossoff is a visiting fellow in intellectual property in the Edwin Meese III Center for Legal and Judicial Studies at The Heritage Foundation.
Original article link
