Patent wars – Are patent trolls Aiming at Google Wallet and NFC?

Patent Wars – Are Patent Trolls Aiming at Google Wallet and NFC?

NFC may be at risk from tech giant battles and patent trolls and in this article we will highlight one potential. In most of the world, an individual or organization has the unequivocal right to register and protect their intellectual property. It’s how it should be and for a long time the system worked great. That was until the titans of the tech world decided to go mano-y-mano over the last few years. That was until patent trolling companies started buying patents just to sue for licensing fees and have since attempted to turn these tactics into a respectable form of doing business where they advertise for investors to pay legal fees for claims. Everyday we hear that companies who have developed unique and novel products and services are being targeted and accused of falling fowl of patents and are being pushed to extinction. In an economy that is looking ready to slide back into recession, we ask can this be allowed to continue unchecked, or is it time the system and laws were overhauled?

Verizon Calls for a Presidential Intervention on Mobile Cases

Verizon Communications’ Chief Counsel, Randal Milch, thinks it’s getting out of hand and it has the potential to to cripple the mobile industry. BGR reported that Milch recently circulated a chart showing all of the devices that were facing being banned from U.S. import due to patent wars in the United States where claimants are seeking injunctions. A couple of the devices that have been accused of breaking patents include the Apple iPhone and several Android tablets. The Wall Street Journal reported on Wednesday that Milch wants President Obama to overturn any ruling that would block importation of devices found to infringe on patents. The Verizon view is that vendors found to have infringed patents should be forced to pay licensing fees instead of having devices ripped from the market. Well, that would sure help Verizon maintain a steady stream of available devices, but at the same time push up production and end user distribution costs and this effort only treats the symptoms of what is happening out there with patents in the tech world, and does not treat the root cause. This problem isn’t limited to the United States. In fact, just this week Samsung was found to be infringingone iPhone patent by a Dutch court and had to remove one of its phones from the market. Samsung said it would update the product quickly and be back in the market, but the cost to the company represents lost revenue. Google just this last week bought Motorola Mobility and cited one of its main reasons for doing so as being the acquisition of the patent war chest owned by Moto. We are not lawyers and nor do we claim to fully appreciate the complexities that are involved in a case like this, but it seems to us that if companies are simply forced to pay licensing fees this just encourages patent trolls further, which everyday is becoming more and more of a problem to legitimate businesses. For NFC to succeed, it requires a push from many manufacturers over many industries to form a ubiquitous offering that everyone has access to and is accepted and used everywhere. This is especially true in the NFC payments market which has a complex ecosystem with many partners required to ensure the technology is usable by consumers. Now sadly patent trolls are eying related NFC products and services also. We may have even found trouble on the horizon for big G’s NFC Google wallet and Google offers products.

UPDATE

We have included the image that Reuters published showing who is suing who for patent infringements. Green dots represent Android OS devices.

END UPDATE

Patent trolls smell blood in the water for NFC and related services

We have reported on many research studies that predict that NFC payments and related services like loyalty programs will take off and that there are billions of dollars to be made globally. Every week, new projections are released and small companies and major corporations are investing in NFC innovative concepts, services and products for the coming NFC boom. However, many of these innovative NFC products and services are under a clear and present threat of potential attacks if they start to succeed in whatever venture they attain a modicum of success in. We were stunned the other day when we came across the press release (that we have included at the bottom of this post) where one company is actually boasting about the potential of just how many companies they can get licensing money from with a patent they own that relates to NFC and loyalty programs. Furthermore, they are advertising for investors to, as they put it, “exploit market opportunities.” The company in question is called Schimatic Inc. and they are doing business as Smart Chip Technologies (SCTN) LLC, based out of Las Vegas. The patent in their ownership is US patent 5,806,045 which is described as ”a method and system for allocating and redeeming incentive credits on an integrated microcircuit chip platform.” They term themselves as a patent licensing company engaged in the research, development, and integration of proprietary processes incorporating smart software technologies for the electronic payment industry. And they even have a tag line that is ”Licensing loyalty for rewarding solutions.” This company is not the problem, it is merely a symptom of what has gone wrong. There are hundreds, if not thousands, of companies just like SCTN that are in the same business and there are also legitimate IP lawyers that are not patent warehousing and actively looking for  companies which might just border on an infraction of a patent they have in their portfolio. If President Obama simply allows import bans to be waved and licensing agreements to be made, it will explode the amount of companies out there just like SCTN. We don’t feel we have the technical expertise to suggest a solution and we will leave that to more qualified individuals to ascertain. However, it is clear that when the global economy is standing at the precipice of another recession, thousands are losing their jobs and their homes – no one needs what these companies are doing with the patent system. It also becomes clear that the laws in place do not protect individuals or organizations with true innovations, who have real products in the market and not just a concept that made its way through the patent office. We feel confident that the tech giants need a better way to protect and come to agreements on their novel and unique technologies. This mess is costing jobs, losing people their homes and is playing its part in crippling the economy. We don’t want to see NFC struggle to be adopted and the same applies to further innovations because of this problem in legal systems around the world, but neither do we want a free for all where no one is protected from anyone taking ideas, concepts, business models or products and solutions. A net result is that prices go up for the end consumer. Tech giants use these patent cases as a tactic to make their competitors raise prices and to score a nice licensing fee. Patent trolls just use it to get rich with little to no actual experience in the patents they are claiming as their own. NFC patents could be the next growth area for patents and this would slow down adoption and raise prices. Something needs to change. Whereas we don’t see eye-to-eye on Verizon’s vision of what needs to change, at least they are recognizing the problem and attempting to tackle the subject. The only way things will change is if the subject becomes politically charged, so perhaps asking President Obama is the best way to begin to sort this out. However, something tells us he has his plate full at the moment with more pressing issues. It is in most peoples interests to see the patent wars come to an end and it’s in the interest of NFC if patents like the one below are never used as a weapon.