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When It Comes to Patents, It's a MAD, MAD World

The recently signed patent law fixes only one aspect of a very broken system that's costing billions of dollars.

Pop quiz time.

President Obama recently signed into law one of the few truly bipartisan measures with any meaning that Congress has passed under his administration. It dealt with:

a.) Jobs

b.) Wars in Afghanistan and Iraq

c.) Patents

Go to the head of the class if you guessed patents. If there is one thing Obama and both political parties in Congress could agree on, it's that the patent system is messed up.

The mess is like a hidden tax that hits each one of us every time we buy a gadget, whether it be a smartphone, tablet, PC or video-game console. The leading innovative companies that design and make these things are spending billions—billions—of dollars in an essentially meaningless and often absurd worldwide patent war.

Unfortunately, the America Invents Act addresses none of that.

Meanwhile, “patent trolls” buy patent portfolios from financially troubled companies, then use those patents as an excuse to file suit against those same leading innovative companies—names like Apple, Sony, Toshiba, Dell, LG, Intel, HTC, Texas Instruments, Acer and Motorola—not in hopes of winning, but in hopes of being so nettlesome that the big companies will pay a settlement to make them go away.

A recent study concluded that these trolls, who typically have no intent to actually use the patents they buy, have cost the U.S. economy a half-trillion dollars over the last two decades.

Unfortunately, the America Invents Act addresses none of that, either.

And U.S. patent examiners often don't have a clue about the high-tech inventions for which they grant patents. Indeed, sometimes it appears they just plain don't have a clue—witness the recently approved patent “for facilitating a construction of a snow man/woman.”

Nope, the America Invents Act doesn't address that, either.

What it does address is the huge backlog of nearly 700,000 applications in the U.S. Patent Office that haven't been touched. It takes three years before examiners even begin to review an application. The U.S. patent director says the legislation, which increases fees and ensures they stay with the Patent Office, will allow hiring of an additional 1,500 examiners to attack the backlog.

It also makes it easier to sort things out, as examiners now will only have to concern themselves with whether the patent application is the first effort to patent an invention, rather than whether the applicant is the first to create the invention. If other applicants step forward within nine months to assert they are the original inventors, the patent can be changed.

But back to the patent war. One recent analysis put the number of patent lawsuits filed last month at roughly 15 every business day.

You want absurd?

Apple is suing several Android mobile-device makers over patent infringement, but one of the biggest fights right now is between Apple and Samsung over Samsung's Android-powered Galaxy tablets, which Apple maintains “slavishly copy” its iPhone and iPad. There are 19 lawsuits and countersuits between the two companies, in 12 courts in nine countries: the United States, Germany, Australia, the United Kingdom, France, Italy, the Netherlands, Japan and South Korea.

Apple has succeeded in temporarily stopping sale of Samsung's tablets in Germany and Australia. Samsung is pursuing a ban on the sale of iPhones in South Korea and the Netherlands, but until recently had pulled its counterpunches.

Why? Because Samsung, the world's No. 1 supplier of LCD screens and memory chips, supplies some of the key components used in—you guessed it —iPhones and iPads.

Casio recently signed a licensing agreement with Microsoft for rights to use—wait for it—Linux, the open-source operating system developed as an alternative to Unix and used on computer servers worldwide.

Microsoft had nothing to do with the creation of Linux, but contends the OS violates several of its patents. Casio and dozens of other product manufacturers who put some variation of Linux on their devices have paid Microsoft rather than take on the expense of going to court against the software giant.

But Microsoft hasn't stopped there. It has muscled patent licensing agreements with HTC, Acer and Viewsonic for their use of Android, the open-source mobile-device operating system developed by Google. Two companies that haven't agreed to pay up, Motorola Mobility and Barnes & Noble (which makes Nook e-reader/tablets that use Android), are now in court.

Google recently agreed to buy Motorola for $12.5 billion in a deal widely viewed as mostly about Motorola's 17,000-strong patent portfolio, which Google wanted to use in its defense of Android against the Apple onslaught. Rather than sully its own hands, though, one of the first things Google did was assign rights for five of the Motorola patents to HTC, so it could countersue Apple, which it promptly did, in a move widely viewed as a proxy fight over Android.

Tech companies the world over are rushing to purchase or otherwise bolster their patent portfolios, not to use the inventions themselves, but as missiles to defend against patent Armageddon. Like the nuclear arms race of the last century, the companies seek to defend themselves through MAD, mutually assured destruction. You want to make it impossible for me to do business? I can do the same to you.

In the realm of patents, it's a MAD, MAD, MAD, MAD world.

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