Posner, Apple v. Motorola, James Watt, and the Steam Engine That Couldn’t

Having brought up ‘intellectual property’ yesterday, I figured it might be a good idea to follow-up with a couple of related notes today.

First, some interesting news: Judge Richard Posner has ruled that the Apple v. Motorola patent infringement case be dismissed in its entirety. Apple had accused Motorola of violating four of its patents; Motorola had responded with a claim in return. The two have been in litigation since 2010; one shudders to think of the legal bills racked up, transaction costs that could have been spent on research and development by two innovative technology outfits.

Jon Brodkin at Ars Technica notes that

Judge Richard Posner previously canceled a jury trial in Chicago in the case, and then castigated both Apple and Motorola while calling the entire US patent system chaos….Noting that dismissals without prejudice allow suits to be refiled, Posner made it clear that this one would be dismissed with prejudice. “It would be ridiculous to dismiss a suit for failure to prove damages and allow the plaintiff [Apple] to refile the suit so that he could have a second chance to prove damages. This case is therefore dismissed with prejudice,” Posner wrote. Posner had previously ruled that proposed testimony from experts put forth by both sides would be inadmissible, making it difficult to support any claims for damages or injunctions.

And that isn’t all. In some telling commentary on the current lunacy of the world of patent litigation, Posner

[C]omplained that Apple’s attempt to get an injunction restricting the sale of Motorola phones would have “catastrophic effects” on the mobile device market and consumers. He further criticized Motorola for trying to use a standards-essential patent to get an injunction against Apple.

Second, in keeping with the ‘Twas ever thus-theme invoked yesterday, here is a little episode that should have warned us about patenting’s costs. In Against Intellectual Monopoly, Michele Boldrin and David K. Levine remind us of  the story of James Watt and the steam engine: the patents he was granted for it and his subsequent aggressive deployment of the law to crack down on possible competitors, all the while dissipating his innovative energies in litigation rather than designing better steam engines. In the end,

The evidence suggests that Watt’s efforts to use the legal system to inhibit competition set back the industrial revolution by a decade or two. The granting of the 1769 and, especially, of the 1775 patents likely delayed the mass adoption of the steam engine: innovation was stifled until his patents expired; and very few steam engines were built during the period of Watt’s legal monopoly. From the number of innovations that occurred immediately after the expiration of the patent, it appears that Watt’s competitors simply waited until then before releasing their own innovations….Watt’s inventive skills were badly allocated: we find him spending more time engaged in legal action to establish and preserve his monopoly than he did in the actual improvement and production of his engine. From a strictly economic point of view Watt did not need such a long lasting patent – it is estimated that by 1783 – seventeen years before his patent expired – his enterprise broke even; so every dollar that came after was pure gravy. (Introduction, pp. 3)

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