Dogfight: How Apple and Google Went to War and Started a Revolution (24 page)

In the 1950s the inventor of the laser, Gordon Gould, was unfamiliar with the process of submitting a patent. Rather than immediately submitting an application, Gould had his book of ideas notarized. By the time he applied, his ideas had already been patented by another physicist, Charles Townes. Gould spent the next thirty years attempting to rend the patents away from Townes and get the legal rights to laser technology. This was so expensive that he ultimately spent 80 percent of his royalties to cover his court costs. “The slowly ticking legal clock can exhaust an inventor’s financial and emotional resources; large, rich corporations and their lawyers have thwarted many an independent inventor’s claims until he has lost the will and ability to fight,” said Nick Taylor in his book
Laser: The Inventor, the Nobel Laureate, and the Thirty-Year Patent War.

One of the most famous of all patent wars was one of the first, during the middle of the nineteenth century. Isaac Singer, the man most of us associate with inventing the sewing machine, was involved in some kind of patent litigation for twenty years. He seemingly lost as many of these lawsuits as he won. Yet because Singer had enough money to fight for the duration and was better at marketing and selling his company to the public than his competitors, he, not the many other inventors of sewing machines, is remembered.

Singer wasn’t even the first to patent a sewing machine. In fact, he was one of the last. The first patent went to inventor Elias Howe, Jr., in 1840. His machine was crude. It combined only three of the ten parts that are typically associated with sewing machines. It sewed vertically while the needle moved horizontally—not exactly practical for sewing in a straight line when you have to hold the fabric up in the air and feed it through the machine. Modern machines sew horizontally while the needle moves vertically, allowing the sewer to use a table to support the fabric.

From 1840 to 1850 inventors received at least seven more sewing machine patents, but there were few commercial successes. Only then—after watching others fail—did Singer bring his machine to market in 1850. His machine’s advantage was that it had a presser foot, which moved the fabric mechanically through the machine and could sew up to nine hundred stitches per minute. The typical seamstress at the time sewed about forty.

Singer and Howe fought viciously for the next decade. Singer’s success enraged Howe, who felt that Singer had merely improved on his ideas and not invented anything. This accusation didn’t bother Singer much. Singer was famous for saying that he was “interested in the dimes not the invention,” according to Adam Mossoff, George Mason University professor of law and intellectual property, in his paper “The Rise and Fall of the First American Patent Thicket: The Sewing Machine War of the 1850s.” When Howe came to Singer’s shop in New York City to demand royalties, Singer turned him down and threatened to kick him down the stairs. “Singer was an irascible fellow who lived a very colorful life; he was a bigamist who married under various names at least five women over his lifetime, fathered at least eighteen children out of wedlock, and had a violent temper that often terrorized his family members, business partners, and professional associates,” Mossoff wrote.

By the mid-1850s I. M. Singer & Co. was embroiled in twenty different lawsuits in the United States—defending itself in some and bringing cases against its major competitors in others. Howe actually won some of the early lawsuits, but that only emboldened Singer to fight harder. The battles stopped only after it became clear to the various sewing machine makers that they would all make exponentially more money by ending their war than by continuing it. The sewing machine had revolutionized one of the biggest markets in the world—clothing. It allowed clothes to be mass-produced and sold for a fraction of their former cost. That caused a great rise in demand for garments, which in turn caused a great rise in demand for more sewing machines.

The solution was one that many today are suggesting is Apple’s way out of the current patent thicket. The suing companies, including Singer, Howe, and two other companies, set their differences aside and created America’s first patent pool. Called the Sewing Machine Combination, the group agreed that all participants would be entitled to equal access to the technology necessary to make a basic sewing machine and then created terms for cross-licensing deals that allowed each company to specialize and continue competing with one another.

*   *   *

The similarities between Singer’s and Howe’s patent fight and the smartphone wars of today are striking. It’s tempting to distinguish today’s fights by arguing that software is so much harder to understand. But USPTO judges and juries have always struggled with understanding technologies. In 1912, Judge Learned Hand was overseeing a patent case in the biomedical industry challenging whether adrenaline could be patented. He ruled that it could be, but he also wondered why he was being asked to decide at all. “I cannot stop without calling attention to the extraordinary condition of the law which makes it possible for a man without any knowledge of even the rudiments of chemistry to pass upon such questions as these. The inordinate expense of time is the least of the resulting evils, for only a trained chemist is really capable of passing upon such facts.”

What
is
different with software patents today is that despite thirty years of trying, the legal precedents governing what makes a good or a bad patent remain in dispute. In the early days of the computer industry the answer to this question was easy: software
wasn’t
patentable. It wasn’t viewed as a product separate from the computer itself. Courts didn’t think software did much anyway beyond telling a machine to do mathematical calculations faster. Math, being a part of nature, was unpatentable.

But by 1981, with the PC gaining traction in businesses and an entire industry of software entrepreneurs emerging, the U.S. Supreme Court changed that in
Diamond v. Diehr
. It said that a computer program used to calculate how long a machine would heat and cure rubber
was
patentable. The software was more than just a series of mathematical equations, the court ruled. It was a unique process for determining the best way to mold rubber. The patent on molding rubber without software had long expired. But the addition of software had created a new, unique, and patentable way of doing it.

This decision became critical to Silicon Valley entrepreneurs in the 1990s. Up until then the legal convention had been to protect software under copyright law, given courts’ previous resistance to permitting software patents. Writing software is creative just as writing books or music is, so it should be protected the same way, attorneys thought. With the English language, letters are used to form words and express ideas. With the language of music, notes are used to tell musicians what sounds to play with their instruments. With computer language, software code is written to tell machines what to do.

But in 1987 Quattro, a spreadsheet software program from Borland, pushed the limits of copyright law in software and successfully rendered it useless. Back then there were many spreadsheet programs for the PC, with Lotus 1-2-3 being the most dominant and successful. Quattro, in an effort to make its product easier to use, copied the words and menu hierarchy of Lotus. It didn’t want customers to be confused switching back and forth between Lotus and Quattro. It didn’t use any of Lotus’s underlying code, it just provided users with a “Lotus Emulation Interface,” which allowed them to switch between the Quattro look and the Lotus look.

Lotus sued, saying its menu system was protected under copyright law. But, to the surprise of all Silicon Valley, it lost. “In many ways, the Lotus menu command hierarchy is like the buttons used to control, say, a video cassette recorder (‘VCR’),” said Judge Norman Stahl of the First Federal Circuit Court of Appeals in New Hampshire in 1995. “A VCR is a machine that enables one to watch and record video tapes. Users operate VCRs by pressing a series of buttons that are typically labeled ‘Record, Play, Reverse, Fast Forward, Pause, Stop/Eject.’ That the buttons are arranged and labeled does not make them a ‘literary work,’ nor does it make them an ‘expression’ of the abstract ‘method of operating’ a VCR via a set of labeled buttons. Instead, the buttons are themselves the ‘method of operating’ the VCR.”

The repercussions were huge. Apple’s lawsuits against Microsoft, which continued into the 1990s—long after Jobs had left the company—would run afoul of this ruling, for example. Left with no other tool to protect entrepreneurs’ creations, attorneys turned to the
Diamond v. Diehr
case and started using patents for protection instead.

Using patents to protect software has proven only slightly more effective than using copyright, however. One big problem is simply technological: The patent office database is searchable, but the search is not sophisticated like Google’s, for example. Google’s search engine not only finds items you are looking for, but similar items it
thinks
you are looking for based on your search history. That means that when the patent office tries to find previously issued patents on an idea, it often misses relevant filings.

Two years before Apple even started working on the iPhone—in 2003—a company called Neonode received a patent for activating their handheld device by swiping a finger across the screen. Apple later received a patent for exactly the same thing, known to many as the “slide to unlock” feature on the iPhone and the iPad. The patent office didn’t know it had already issued this patent because Apple and Neonode described the same behavior slightly differently. Neonode’s patent called the process “gliding the object along the touch sensitive area from left to right” instead of “slide to unlock.” Though the Apple patent has been challenged in Europe, it is still valid in the United States. And Apple maintains that its and Neonode’s patents describe different things. “Apple’s lawyers claim that continuously moving the finger isn’t specified in other prior art,” said Boston University economist James Bessen at a Santa Clara conference on patent reform. “We’re into a world of magic words, of word games. Courts and patent drafters play word games.”

Mark Lemley, director of Stanford University’s program in law, science, and technology, whom many consider to be the leading guru of reforming software patent law, says that the problem is more the patent office’s fault: the office hasn’t stopped thinking about software the way it was originally conceived—as a set of processes run by a computer. No one else thinks of software that way anymore, he said. People categorize software innovation by the solution it provides to some problem. At issue is not whether the code itself or the process it runs is unique but whether the software taken as a whole does something unique.

“We let people get away with claiming the invention in terms of the problem they solved, not the solution they provided. We don’t allow that in anything else,” he said. “We don’t allow people to claim a configuration of atoms to cure cancer. Your solution is a particular chemical.”

9

Remember Convergence? It’s Happening

Within a year of the iPad’s release it seemed remarkable that Jobs had spent a moment worrying about Android’s rise in 2009 and 2010—or at all. Android continued its astonishing growth, but iPhone sales accelerated just as fast. Quarterly sales of the iPhone 4, unveiled in 2010, doubled those of the iPhone 3GS. Sales of the iPhone 4S, unveiled in 2011, doubled those of the iPhone 4. By the fall of 2011, Apple was selling nearly 40 million iPhones a quarter. Google was doing well. It said Android was profitable. But it was still hard to see Android’s financial impact on the company. Meanwhile at Apple, the iPhone and the app store were propelling the company to record profits. In 2011 Apple made $33 billion, as much as Google and Microsoft combined. In 2010 it had passed Microsoft to become the biggest technology company in stock market valuation. In 2011 it had passed Exxon to become the biggest company, period, in stock market valuation. By the end of 2011 it was sitting on so much cash—$100 billion—that if it had wanted to use that money to become a bank, it would have ranked among the top ten in the world.

Most notably, by the middle of 2011, the iPad was proving to be a more revolutionary product than even the iPhone—and certainly the iPod. The iPod and iTunes changed the way people bought and listened to music. The iPhone changed what people could expect from their cell phones. But the iPad was turning
five
industries upside down. It was changing the way consumers bought and read books, newspapers, and magazines.
And
it was changing the way they watched movies and television. Revenues from these businesses totaled about $250 billion, or about 2 percent of the GDP.

The iPad wouldn’t have been possible without the iPhone. It would have been too expensive to build and sell for $600 in 2007. The required low-power ARM chips weren’t fast enough to run something with a screen that big. And without all the content in the app store, consumers would not have known what to do with it. At least that’s what Apple thought. But by 2011, with the app store in place and the learning curve for using Apple’s touchscreen eliminated, the iPad was spawning seemingly endless new ways to consume and interact with content.

On top of all that, the iPad was also upending the personal computer business. It was eating into PC sales the same way that in the 1980s PCs ate into sales of minicomputers and mainframes from such companies as Digital Equipment and IBM. Some iPad buyers did indeed make the iPad their third device, as Jobs had predicted. But many others decided they now needed only two, and they started ditching their Microsoft-run Dell, HP, Toshiba, Acer, and Lenovo laptops at an accelerating clip. The shift hit Dell so hard that by the beginning of 2013 it was trying to take itself private to retrench.

Jobs was particularly satisfied with this development, a confidant said—even though in the context of the other upheavals the iPad was unleashing it was almost a footnote. Thirty-five years after starting Apple with Steve Wozniak, Jobs was finally doing what he had set out to do all along: he was transforming what consumers and businesses expected from their computers. The Macintosh in 1984—the first mainstream machine to use a mouse—was supposed to have been the machine that did this. It was supposed to have taken a complicated device—the PC—and made it a consumer product that anyone could use. That failed. As everyone knows, Macs didn’t go away, but Microsoft Windows and Office get the credit for making the PC mainstream.