Testing the Application of Old Laws on New Technology - STRATFOR

Representatives for two cellphone giants, Apple Inc. and Samsung Electronics, stood before the U.S. Supreme Court on Tuesday, presenting their sides in a case of patent infringement. The original dispute is not over Samsung's infringement of a patent on a technical component of its rival's smartphone but rather its copying of distinctive design elements of the iPhone. In lower courts, Apple has prevailed on the merits of the case, and Samsung is not trying to reverse those decisions. The culmination of the four-year legal battle will be about the amount of money that the design infringement should be worth.

Under U.S. law governing design patents, Apple was awarded damages equal to the South Korean conglomerate's entire profit on its infringing smartphone. Apple contends that its patented iPhone design is the key to the benefit and utility of the device, and thus the award is justified, while Samsung argues that the internal workings of the phones (and thus the patents governing them) are more vital to determining value. With thousands of patents involved in a device such as a smartphone, determining the exact value of a single or even a handful of patents can be difficult. But the law governing the lower courts' decisions, an amendment to the U.S. Patent Act passed in reaction to a Supreme Court decision in the 1880s, states that the violation of a patent used in any article of manufacture makes the offender liable for the "extent of his total profit." Whatever decision the Supreme Court reaches in the arguments it heard today will help determine whether that remains true. Despite the back-and-forth and the attention of the high court, the dispute demonstrates the limited ability of patents to protect and promote the development of intellectual property.

What is a Geopolitical Diary?

With the rate that technology moves, the precedents used to govern the way it is developed may no longer be applicable, and the pace of regulatory change often lags behind. Existing laws may often not be applicable to new technology, and the use of outdated rules to govern a shifting technological environment can prove difficult or inadequate. Because legislation cannot always encompass every new technology, ongoing battles over patent filings have the potential to dictate the use of technology until legislation can catch up.

For instance, in the biotech sector, U.S. courts are currently deciding who will have control over the landmark gene-editing technology called CRISPR. Whoever wins — the Broad Institute at MIT, the University of California or French pharmaceutical company Cellectis, which recently entered the fray — not only can profit from owning the intellectual property but also will gain the power to exert a level of control over the use of the method until laws specifically governing its application are created. The decision will carry long-term implications for both the agricultural and health sectors.

Beyond these select cases, innovative capabilities of corporations and nations demonstrate which countries and regions are best equipped to take advantage of emerging technologies and help determine the geopolitical order in future decades. Patents are often used as a quantitative measure of a country's or company's ability to innovate. But although there are certainly merits to the use of patents as a metric, shifting technology and the behavior and beliefs of some key innovators reduce the real applicability of the protection. Detailed patent information is widely available and shows the progress or development of a technology over time. Patents don't tell the whole story, however, and as can be seen in Apple v. Samsung, the value of an individual patent is debatable.

On an international scale, patents and other intellectual property rights are only as valuable as the respect given to them by all participants. The agricultural sector has long dealt with the misappropriation of patented technologies in genetically modified crops, leading to longstanding disputes, such as one between Monsanto and soybean farmers in Argentina. Given China's history of weak enforcement of intellectual property regulations, as its technological prowess grows, the concern over respect for patents in business collaborations there remains high. There's not much use for a patent in an increasingly connected world if the world as a whole does not acknowledge it.

Some would argue that patents, which can be used to lock down technological breakthroughs, can limit cooperation, causing innovation to stagnate. A trend has developed in recent years in which developers open access to their designs to promote innovation and the further development of technology. For instance, Tesla Motors allows a number of its patents to be used in good faith without cost, Toyota Motor Corp. has opened thousands of patents on fuel cells and related technology to fee-free use, and some software development in general has moved away from patents and toward a model of open-source collaboration. By doing so, proponents argue, transparent competition and collaboration will promote development more than the current system of patent protection allows. In areas such as additive manufacturing, where software and design elements can prove to be as vital as hardware developments, the potential for lawsuits surrounding intellectual property is vast. But a movement toward open-source software projects, where computer code is available for anyone to modify or improve, has the potential to change how that industry works. The movement argues that the elimination of intellectual property barriers creates transparency and promotes rapid prototyping, increasing the speed of development. With the true value of different types of patents open for debate, this strategy could be more broadly applied in the future.

It cannot be disputed that innovation and adaptability are both key to taking advantage of emerging technologies. A comparatively flexible and responsive legislative environment provides an advantage for nations at the cutting edge of emerging technologies. As it stands, the process in the United States remains slow — the years-old dispute brought today before the Supreme Court will likely not be decided for several more months. But while disputes over who benefits over new technologies will never go away completely, the relevance of patents to enforce that value, especially ones for nonessential functions, remains up in the air.

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