Apple 2.0

Covering the business that Steve Jobs built

Why Judge Posner pulled the plug on Apple v. Motorola

June 23, 2012: 8:19 AM ET

In a ruling sure to be widely cited, an influential jurist put his finger on the problem with Steve Jobs' threat to go "thermonuclear" on Google's Android

FORTUNE -- Toward the end of his long analysis of Judge Richard Posner's ruling Friday that dismissed -- once and for all, with prejudice -- Apple's (AAPL) claim that Motorola's Android phones "ripped off" the iPhone, FOSS Patents' Florian Mueller got to the heart of the issue:

Apple's "rip-off" claims are right. Judge Posner's decision doesn't prove that there was no "rip-off". He just cannot see that the patents that were shown to him, and the related infringement allegations and damages theories, substantiated a "rip-off" of the illegal kind. At the most he felt that Apple might have been entitled to a limited amount of money, if it had done a better job of proving economic harm.

This is a useful paragraph because it separates the legal issues at stake from the palpable sense of injustice Steve Jobs felt when he threatened to "go thermonuclear" and told his biographer: "Our lawsuit is saying, 'Google you f***ing ripped off the iPhone, wholesale ripped us off."

There is, as Mueller put it, a "protection gap" between what Jobs clearly felt -- and many people might feel -- ought to be protected by the laws governing intellectual property rights, and what our patent and copyright systems actually protect.

What Judge Posner ruling does, more clearly than any that came before it, is delineate the limitations of those laws as they apply to this case. Among his key findings:

  • Apple claimed that Motorola's Android phones "as a whole" ripped off the iPhone. But that's not against the law. As Posner wrote: "Motorola's desire to sell products that compete with the iPhone is a separate harm--and a perfectly legal one--from any harm caused by patent infringement."
  • The four patents that Apple claimed Motorola infringed were, for the most part, quite narrow and could be circumvented. The judge himself suggested workarounds for three of them. (The one that remains could be a problem for the makers of Google (GOOG) Android phones in future lawsuits.)
  • Even if Apple could prove infringement, its lawyers didn't do their economic homework. Perhaps they were too focused -- like Jobs -- on the fact of the rip off. Perhaps Apple is just too damned profitable. For whatever reason, the company never got around to telling the judge how much Motorola's alleged infringement of its patents cost it in past or future iPhone sales.
  • Finally, the judge put a stake in the heart of Motorola's claim that it has the right to block Apple from using a patent whose chief value derives from the fact that it is part of an industry standard. As Posner puts it, in words sure to be cited in future cases: "How could it be permitted to enjoin Apple from using an invention that it contends Apple must use if it wants to make a cell phone with UMTS telecommunications capability — without which it would not be a cell phone."

In other writings, Judge Posner has made it clear that he would like to see less litigation from a patent system he describes as "dysfunctional." But as FOSS Patents' Mueller points out, Posner's ruling is "100% certain" to be appealed. Moreover, without a monetary settlement to establish the cost of patent infringement -- and thus the best reason not to infringe in the first place -- there is likely to be more litigation in the future, not less.

You can read Posner's decision in full here.

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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