Economics Honor Thesis: The Market Effects of Smartphone Patent War

AN EVENT STUDY OF PATENT LAWSUITS ON SMARTPHONE PLAYERS’ PERFORMANCES IN THE PUBLIC MARKET

I wrote my economics honor thesis on smartphone patent war. You can view the full paper here:

http://www.scribd.com/doc/223837349/The-Market-Effects-of-Smartphone-Patent-War

Enjoy!

Usage of Social Media

I think it’s good that it’s very interactive among students, and I really learned a lot from my peers since everyone looks at patent issues from very different perspectives.

Blog:

For me, at first it was really hard to do these blog posts, since I tend to spend a lot of time on researching interesting and informative topics, and I want to be as comprehensive and as accurate as possible.

It did get easier because towards the end of the class, I knew about what I am interested in, so the topics that I would like to cover was narrower than before. It was also because I gradually became more comfortable with the class materials and was able to absorb them, so researching on new topics was not as hard.

I think blog is a wonderful tool for students to be more proactive and curious about the class topic, and being able to explore different topics really helped a lot for learning more in depth.

YouTube video:

I personally do not like doing YouTube videos, because even after a whole semester, being a self-conscious person, I still feel a bit awkward videoing myself talking in my room. English is not my first language, and it is not for some other students in the class. I suppose having people understanding my accent in videos takes some extra efforts, so maybe people would cherry pick sometimes. This might not be the case, but I just want to throw it out there.

Comment:

Comment is great since it allows me to really take ample time to read others’ blogs and view their videos. It helps me with expanding my horizon and see how other students approach the same topics from very different angles. It also introduce me to many new topics related to patent. 

Class Reflection

Overall, this class is a great experience for me. From this class, I learned a lot about what is a patent, what can be patented, how is it composed, how to test the validity of a patent, what’s the application process, and what does it entail when a patent is infringed, and how to mitigate the risks, as well as patent trolling behaviors and the smartphone patent ecosystem.

Personally, I found this class to be useful enough that I actually switched my Economics honor thesis to a topic that’s patent related. I am currently writing my thesis on understanding the impact of patent lawsuits on smartphone manufacturers’ performances in the public market. I always assumed that plaintiffs are going after the damage rewards or licensing deals, which can definitely be true in many cases. But from the first few classes, I learned the main reasoning behind all these messy and abundant lawsuits among top smartphone players: to slow down competitors’ pace in research and development, which is very different from what I thought from the very beginning.

Also, since I did a lot of independent researches for writing the blog posts, I had a great chance to understand many terminologies and their applications, such as standard essential patents, FRAND, functional claims, patent trolling, patent licensing, etc. Having a good understanding of these buzzwords really helped me doing my research since I had to read a lot of court rulings and dockets.

The reason why I take this class is because I’m going to work for Cornerstone Research as a full-time Economic Consultant. My job is mainly using financial and economic models to quantify damages for lawsuits, so the majority of our clients are big law firms. I’m certain that many cases that I will be working on are patent related. I strongly believe that being able to have a deeper understanding about patents is crucial for me to succeed in the workplace. 

Silly Patent: The Flatulence Deodorizer

https://www.google.com/patents/US6313371?dq=US+6313371&hl=en&sa=X&ei=UNteU523DujJ8wGPtIG4DQ&ved=0CDcQ6AEwAA

Have you ever find yourself in an awkward situation that you are next to someone, close enough for the person to breathe the same air as you do, but you can't help yourself with the desire to fart? Well, now I present you a perfect solution: the flatulence deodorizer!

The name of this patent says everything: the flatulence deodorizer discloses a pad to be worn by a user for absorbing gas due to flatulence. And let me tell you, this is a serious business: it can be purchased at http://www.flat-d.com/. The company has a number of products related to this technology.

Judging from the fact that they have a website up and running, this product, which sounds extremely ridiculous to me, is actually commercializable. Maybe there are people who are willing to wear an adult diaper after all to avoid embarrassing moments.

Now let's run the test of the three criteria for patents:

1. Novel:
I won't argue this point.

2. Non-obvious:
It's probably not as obvious for someone skilled in the prior art to create an adult diaper for deodorizing.

3. Useful:
It is useful, but will people actually be willing to wear them? In my personal opinion, wearing it is more embarrassing than the embarrassment caused from farting in the public itself.

Let me know what you think.

Silly Patent: Animal Ear Protectors

http://www.google.com/patents/US4233942

This invention provides a device for protecting the ears of animals, especially long-haired dogs, from becoming soiled by the animal's food while the animal is eating. And it looks like this:

Will you ever ask yourself, "Is this a reasonable concern that I do not want to have food in my dog's ears?" I mean, maybe as a dog lover, I do sometimes if I don't want my pet get super messy. But do I honestly want the discomfort that my dog has to suffer through in order to be neat? And is this even pretty or at least presentable to the public? Not so much.

Now let's run through the test for validity of this patent.

1. Novel:

To be fair, it is novel that no existing patents is anything like this one.

2. Non-obvious:

Yes, it is non-obvious, simply because I think nobody else would ever bother to even think about     having stuff over dogs' ears.

3. Useful:

Is it useful? Maybe and maybe not. But useful does not necessarily mean commercially viable. I doubt a dog owner would want to have his dog have this on and this might just torture the dog in many ways.

Let me know what you think.

Business Methods Obviousness

For many years, the USPTO took the position that "methods of doing business" were not patentable. However, court’s 1998 decision in State Street Bank & Trust Co. v. Signature Financial Group opened the doors for patenting novel methods of doing business. The court rejected the theory that a method of doing business was excluded subject matter. The USPTO continued to require, however, that business method inventions must apply, involve, use or advance the "technological arts" in order to be patentable.

So when is a business method non-obvious? In re Bilski is a case dealing with the patentability of business method. Bernard Bilski and Rand Warsaw applied for a patent on methods for hedging risks for commodities trading via a fixed bill system.

The patent is a method to provide a fixed bill energy contract to consumers. So consumers pay a fixed price for their future energy consumption in advance of winter based on their past energy usage. This way, if any given winter is usually freezing and require more energy for heating, consumers are protected by the fixed bill. However, if any given winter is usually warm and therefore require less energy, consumers would still have to pay for the fixed bill even though in reality they consume less compared to what they paid for.

The examiner rejected the patent on the grounds that "the invention is not implemented on a specific apparatus and merely manipulates an abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts."

Examination Guidelines Regarding Obviousness

Ever since the court’s decision in KSR Int'l Co. v. Teleflex Inc., the guidelines for determining obviousness have changed. Below is a summary of the several reasons an examiner can employ to support an obviousness rejection:

(A) Combining prior art elements according to known methods to yield predictable results;

(B) Simple substitution of one known element for another to obtain predictable results;

(C) Use of known technique to improve similar devices (methods, or products) in the same way;

(D) Applying a known technique to a known device (method, or product) ready for improvement to yield predictable results;

(E) ''Obvious to try'' - choosing from a finite number of identified, predictable solutions, with a reasonable expectation of success;

(F) Known work in one field of endeavor may prompt variations of it for use in either the same field or a different one based on design incentives or other market forces if the variations would have been predictable to one of ordinary skill in the art;

(G) Some teaching, suggestion, or motivation in the prior art that would have led one of ordinary skill to modify the prior art reference or to combine prior art reference teachings to arrive at the claimed invention.

A patent applicant can challenge the examiner’s decision by arguing:

(1) One of ordinary skill in the art could not have combined the claimed elements by known methods (e.g., due to technological difficulties);

(2) The elements in combination do not merely perform the function that each element performs separately;  

(3) The results of the claimed combination were unexpected," as well as evidence relating to the secondary considerations enunciated in Graham(long-felt need, commercial success, and failure of others). 

In class, I was still confused about (E) – the “obvious to try” doctrine. Hence, I did some additional research and found out that the obvious to try doctrine was originally developed by Judge Rich in Huellmantel, Tomlinson, and O’Farrell. According to Judge Rich, "obvious to try doctrine is relevant when “a prior art suggests the possibility of a claimed invention, but expresses or infers at least some uncertainty that the invention can be made or will function as expected”. The standard to determine whether this doctrine should be employed or not is based on “whether there is a reasonable expectation of success”.

Does any of these doctrines surprise you or confuse you? Why?