Apple Patents Touchscreen Technology

Apple has been awarded the patent for capacitive touchscreens in the US after first applying for the right back in 2007. There are two different types of touchscreen technology: capacitive and resistive, with the former first used by Apple in the first iPhone, which has now become the industry standard with other manufacturers. The scope of the decision means that Apple could ask for royalties from anyone using the technology or ask that their products be withdrawn from the US market for intellectual property rights (IPR) infringement. The decision also follows acceleration in cases and suits related to patents in recent weeks as IPR becomes a key strategic tool in the competition between vendors.

Outlook and Implications

• Apple Could License Touchscreen Technology: As the rights holder, Apple could ask all vendors using capacitive touchscreen technology to become one of its licensees and pay it royalties for the right to use the technology. As the majority of smartphones sold in the US use the technology and includes players such as Research In Motion (RIM), Samsung, HTC and Nokia to name the most significant in terms of the bulk of non-iPhone smartphone sales in the US, this would mean a rather hefty sum would have to be paid to Apple. If operators refuse, Apple could take them to court and ask for compensation, as well as the withdrawal of any infringing products from the market. However, the legal system may decide to rule against Apple because of similarities, meaning that the guilty product must match the patent in its entirety and not just a part of it. As such, Apple may decide to settle out of court through settlements with different companies involved in manufacturing capacitive touchscreen technology.

• Spate of Patent Issues: This victory for Apple follows a spate of patent-related cases in recent weeks, with Nortel ready to sell its own intellectual property, Apple and Nokia settling their dispute, Apple and Samsung still embroiled in theirs, Microsoft fined USD290 million for infringement, Oracle suing Google for infringing Java and asking for a 10-figure compensation package, Dolby suing RIM, and with a decision expected on 24 June 2011 on the case brought by Kodak against both Apple and RIM on an image preview patent (see table below). The sums involved are quite large, with the sale of Nortel’s 6,000 patents, for which Apple has just received the go-ahead, expected to top the billion-dollar mark; Apple spending over USD5.7 billion for the right to use Samsung's semi-conductors; and Nokia recognising that the one-off payment and future royalties paid by Apple as part of their settlement will have a positive impact on its next quarterly results.

• IPR: IPR is quickly becoming a key issue in the telecoms space, not only because of the multi-billion sums involved, but because of the way the industry has moved forward recently. It is now virtually impossible for any manufacturer to build a new device using only its proprietary rights as devices have become more sophisticated and involve a myriad of components from different rights holders. As such, companies are attempting to secure these rights for themselves, as Apple has done in this case, in order to gain a competitive advantage over rivals through the use of royalties. However, these types of patents could stifle innovation as they favour the big players over smaller companies, which in many cases would not have the financial and legal know-how to use the patent for their own products. Finally, patenting is not only an issue within the smartphone segment, but also for infrastructure. The move to 4G has seen the entry of new actors, such as Samsung, LG, Huawei and ZTE, which have challenged the traditional leaders in Qualcomm, Nokia and Ericsson—the Swedish vendor recently stated that it owns one-quarter of essential patents in the LTE space, while the Chinese vendors have claimed they each own 7% and 8% of these rights respectively.

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