Alexa, What’s “Efficient Infringement?”
Updated: Jan 13, 2020
“Alexa, who invented wireless speakers?”
“Are you sure it wasn’t Sonos, the Santa Barbara company that owns 100 patents on this technology? The New York Times has reported that Sonos invented home speakers and then partnered with Google. Isn’t this actual intelligence better than artificial intelligence?”
“No offense, it’s just we both know whose you are. It raises questions about whether you’re telling the truth.”
The Times reports that Sonos invented wireless speakers in 2005. The wireless sound system Sonos began with led to follow-on inventions and some 100 patents. Sonos teamed with Google in 2013 on a speaker product.
But the relationship soured. In 2015, the Times says, Google introduced a Sonos knockoff, followed by another, the Google Home speaker, and Amazon came out with its Echo. Sonos reverse-engineered them and discovered technology Sonos believes is patent-infringing.
Sonos asked the Big Tech firms to license its technology being used in their products. They refused. After repeated attempts at negotiation, Sonos has filed patent infringement suits against Google in federal court and at the U.S. International Trade Commission. The court will decide whether Sonos is due damages and an injunction. The USITC will determine whether to block the infringing products from entering the United States. Sonos’s litigation focuses on five of the patents, though it contends infringement of most of its patents.
What Sonos has experienced is “an increasingly common complaint in the corporate world.” Established Goliaths “[exploit] that leverage over smaller companies to steal their ideas and their customers.” This phenomenon has a name: "efficient infringement."
Here’s a definition from the Center for the Protection of Intellectual Property: “[E]fficient infringement occurs when a company deliberately chooses to infringe a patent given that it is cheaper than to license the patent.”
A bit more colorfully from IPWatchdog: “Efficient infringement is a cold-hearted business calculation whereby businesses decide it will be cheaper to steal patented technology than to license it and pay a fair royalty to the innovator.”
From Intellectual Asset Management: “[The] strategy to hold out on taking a licence, and force the patent owner to litigate.”
Sonos is but one example of an epidemic of patent infringement. The Economist cites “Boris Teksler, Apple’s former patent chief, [who] observes that ‘efficient infringement,’ where the benefits outweigh the legal costs of defending against a suit, could almost be viewed as a ‘fiduciary responsibility,’ at least for cash-rich firms that can afford to litigate without end.”
Efficient infringement has spread because, over recent decades, Congress, courts and administrative bodies have steadily weakened our patent system. The American patent system set the “gold standard” with its integration of private property rights. That foundation has serious cracks. This harms R&D companies, startups and independent inventors.
A litany of lowlights enabling efficient infringement includes: • Quasijudicial proceedings at the PTO deny constitutionally guaranteed exclusive Article III court jurisdiction over all property rights, including patents, and denial of de novo review. • Practically a categorical rule against issuing injunctions to stop continued infringement. • Easy, widespread, repeated, even concurrent challenges of patent validity. • Prior art allowed from anywhere in the world. • A narrowed threshold for what’s patentable. • Automatic 18-month publication of patent applications, whether or not a patent has issued. • The switch to first-to-file getting the patent over the former first-to-invent tenet. • And the kicker: The Supreme Court abandoning 200 years of property rights doctrine in patents, now claiming patents are merely a government-issued franchise or public right. Until this and other damage is repaired, there will continue to be many more Sonoses fighting antipatent mammoths who efficiently infringe at will.