Analyst Opinion – Watching this new battle between Apple and Palm almost looks like a remake of an old play or movie but with Apple in Microsoft’s role and Palm as Linux. Not too many years ago, Microsoft was popping up on a regular basis threatening with litigation for violations by Linux to Microsoft’s patent and copyright portfolios. No real litigation ever resulted and you had to wonder what would have happened if Microsoft had gone the litigation route. Apple is now making similar noise about Palm and its Linux platform – and we know that Apple is far more aggressive than Microsoft in legal matters.
Apple also has an impressive patent portfolio which is, in this instance, largely anchored by a recent massive 358 page mother of all patents on the iPhone. So, what can we expect to happen?
One of the advantages a patent troll has over a firm like Microsoft or Apple is that they are nearly invulnerable to a counter attack – since there is no ongoing businesses that could be challenged. Palm has a deep patent portfolio. And given that a good chunk of the folks working at Palm are ex-Apple, they may also have an inordinate amount of insight into just where Apple’s bodies are buried. This means that the traditional defense against this kind of an attack, which often amounts to mutually assured destruction, might work for Palm.
Palm should be able to use the traditional defense against an attack like this: They can go after the Apple products that likely infringe on Palm’s Treo and PDA intellectual property. If we look at the iPhone and iPod touch, there may be a number of areas that Palm could attack as infringing, assuming Palm’s intellectual property can be equally defended.
You would also have to think that, considering Palm’s executive connection back to Apple, they would have anticipated this attack and it isn’t as if Apple was candid about going after anyone they thought might infringe.
This clearly doesn’t mean Palm will win; but it does mean they should be vastly better prepared than any firm Apple has likely ever gone up against, because Palm knows Apple’s playbook and they have been in the PDA and cellphone market with a touch screen phone long before Apple was.
It is ironic that the Palm platform has its roots in the Apple Newton, which could make an interesting footnote, depending on how this all comes out – and in the light of Steve Jobs’ decision to discontinue that product when he returned to Apple.
The 358-page Mother of All Patents
Looking at this, I can almost imagine what happened. Steve Jobs, who never takes no for an answer, wanted his folks to patent the iPhone. They did this in what appears to be the mother of all patents. But this may reflect one of the problems in working with folks like Jobs: They don’t really take advice. They expect their wishes to be met. More typically, you would have a lot of patents covering what appears to be a massive amount of technology ground in this thing. Part of the reason for that is smaller patents can be defended individually and losing a small number of them would not necessarily put the entire phone at risk. But if any major part of this patent fails it could effectively take the entire patent out and while Apple can re-file, it would take years to get a new patent through the process. And by then, Palm could be sitting where Apple is today.
To give you an idea of how convoluted this is, here is an example: E-Pass recently lost against Palm, Microsoft, and HP overturned a patent that probably also applies to the iPhone. Each item in Apple’s patent, once in front of a judge, could have widely different interpretations depending on the judge, which is generally why you try to keep patents as simple as possible. The E-Pass patent was comparatively very simple and two judges clearly couldn’t agree on its interpretation.
Now I’m clearly speculating here, but this overriding legal advice, which is what I think Jobs did to create this 358-page monster, is the kind of thing that got Bill Gates into trouble when Microsoft was taken to court by the U.S. Department of Justice. He thought he was smarter than his attorneys and the result wasn’t pretty. If I’m right, there could be a huge early Christmas present for Palm (as well as others who would like to participate with similar phones). There is even a reasonable chance that people on the Palm executive staff argued with Steve over this approach and is now in a position to demonstrate why their advice should have been followed. The resulting “I TOLD YOU SO” could be legendary. We’ll have to wait for the book to find out.
Wrapping up: Palm may have reason for confidence
I’m not saying Palm will win and to even guess the result, I would need to see Apple’s complaint and Palm’s response. Neither exist today. But I can see that Palm has reason to feel confident while realizing that a lot of very confident people lose in court regularly. Still, as a possible indicator of what would have happened had Microsoft made good on their intellectual property threats, this could have implications that go beyond the phone battle.
Right now, Apple is just threatening Palm in an early FUD attempt to scare away some of the large carriers. Unfortunately for Apple, these carriers don’t scare that easy. In addition, Palm appears to have anticipated Apple’s move, so this will likely go the distance.
Apple will be Microsoft in this play, and Palm Linux. Palm appears to have improved significantly on Apple’s iPhone, much like Linux was addressing better the unmet IT needs. This is where we’ll get to see if Apple’s ability to manipulate the impressions that surround them keeps the company from appearing as the villain in this new play.
If Apple is successful, there might be a lesson Microsoft could learn from this as well.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.
The opinions expressed in this commentary are solely those of the writer.