Europe Bans PS3 Imports, But Who Wins in Patent Wars?

playstation-3

Somewhere stacked among the grand avenues of shipping containers that line the sprawling Dutch port of Rotterdam is a huge shipment of brand new Sony PlayStation 3s. It arrived late last month, ready to get sent out to stores across Europe and, from there, into the hands of eager gamers. But unlike the millions of machines sold around the continent over the past five years, this batch isn’t going anywhere soon.

Customs officers in the Netherlands have seized the shipment — said to add up to thousands of units — as part of an ongoing patent dispute between Sony and LG.

Why? Because, essentially, the two companies are accusing each other — in almost every jurisdiction possible — of infringing each others’ intellectual property. LG says Sony is using its technology for Blu-ray playback, and recently won an injunction to prevent the PS3s entering the European market. Sony has countered by launching its own lawsuit, accusing LG of using Sony technology in its mobile handsets.

However the case turns out, the short-term impact of this ban could be serious. Right now, most retailers still have a week or two of PS3 units in stores. If the ban lasts beyond that, however, stock could start to run low. That’s got to hurt.

But this isn’t just about a conflict between one Japanese electronics giant and a Korean rival. Even though it’s one of the most extreme cases of patent warfare we’ve seen, it’s also indicative of the increasingly destructive influence of the tit-for-tat patent battles that take place across the technology industry.

Just look at a few of the two-way duels taking place between the largest players around the world: Apple and Nokia; Microsoft and HTC; Motorola and Apple; Oracle and Google.

Who really wins from all this?

Certainly not users. At best, consumers are the innocent bystanders in these fights; at worst, they are held hostage with threats to starve them of their gadgets.

This isn’t to say companies don’t have a case, of course. As the legal system stands, these companies have legitimate grievances against each other — and working out who’s right is exactly why they go to court. The rights and wrongs of IP disputes are notoriously hard to navigate at the best of times, and the amount of money and investment that goes into a technology can be very precious to the business that owns it. But Sony and LG have made it obvious that in the horse-trading over who owns what, the last people on the minds of the corporate lawyers are ordinary buyers.

The truth is that at any point, most large technology companies have a range of lawsuits-in-waiting. With hundreds or thousands of patents in their files — patents that often cover similar territory to their rivals — it seems as if it’s almost impossible not to infringe somewhere along the line. And so they trade lawsuits, fire attacks at each other and eventually argue a settlement.

The trouble is, the system doesn’t speed this process up, and, especially in the increasingly internationalized market, it can have important ramifications. LG’s main case against Sony is in the U.S., for example, but it has ended up being European consumers who are taking the hit. It is as if we’re heading towards some corporate equivalent to mutually assured destruction — each multinational company sitting with its finger hovering over a huge red button that, once pressed, mobilizes an army of lawyers and launches a salvo of patent missiles at the target. They shoot back, if there’s enough firepower. Somebody wins.

How do you fix it?

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