“Funny how this works, right? Just a week or so after it’s first ever quarterly loss and an admission that it totally screwed up in the smartphone market, Nokia suddenly sues Apple for patent infringement over the iPhone.”

Quick things to note here. The loss was not due to their smart phone division (which on it’s own made a good profit) but their network division which had a big write off. Nokia still holds worldwide 50% of the market and only went down 2% YOY for the quarter. Not great, but not totally bad as you state.

“It looks like the old adage is true again: if you can’t innovate, litigate! It’s the same story all over again. A company that was a leader in the market but got complacent and lazy, suddenly finds that it lost its lead to a more innovative upstart. Since it’s so far behind, even scrambling around doesn’t help it to catch up, so it just starts suing over patents.”

Although I do believe this in general, I don’t know that in this case this is entirely true. Nokia has been the one to innovate and continues to do so. It is ignorant to suggest otherwise. Their R&D in the cellphone market has exceeded 40 Billion euros, and many of their innovations show up in other phones. Nearly every other manufacturer uses these innovations and licenses them. Nokia has not lost their lead at all, though they have decreased in market share. They are still 3-4 times the size of apple in the smart phone market. And vast majority in the dumb phone market.

“This story nicely highlights a few other points as well. We keep hearing from patent system supporters how the patent system is necessary because, without it, the market leader would always just immediately copy the upstart and “steal” their idea.”

This seems like a weird tangent, but if that is the way they present it… (I mostly agree that the patent system is broken). I just don’t see this case being a great example of it.

“Of course, Nokia has had two plus years to “steal” Apple’s idea, and where is it in the smartphone market?”

50% majority, with the groundbreaking N900 (based off an OS they have been developing since 2005) to be released in November, and Nokia is still selling 17 million smart phones a quarter. They have the 5800, N97, N900, X3, X6, and they have sold a ton of others (N95, E71 etc.) If you take the numbers, YOY, RIM gained 2%, Nokia lost 2%, Other manufacturers lost 11%, Apple gained 11%. I would say most of Apple gains have come at the expense of the other manufacturers, and not so much Nokia.

“It’s not so easy to just copy someone else’s idea — especially if you’re a huge player like Nokia, who will often view the disruptive innovator as not being worthy of paying attention to (which basically was Nokia’s reaction to the iPhone).”

This seems like a general statement with little bearing in reality of this specific situation. I highly doubt Nokia wasn’t paying attention to Apple.

“Separately, remember how confused we were when Steve Jobs proudly hyped up the fact that Apple had over 200 patents on the iPhone concept? We’ve pointed out that it’s hardly done anything to stop lawsuits.”

So what? Maybe those patents don’t hold up. And it is not like Apple has never been a litigious company.

” Apple has been sued over and over and over and over and over and over again for patent infringement. Welcome to the tragedy of the anti-commons, where it becomes impossible to do pretty much anything innovative without facing massive legal costs. Basically, if you build anything even remotely innovative these days, you’re going to get sued for patent infringement, probably multiple times.”

A definite problem with the system. But I think an equal problem is that R&D costs on the order of which Nokia has spent, which ARE innovative and are responsible for the phones we have today, should be protected especially for a company releases actual products. Although patents typically are too general or broad, companies that actually innovate and patent in the first place and release a product that uses those innovations should be protected. Why should Apple get a free ride on the innovation Nokia spent billions of dollar on and created. Especially when the rest of the market had no problem licensing these (except Qualcomm as mentioned) This is exactly the situation patents should be used. It is not like they are a patent troll with no actual product or R&D.

“It’s become a massive tax on innovation, rather than a lever for innovation.”

In terms of patent trolls yes, but I think companies that actual spend the money to research and develop these ideas, release the actual products in the market should be protected. Though pantents do have many problems, I don’t see this instance as one of those cases.

(In terms of your “disclosure” fun going on, 🙂 , I use a blackberry bold and love it)