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Apple v. Google Case May End Patent Gold Rush

Stocks in this article: AAPLGOOGMOT

CHICAGO ( TheStreet) -- Since the Supreme Court refused to narrow patents on software and business methods two years ago, there has been a patent market boom.

Just last month, Microsoft (MSFT) spent $1 billion on AOL (AOL) patents. This followed Google's (GOOG) $12.5 billion purchase of Motorola Mobility, allegedly for its patents, and the $4.5 billion purchase of Nortel patents by a consortium of big tech outfits.

Analysts are now treating patents the way they do cows or acreage, offering per-patent estimates on bulk lots and looking forward to future sales of patent portfolios by the likes of Yahoo (YHOO) and Kodak.

If the gold rush ends, however, credit Richard Posner.

Posner, an esteemed conservative theorist is now a senior judge on the U.S. Court of Appeals in Chicago, and is currently sitting in as a trial judge.

But this is no ordinary patent trial. It's Apple (AAPL) v. Motorola. The unit of Motorola being sued is the one Google is buying.

Reporters are covering this one like it's a sports story. Among all the Android patent trials now going on around the world, this one may indeed be the Super Bowl. Apple alone has 30 lawyers on the case, charging Motorola with violating six key patents, while Motorola charges Apple with violating three of its own.

So far Posner has been going through motions. Most reporters will ignore the story until the trial, which is not expected to start until June. That would be a mistake, because the decisions a patent judge makes before trial, concerning what the trial will actually cover, can tell a lot about what the final result may be.

Posner has made many rulings already, but some trends now seem clear to me:

  • He takes no nonsense. Posner has ruled Apple's claim constructions "superior," those of Motorola "ridiculous."
  • You take risks when you bring broad patents to court. Posner has ruled one of Apple's patents invalid due to a lack of specificity.
  • Discovery is going to be expensive. Posner has told Google to hand Apple data covering its development of Android.
  • Only patents that are on point are going to be covered. Posner has identified one patent on "touchscreen heuristics" (Steve Jobs is listed as one of the inventors) as the centerpiece of the case.

The touch screen heuristics patent is Apple's ace. It would be very difficult for Android to invent its way around a basic patent on how one interacts with a touch screen.

Other courts may be taking note. A patent company called Eolas has had its broad patent claims concerning the Web invalidated in a Texas court. The case is Eolas Technologies Inc., v. Adobe Systems Inc. That same court, usually seen as especially friendly to patent holders, has also let Apple intervene in a case against another patent holder, Lodsys, filed against its developers.

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