Samsung and Google vs Apple: the war heats up

In the ongoing patent battle between the Android suppliers and Apple:

Apple has been granted a preliminary injunction banning sales of the Samsung Galaxy Nexus smartphone in the United States… just two days after a similar injunction banning sales of Samsung’s Galaxy Tab 10.1 tablet.

A large contribution to the academic literature on technology patents has been made by Bessen and Hunt. On the subject of companies with large patent portfolios they say:

[E]xtensive competition in patents, rather than inventions, may occur if firms rely on similar technologies and the cost of assembling large portfolios is not very high. In such an environment, firms may compete to tax each others’ inventions—for example, by demanding royalties—and, in the process, reduce their competitors’ incentive to engage in R&D.

The outcome of patent litigation and licensing agreements often depends on the size of the firm’s patent portfolio. This creates an incentive for firms to build larger patent portfolios, especially when their rivals focus on patents as a competitive strategy. Economists sometimes describe this type of environment as a prisoner’s dilemma. All firms would be better off if they did not act in this way, but each firm would be worse off if it did not respond to a surge in patenting by their rivals. Under these circumstances, firms may find themselves competing in court, rather than in the marketplace.

It seems that has come to pass even for companies that are considered among the most innovative.

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