As we don wearable computers, stay tuned for a potentially unprecedented level of patent battles before the US International Trade Commission involving some familiar names and likely many new ones, with consequences across diverse markets.
Today's glasses, watches, and wristbands are just the start of a wearable computing sector where revenues may triple in the next few years, according to market projections. When new markets emerge, patent suits are likely to follow as vendors jockey for position.
Patent holders, some of which may not even compete in the marketplace, are likely to file suits seeking a portion of the new revenues. Many such patent battles played out over the past few years, particularly in the International Trade Commission (ITC), as digital televisions and smartphones surged in popularity.
The ITC has a history of being the forum of choice for patent holders in rapidly emerging markets. In 1983 alone, the ITC launched 43 new investigations, a spike that can in part be explained by the rise of microprocessor-based systems.
In 2011, the number of new ITC cases reached a peak of 69, largely due to disputes over technology relating to digital televisions and smartphones. Since then the pace has settled down to 40+ new ITC investigations a year, on par with its highest level since the early 1980s, but the rise of wearable computers may take the number to new heights in coming years.
The ITC has unique attributes that are likely to attract the patent battles over wearables. It is known for its experience managing complex patent cases to relatively speedy resolution. The ITC also has jurisdiction over any goods entering the US, so it is possible to assert a patent against companies all over the world in a single complaint. It also offers the extremely potent remedy of excluding infringing devices from the US, often viewed as a death sentence in the industry.
The number of patent battles over wearables may easily exceed what we recently observed for digital televisions and smartphones. Unlike the digital television and smartphone markets, where a handful of players hold significant market share, the growth of wearable technology is likely to lead to disputes among a more diverse group.
Wearables are expected to infiltrate markets where the major electronics companies have traditionally had little or no presence, such as fitness and healthcare. The medical device industry has been historically litigious, and wearable technology is likely to lead to competition among established medical companies among others.
While technology behemoths such as Google and Samsung have cross-licensed their portfolios, new players such as Fitbit and Pebble may view patent enforcement as critical to defending their success against larger companies. In addition, wearables are already inspiring such highly integrated components as the new chips from MediaTek. Competition to supply such components is likely to lead to its own share of patent fights.
— Charles H. Sanders is a partner in the law firm of Goodwin Procter LLP.