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UO Business | Fall 2012

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Page 13 of 39

ON POINT Patently Brilliant When the world needs an expert take on patent reform, it turns to UO Lundquist College of Business's Rosemarie Ziedonis, one of the most cited voices in the field. T he question of patents, whether it be validity, use, or even hoarding, is creating controversy in the technology world right now, and Rosemarie Ziedonis, UO Lundquist College of Business associate professor of management, is in the thick of it. During the past year, mobile device makers Samsung Electronics Co. and Apple, Inc. have sued each other for perceived patent infringements in jurisdictions around the world—from Seoul to San Jose. In August, a jury in San Jose found 14 Samsung had indeed infringed—to the tune of more than $1 billion—on five of the six Apple patents in question, including Apple's touch screen technology used in its iPhones and iPads, as well as Apple's recognizable "trade dress." The unanimous jury scrapped Samsung's counter claims that Apple had used its wireless technology without proper compensation. In an earlier court battle in Samsung's home country of South Korea, a court ordered each company had infringed on the other and both Apple and Samsung were ordered to pay a small amount in damages. "The smartphone battle raises questions on whether patents stimulate or stifle innovative activity in key sectors the economy," says Ziedonis. "For technology producers and users alike, the financial consequences are large and worth fighting for." When the U.S. Federal Trade Commission (FTC), the Department of Justice, or the European Union needs expert analysis on the strategic value of patents, they come to Ziedonis. Her main focus is the intersection of law and business strategy, Ziedonis said. In sum: how innovation policies affect the behavior of firms. She briefed the FTC during its hearings on the Evolving IP Marketplace. She has also testified at patent reform hearings in front of the National Academies of Science, Federal Trade Commission, and the American Intellectual Property Law Association. That's because Ziedonis is widely considered the source on comprehension and discernment in policy debates over patent reform. Her article, The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979–95, coauthored with Bronwyn H. Hall, is influential in both policy debates and academic literature, with more than 1,200 citations. In it, Hall and Ziedonis examine patent patterns in the U.S. semiconductor industry. In the study, they note a sharp increase in firms' patenting during the time studied, but, in an apparent paradox, they also find the industry doesn't seem to rely on patenting to protect its research and development investment as originally thought. Instead firms count on secrecy—a hallmark of innovators like Apple—and lead time to get a jump on the competition when bringing a product to market. Ziedonis' 2004 paper, Don't Fence Me In: Fragmented Markets for Technology and the Patent Acquisition Strategies of Firms, is also widely cited on the subject. In it, she considers the incidence of patent portfolio building, or how firms accumulate patents to protect innovation investments and strengthen their negotiating positions with other patent owners. One common misunderstanding is that patents create monopolies, Ziedonis said. "What you have is a right to exclude others from making, using, selling, and importing that invention, which means that right is only valuable if you can credibly threaten to enforce it," she said. The late Steve Jobs famously said he would, "go thermonuclear" on Google's Android, which is similar in look and feel to his company's iPhone, spending his last breath and "every penny of Apple's $40 billion in the bank to right this wrong." Although his company won its latest battle against Samsung, the rival's lawyers have vowed to appeal the ruling. And Google, a Samsung partner, has kept Android on the market. Ziedonis, like so many others, will be watching every step of the process unfold. But the Apple- Samsung battle is just one example of an interpretation of complex patent law at work. In September 2012, Ziedonis traveled to Belgium to brief European Union officials on "patent thickets"—overlapping intellectual property rights that a company must wade through in order to make improvements and innovations. And she isn't done yet. Ziedonis and Hall are at work on another paper suggesting that the risk for U.S. semiconductor firms of being sued for patent infringement has continued to climb despite their massive stockpiling of patents—aimed largely to reduce that risk.

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