Consumers blindsided by secret settlements in hi-tech patent lawsuits

From Peter Scheer at the First Amendment Coalition of California:

Apple recently announced that it had reached a global settlement of its patent disputes with HTC, a producer of smartphones using Android, the Google-owned operating system for phones and tablets that compete head-on with Apple’s phones and tablets.

Although this settlement, covering some 50 lawsuits, will have a direct impact–almost certainly painful–on millions of American consumers, and many more around the world, you can’t find out the settlement’s terms. Why not?

Because, incredibly, all the relevant terms are secret–the secret results of a secret settlement process–known only to Apple and HTC, to a federal judge in a separate patent case involving Apple and Samsung, another Google-licensed maker of Android devices, and to Samsung’s lawyers. (A censored version of the settlement given to reporters has been cleansed of all financial terms).

If Congress took up legislation taxing handheld devices and removing some of their features, you would certainly hear about it–and you’d have a chance to protest loudly against such a (stupid!) law. Yet Apple and HTC have agreed to terms that almost certainly include licensing fees (raising prices to consumers) and patent use restrictions (limiting device functions) on its Android phones, all as part of a negotiated conclusion to lawsuits.

The only difference, in terms of impact on American citizens, is that the latter scenario is TOP SECRET. (Also, the revenues generated, instead of going to the US Treasury, are pocketed by Apple shareholders.)


Apple should be forced to release its settlement with HTC now, in uncensored, unredacted form. Full disclosure should be the norm in patent lawsuits between competitors. If transparency means that tech companies, fearful of having to disclose their financial secrets, refrain from initiating new patent litigation, well, so much the better.

America’s best tech companies could go back to focusing their resources and energies on product innovation instead of legal strategy. We will all be better off.

The First Amendment Coalition of California is a member of NFOIC. Peter Scheer is executive director of the First Amendment Coalition. — eds