What can the villains in this drama use as power to force their illegal price fixing on reluctant companies?
Just what you'd expect.
"Mr. Jobs proposed a no-poaching deal to Edward T. Colligan, Palm’s chief executive. Mr. Colligan responded that such a deal would be unfair to employees as well as “likely illegal.” Mr. Jobs then threatened to unleash Apple’s patent lawyers on Palm."
Yep. It's our badly broken patent system yet again.
Interesting, since most of Palm's ideas on smartphones pre-dated the iPhone. No wonder we've changed the patent law to first to file, rather than first to invent.
This is the reason that tech companies seek to acquire large rather than technically sound patent portfolios.
Briefly: defense against infringement runs around $1-$10 million per patent )(it may be higher, my information's somewhat dated). Defeat one patent, and the company with the larger portfolio presses suit with another, and another. Even if the plaintiff successfully defends itself against these suits, it's still out $1-$10 million per patent. Often far better to strike a licensing deal for $40k (or some value less than $1-$10m).
It's possible to countersue, and this happens, usually with the result that the companies reach a cross-licensing arrangement.
"does the defending party get their legal fees reimbursed by the suing party?"
Almost never.
The law requires "exceptional circumstances" for an award of attorney fees and the CAFC (the patent appeals court) is inclined to reverse even fees awarded under those circumstances.
There were two cases argued at the Supreme Court this week to try to define what constitutes "exceptional" and reduce the authority of the CAFC to weaken the awards. [0] The court isn't expected to change much.
There is a bill in Congress that has passed the House and is being considered by the Senate [1] which would change the rule to award fees by default "unless the court finds that the position and conduct of the nonprevailing party or parties were reasonably justified in law and fact."
So plenty of people even in languid Washington are frustrated with the current lack of fee shifting. Maybe something will be done. Maybe not. Washington is not famous for swiftness or wisdom.
That depends. One of the problems, again, is that the process can take its sweet time to happen, and there's always a risk involved. Your legal team needs to be paid up-front, generally, which means that in terms of financial capital you're allocating your resources in advance, and have that much less to contribute to real business investment.
Other than that -- I'm wading in above my head, so I'll let someone more qualified respond at more length.
I agree that the biggest liability to the economy at large of huge patent portfolios, little seen so far, is the ability of multiple incumbent corporations to collude and increase barriers to entry so they collectively are not threatened by innovation from upstarts.
That said, most of the time that Palm (and Handspring etc.) devices existed, they were PDAs, and the reason Palm beat out Apple's Newton is probably that they chose a subset of functionality that was more modest and probably more appropriate to the hardware of the time.
For example, while Newton's handwriting recognition was often unreliable, Palm devices asked its users to use a an arcane script that was easier to process. (Later lost in a patent-related issue, if I remember correctly)
Probably someone here was actually involved in the history of developing the devices, but as I remember it, the revolution of Palm pilots and other models was that they worked more smoothly, and they synced more reliably with your computer than any competitors. That involves a lot of good engineering and attention to detail, but it does not necessarily mean that there can't still be overlaps with patents held by companies which invented something earlier but with an implementation that didn't win over enough customers to survive.
part of the story that is forgotten..there is a specific part of software in the mobile OS that Palm invented and patented and than gave that patent away for free to anyone who wanted to use it..if you are a mobile OS geek you know piece I am talking about
Just what you'd expect.
"Mr. Jobs proposed a no-poaching deal to Edward T. Colligan, Palm’s chief executive. Mr. Colligan responded that such a deal would be unfair to employees as well as “likely illegal.” Mr. Jobs then threatened to unleash Apple’s patent lawyers on Palm."
Yep. It's our badly broken patent system yet again.