Trade Case in Washington Jeopardizes U.S. Innovation

The use of smartphones for everyday tasks has propelled innovation to new levels. For example, companies like Uber that rely on cell phones to interact with customers are starting to innovate far beyond their original offerings, including their carpool like “Smart Routes” feature that debuted in San Francisco in late August. It is in everyone’s interest to see those changes continue. Around the country and around the world scientists, engineers, and computer programmers are creating whole new virtual worlds that have fundamentally transformed the way we communicate, travel, and play games.

The world of innovation is fragile in some ways. The speed at which new ideas are now developed and patented is unlike anything mankind has heretofore experienced. As a tool for innovation this is good but it leads more easily to patent disputes.

The Founders considered the protection of intellectual property so important that they listed it among the enumerated powers of the legislature in the U.S. Constitution. Therefore, we need to take patent rights seriously and settle disputes the fairest way possible. To be sure, today’s technological innovations happen so fast that the system men like Hamilton and Madison designed to deal with is put to the test in handling disputes fairly, equitably, and often.

NVidia – a manufacturer of graphics processing units for mobile computing and communications market and devices like the Shield, a tablet that has HD displays, connect to gaming controllers, and sell for about $300 – is experiencing the challenge of operating in a complex global market, in more ways than one.

The Shield is designed for hardcore gamers. Unfortunately for NVidia, and their customers, there have been several reported cases in which its batteries badly overheated, and at least two getting so hot that flooring was damaged. As a result the U.S. Consumer Products Safety Commission is working with the company on a recall. Not the type of fire sale either party was expecting.

It’s only more bad news that the corporate innovator is embroiled in a patent infringement case before the U.S. International Trade Commission involving a chip that supports graphics processors used in the popular Galaxy line of Samsung smartphones and some tablets.

The ITC exists to handle unfair trade practices among competing products and to make sure the global market works for the people who participate in it. The challenge moving forward is to write rules for the system that keeps it all going forward rather than allowing it all to bog down in a morass of protectionism, a place that is among the last redoubts of businesses in crisis.

NVidia, which is alleging Samsung and Qualcomm Inc. infringed on these patents, is asking for extraordinary relief. As noted, patent disputes are inevitable. But what makes this dispute remarkable is that relief NVidia seeks would be a ban on the import and sale of Samsung devices that use the chip in question. That is what NVidia wants from the ITC.

It’s a high stakes case. The ban NVidia seeks could create a shortage in the U.S. market for affordable smartphones and tablets. According to a recent editorial in the Los Angeles Sentinel, “removing Samsung’s devices from the U.S. market would likely create acute shortages that, in turn, would lead to price hikes that would impact low-income consumers especially hard.”

Moreover it would inhibit future innovation and exploration throughout the industry because there is no telling when or where someone who thinks they might have designed a piece of a successful product line might want an increased share of the rewards. It won’t end investment in new product lines – like the next generation of smartphones or the next generation of gaming tablets like the Shield – but it sure will inhibit it because it will raise the attendant risk not to failure but to success.

Companies should be working together to make sure that products are safe, sure, but also that consumer choices are expanded rather than curtailed. And government actions should reinforce a vibrant, rules-based system. It’s the only way to keep up with a rapidly evolving landscape.

Peter Roff is a former political analyst for United Press International.

Morning Consult