There's Nothing Apple Won't Patent

I keep waiting for the day that a tech blog reveals Apple's (Nasdaq: AAPL  ) latest patent for "a system of inhalation and exhalation producing the necessary biochemical reactions for life," something also known as "breathing." The list of Apple's patent tussles seems to grow longer every week as iMadeItFirst expands to cover such standard mobile functions as slide-to-unlock and the concept of object-oriented graphics. Even the appearance of tablets, presaged by sci-fi classics such as 2001: A Space Odyssey and Star Trek, is "patently" Apple.

The latest patent uncovered by diligent snoops might be one of the most outlandish, and the most dangerous, should Cupertino use it as an anti-competitive club. Ready for this? It's the ability to buy digital stuff online with credits. Somewhere (possibly on top of a big pile of money), Mark Pincus just got a shiver down his spine.

What's wrong with this patent picture?
The claim extends over any form of buying a "media item" in an online store using credits instead of real currency. That's all it is. The patent is so broad that it doesn't specifically explain how one might get the credits. "Whatever means" are good enough.

Apple was helpful enough to say that the credits might potentially come from codes on bottle caps. The patent was filed in May 2006, around the same time Coca-Cola (NYSE: KO  ) rolled out My Coke Rewards … a way to get points from bottle caps that you can use to buy stuff online. Unfortunately, Apple thought to patent the idea first. Sorry, Coke.

Patent all the things
The biggest problem I see here is that Apple was clearly not first to come up with this idea. The notion of buying credits to exchange for goods, real or virtual, has a long history online. Games are particularly avid users of the credit payment model. Linden Labs sells "Linden Dollars," which are then converted into virtual items or property in Second Life, a game that has been running since 2003. Game-based virtual currency is certainly a model for using credits to get digital goods.

A number of freemium game publishers use the credit model, notably Zynga (Nasdaq: ZNGA  ) and Glu Mobile (Nasdaq: GLUU  ) . Gluu's been making games since 2001, and Zynga's a billion-dollar business built entirely on the premise that people would rather spend money than wait an hour to hatch a virtual chicken. Both use credits for in-game purchases. Zynga's credits, routed through Facebook, are so popular that the game company provides 12% of Facebook's revenue. Would either be infringing on Apple's brilliant idea?

Patently Foolish final thoughts
This just strikes me as a head-smackingly ridiculous patent that no technologically savvy official should have accepted. There are mounds of prior examples of credit payment systems, undermining any claim that this might be original intellectual property. I'm not the only one who thinks Apple's patent warfare is bordering on the absurd. But the problem is that the patent system itself allows such absurdities to continue.

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Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights. The Motley Fool owns shares of Apple and Coca-Cola. Motley Fool newsletter services have recommended buying shares of Coca-Cola and Apple as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (11) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 14, 2012, at 8:39 PM, Hawmps wrote:

    So does this mean that Apple can sue United-Continental if I redeem my miles (credits) online for an airline ticket? No, that's not right... a ticket is a physical thing. But wait, an e-ticket... does that count as "digital stuff"? A good attorney could probably make the arguement.

  • Report this Comment On February 14, 2012, at 9:02 PM, bbrriilliiaanntt wrote:

    Apple uses its frivolous patents defensively, I.e to attack Google-Mot for suing them on FRAND, which is 'pure evil' search it. Business is a war, decided sometimes in a court room. Name 1 suit Apple has done offensively, that's right, because they don't. Wake up...

  • Report this Comment On February 14, 2012, at 9:11 PM, fvgetcom wrote:

    Loved this article!

  • Report this Comment On February 14, 2012, at 9:17 PM, walterwrks wrote:

    It is evil if apple uses the patent to harm free enterprise... It is smart if they have it so that no other business can use it against them... Apple is at war against android... Nothing else... I think if you have an idea protect it... If someone else had an idea... Make sure they don't use it against you... twice they have created OS for mobile and PC's and twice someone has come out with a copy taking their market share... Is apple someone not related to android?

  • Report this Comment On February 14, 2012, at 9:18 PM, walterwrks wrote:

    Is apple suing someone not related to android?

  • Report this Comment On February 14, 2012, at 11:25 PM, beetlebug62 wrote:

    Getting a patent is relatively easy. Having it hold up in a court of law is not so easy, if it is as "obvious" as you seem to believe. So, it's rather pointless to go on about Apple. An Aussie court has already pointed out that the tablet in 2001 did not appear to be a computing device, but just a tv player, so I guess what seems obvious to you isn't quite so obvious!

  • Report this Comment On February 15, 2012, at 2:18 AM, OnTheContrary wrote:

    All software patents are bogus, anti-competitive welfare for lawyered up corporations. I am a programmer with 30+ years of widely varying experience and I am here to tell you that writing code and inventing algorithms is what good programmers get paid for, the same way good writers get paid for creating novels out of their imagination and experience, or conceiving and organizing the ideas and content that go into works of non-fiction. Most of what all these types of people trade in was invented elsewhere and "prior art" recedes into the indefinite past, and much of it they routinely create themselves, not knowing that it has been invented before. There is no more justification for software patents than for patenting the ideas that went into this brief paragraph, and to draw on government coercion to enforce such bogus patent rights is to cause all human thought and progress to grind to a screeching halt. Just as there has been virtually no software innovation for the last 20 years. When it comes to software patents, I am a scofflaw.

  • Report this Comment On February 15, 2012, at 3:56 AM, NOTvuffett wrote:

    OnTheContrary, 10-4 dude.

  • Report this Comment On February 15, 2012, at 4:40 AM, steltek wrote:

    Treo: 2002-03, plays music, takes pictures, phone.

    Windows CE: 1996, Pocket PC: 2000, plays music, pictures, phone

    iPhone: 2007, plays music, takes pictures, phone

    Windows Tablet PC's: 2002

    iPad: 2010

    Diamond Rio, portable music player (mp3): 1998

    iPod: 2001

    Feel free to research the above. I had all of those products the years they came out. Apple is *always* years behind the real innovators.

    Apple's business model is converting geekware to consumerware. They're treading on thin ice pretending to have invented these things.

  • Report this Comment On February 15, 2012, at 12:34 PM, green321 wrote:

    I guess my question to everyone would be...

    Considering the hyper-litigous environment we are in and that patents and copyrights haven't kept up with changing technology...how would you handle patenting, if you were a major company in a highly competitive company?

    Apple didn't invent the system. They are playing the game the same as everyone else is. If you want it to make sense of it then reform it.

  • Report this Comment On February 15, 2012, at 4:13 PM, steltek wrote:

    Apple didn't invent the system, but they initiated the current round of patent suits in a bid to block competitors. The other suits are counters to the Apple move. Apple's legal strategy borders on the ridiculous given how strong their brand is. What do they hope to achieve? They have a runaway lead in every category. Is a monopoly really necessary?

    Apple has added some recent value to mobile phones; I'll give them that. But Motorola was busy patenting the very basics of mobile tech for 20 years before them. All I can say is thank goodness Google ended up with Motorola's mobility patents, or there would be zero hope of competition in mobile handsets.

    The only way I can see to make the patent system work is to make standardized licensing like FRAND legally required of all patents. Shorter protection timetables for rapidly evolving tech would be nice, too.

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