Apple co-founder says patent wars will hurt start-ups

The number of intellectual property lawsuits being filed by major tech companies could prevent future entrepreneurs from achieving success, according to Apple co-founder Steve Wozniak.

Wozniak – who founded Apple with Steve Jobs and Ronald Wayne – helped create the Apple I and Apple II computers in the mid 1970s, which contributed to the computer revolution.

Next month, Wozniak will tour Australia and New Zealand to give a series of talks about the rise of Apple, Steve Jobs, and the importance of fostering entrepreneurialism in corporate culture.

Speaking to The Australian Financial Review, Wozniak said start-ups looking to make technology devices now face the prospect of being forced to buy up previously unused patents.

“I care so much about the young person that has some technical knowledge and wants to start their own business,” Wozniak said.

“Companies like Apple, Facebook, Twitter and Yahoo! [were] all started by new thinkers with new ideas.”

“Now, with this big patent situation, there are certain categories that are heavily blocked off because the big companies make sure they own it all.”

Wozniak said he experienced the frustration caused by unused patents when he designed the Apple II computer, which was launched in 1977.

After designing a system to translate letters into dots, which could be put on a screen, Wozniak discovered another company already had a patent on it.

“Only a huge company… could have afforded to do the research when they did, because you couldn’t make an affordable product that used that technology at the time,” he said.

“We actually wound up paying them two bucks for every computer we shipped just for that simple idea.”

“That sort of thing is going to crop up over and over – very simple ideas that the big companies with big money are going to own, and the small guy who starts up is going to have to pay.”

According to James Omond, head of commercial law firm Omond & Co, start-ups need to be very careful about the elements they incorporate into any new product.

“Whether it’s the name you give to a product or the technology you incorporate into it, you need to ask yourself: am I infringing on someone’s rights here?” Omond told StartupSmart.

“One element to look at is where you’re not manufacturing the product yourself by requiring componentry from third party suppliers.”

“Make sure you have a contract that includes a warrant that your use of the component will not infringe any third party IP rights.”

According to Wozniak, a growing number of technology specialists think the patent system should be scrapped.

However, he still believes it is essential to encourage young inventors who aspire to do something new.

He also believes Apple’s record for continued innovation means it is less guilty than other large tech firms, describing Apple as “the good guy on the block”.

“It is creating so much and is so successful, and it is not just following the formulas of other companies – [Apple is] totally establishing new markets that didn’t exist,” Wozniak said.

According to Wozniak, the unique ecosystem that Apple has built around digital content and retail is the reason investment specialists are so buoyant about the company.

“The retail process is owned by Apple, the application is owned by Apple, the operating system is owned by Apple and the hardware is Apple’s,” he said.

“Apple has managed to create this entire world that all the products fit into.”