Introduction The World Trade Organization (WTO), via the TRIPS agreement, has set out various governing…
There has been a great buzz in the patent world with the reported news on 25 Jul 2014 of suits filed by Bose Corps against Beats Electronics in US International Trade Commission (ITC) to block US imports of noise-cancelling headphones made by Beats Electronics and a mirror suit in Federal District Court in Delaware, the USA over the alleged patent infringement of its noise-cancelling technology used in Beats headphones. The patent infringement suit is being viewed by different entities in different perspectives. Is it just a fight by Bose Corporation to protect its IP rights? Or is it a proverbial David versus Goliath fight– wherein a fifty-year-old giant Bose Corporation is using its financial might to subdue an eight-year-old start-up company? The timing of this is also raising many eyebrows as this patent infringement suit is being linked to the news about the acquisition of Beats Electronics by Apple in May 2014.
Bose and Beats are two of the leading players in the headphone industry and this suit can simply be about Bose Corporation’s desire and right to protect its intellectual property rights. The suit essentially is about noise reduction technology used for noise reduction methods in headphones. Bose contends that Beats Adaptive Noise Cancellation (ANC) technology being used in their headphones Beats Studio ® and Studio ® Wireless Headphones infringes on the Automatic Noise Reduction (ANR) technology which is protected by their following five patents:
- US 6717537
- US 8073150
- US 8073151
- US 8054992
- US 8345088
Bose in these suits has also informed about their huge investment over an extended period of time in research and development. Bose has further contended that for the last 50 years they have been investing extensively in research, development, engineering, and design of proprietary technologies and their implementations can be seen in their line of products such as noise-cancelling headphones. Bose has further sought to be compensated for losses suffered and profit lost because of Beats using their patented technology.
High-end Headphone market in 2013 has been valued at $ 1 billion with Beats reported having 60 % of this market share. Bose lawsuit, therefore, could be a genuine desire to protect its market share, especially in US and European markets.
In another perspective, this could be viewed as a fight between Bose and Apple where Bose by targeting Beats Electronics is actually targeting Apple. But this can be actually counterproductive since Beats Electronic now with Apple’s financial backing can engage in a long drawn legal battle and take this fight to a legal and logical conclusion. Apple as reported in various news items has just acquired Beats Electronics for $ 3 billion and Apple can be expected to fight hard to protect its interests.
Bose Corporation’s first suit filed with International Trade Commission against Beats Electronics is to stop Beat Electronics from importing its headphones with noise-cancelling technology to the United States from China. This action has been taken to prevent Beat Electronics from taking over the market and also to reduce the competition from Beat. Bose Corporation’s second suit against Beat Electronics is to stop them from infringing on their patented technologies.
Further, Bose is not leaving any stone unturned and is taking legal actions against Chinese companies also to make them stop from infringing on the patents held by Bose Corporation. One of the Bose representatives has said in a statement “We are committed to protecting our investment and our customers and defending the patent we own”.
As Apple is already involved in a number of big patent battles especially with Samsung and is one of the top companies with most Patent infringement cases in the USA, it will be interesting to see how Apple / Beats are going to react to this and how they are going to defend themselves against this lawsuit. We have to wait for the decision from the court to see if Beat will be able to defend themselves or if they will refer the case to get the lawsuits settled outside the court as was done recently between Apple and Samsung.
Ultimately only legal merits will be considered for the outcome of this suit but it will be interesting and fruitful to watch how these big companies defend themselves as the precedent set with these suits could help in formulating future business strategies not only for business entities involved in these lawsuits but also other business houses.
About the Author: Mr Paras Khurana, Patent Associate at Khurana & Khurana and can be reached at [email protected]