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A U.S. judge yesterday threw aside a much-anticipated trial between Apple (s aapl) and Google-owned Motorola Mobility (s goog) over smartphone patents. The decision and a blog comment by the same judge could prove to be a watershed moment for a U.S. patent system that has spiraled out of control.

In his remarkable ruling, U.S. Circuit Judge Richard Posner stated that there was no point in holding a trial because it was apparent that neither side could show they had been harmed by the other’s patent infringement. He said he was inclined to dismiss the case with prejudice — meaning the parties can’t come back to fight over the same patents — and that he would enter a more formal opinion confirming this next week.

The order is extraordinary not only for what it said but for who wrote it. For the unfamiliar, Richard Posner is a legend in legal and academic circles and possesses a resume that makes the typical Supreme Court Justice look like a slouch. He teaches at the University of Chicago and ordinarily sits on the influential 7th Circuit Court of Appeals but, in an unusual development, was assigned to a lower court last December to hear the Google-Apple patent case.

The case is just one of many patent disputes tying the legal system in knots as large companies tangle not only in court but at the International Trade Commission in an effort to ban each others’ products from the market. Critics say the patent system, which awards 20-year monopolies, has run amok thanks to a flood of questionable patents for software, business methods, emoticons and even one for “swinging on a swing.”

In a series of earlier rulings in the Apple case, Posner didn’t mince words as he used plain language to beat up the over-reaching arguments of both sides:

[re a slide-to-unlock patent] Apple’s .. argument is that “a tap is a zero-length swipe.” That’s silly. It’s like saying that a point is a zero-length line.

Motorola’s contention that the term has a “plain and ordinary meaning” is ridiculous; Motorola seems to have forgotten that this is a jury trial.

In his ruling to dismiss, Posner noted that a trial would “impose costs disproportionate to the harm … and would be contrary to the public interest.” Posner’s cost-benefit assessment is likely rooted in a worldview anchored in law and economics — a Chicago-school of thought that equates court decisions with maximizing efficient economic outcomes.

This week, Posner also lashed at the patent system in a blog he shares with economist Gary Becker. In a post about the declining strength of American institutions, he concluded:

The institutional structure of the United States is under stress. We might be in dangerous economic straits if the dollar were not the principal international reserve currency and the eurozone in deep fiscal trouble. We have a huge public debt, dangerously neglected infrastructure, a greatly overextended system of criminal punishment, a seeming inability to come to grips with grave environmental problems such as global warming, a very costly but inadequate educational system, unsound immigration policies, an embarrassing obesity epidemic, an excessively costly health care system, a possible rise in structural unemployment, fiscal crises in state and local governments, a screwed-up tax system, a dysfunctional patent system, and growing economic inequality that may soon create serious social tensions. Our capitalist system needs a lot of work to achieve proper capitalist goals.

Posner’s decision to descend from the 7th Circuit to oversee the Google-Apple trial suggests he wished to step in and do something directly about the patent system. (Ordinarily, Posner would never hear a patent case as all patent appeals are sent to the DC-based Court of Appeals for the Federal Circuit; that court has maintained an ideological bias in favor of patent owners despite repeated rebuffs by the Supreme Court).

The backlash against the misuse of patents is coming not just from Posner and the Supreme Court but other federal judges as well. Judge James Robart blasted Motorola and Microsoft in Seattle last week, noting that “The court is well aware that it is being played as a pawn in a global industry-wide business negotiation.”

It’s unclear how Apple and Google will respond to Posner’s surprise pounding of them. Both companies have so far said nothing and may be waiting for the other shoe to drop via Posner’s formal opinion expected next week. The judge wrote yesterday that he may change his mind but the overall tenor of the first opinion suggests this is unlikely. You can decide for yourself here:

Posner Order

(Image via University of Chicago)