Apple vs. Samsung

As of August 2012, Apple Inc. and Samsung Electronics Co., Ltd. are engaged in a series of legal disputes concerning multiple patent disputes. This includes, but is not limited, to the recent billion-dollar ruling against Samsung in favour of Apple by a United States District Court. There are currently dozens of cases ongoing, in more than 10 countries across the globe between the two companies.[1]

Billion-Dollar Case

In August 2012, a United States District Court found Samsung guilty of wilfully infringing certain Apple patents, with the jury deciding on a $1.05 billion dollar penalty. This may yet be tripled by the judge at a session due to take place on December 6th 2012, as a result of the jury's conclusion that the infringements were wilful. Samsung was awarded zero damages in its counter suit.

These infringements involved certain Samsung smart phones allegedly deliberately copying certain aspects of the Apple iPhone's design in such a way that it infringes upon and dilutes the "trade dress" of Apple products. As a result, Apple is calling for 8 Samsung products to be removed from sale in the US market[2].

Samsung is unlikely to pay up any time soon; it is almost certain to appeal, and given that a District Court is the lowest level of Federal court in America, the case may has the potential to be twice more if it works its way up to the Supreme Court, in a process that is likely to take years, by which time the infringing models will be long-obsolete.

Implications

With regards to the billion-dollar fine handed down, it's probably too early as yet to draw any strong conclusions as to the consequences for the consumer, and commentators are divided on the issue. Samsung warns of "fewer choices, less innovation, and potentially higher prices"[3], with which Whittaker of tech site ZDNet agrees; his view is that the consumer "may have to pay a premium for the privilege of using a rival product to Apple's iPhone"[4]. The counterargument to this is that in fact the ruling with help spark innovation - because "Samsung will have to innovate even further"[5] - ultimately benefitting consumers. Whether or not this is true remains unclear.

Korean Popular Backlash?

A potential unforeseen negative consequence for Apple is a patriotic backlash against them in South Korea; with Samsung harking from the peninsula nation, a "home court"[6] ruling in the United States in favour of the American company Apple may stoke anti-Apple sentiment and adversely affect sales in a country that has been unusually keen on the uptake of their products, warns Jasper Kim of the Asia-Pacific Global Research Group[7].

Samsung Changing Course

There are signs that in the aftermath of the case, Samsung is shifting its strategy and looking to work more closely with Microsoft; less than a week after it was handed the billion-dollar fine that it is sure to appeal, it announced a battery of new devices running Microsoft Windows Phone 8 operating system[8]. One commentator identifies Microsoft as standing to benefit from the ruling; the "built-in patent protections" that Windows Phone will provide will be an attractive option to manufacturers trying to decide what OS they intend to carry on their hardware[9].

Commentary

Legal Attrition

Some have interpreted the litigation as part of a wider Apple strategy to wear down competitor Google in a process of attrition; Google provides the Android mobile operating software that is Apple's closest competitor but does not manufacture its own hardware, instead providing the OS to companies like Samsung. As such, by targeting companies like Samsung (amongst others), it forms part of a larger battle against Google, taking place both in the markets and the courts. The late Steve Jobs was quoted in the Walter Isaacson biography as vowing to "destroy Android"[10], which supports this theory; he told the biographer that it is a "stolen product", suggesting his inclination to take legal action.

Preludes to Negotiation

Another interpretation of the case, however, views it as part of a "global negotiation being conducted by litigation"[11]. The argument is that the lawsuits, despite the seemingly astronomical figures being thrown about, will not sound the death knell for whichever company loses - rather, they are helping to "set prices for a series of eventual cross-licensing agreements". Both firms are in possession of valuable patents that the other seeks to use - hence the litigation - and the solution to this would be to license them to one another. The legal action in this context is an overture to the eventual agreements, heaping to gauge value of the patented technologies, and accordingly both companies are attempting to position themselves in the strongest position possible for when that time comes. Tim Cook, who took over the role of CEO when Jobs stepped down prior to his death, is regarded as not so fanatically opposed to Google as his predecessor either; as of the August 31st 2012 there are rumours of Cook and (Google CEO Larry) Page meeting for discussions[12], adding credence to this interpretation.

Links

References

  1. http://news.yahoo.com/apple-vs-samsung-legal-battles-summarized-100947327--finance.html
  2. http://news.yahoo.com/apple-vs-samsung-legal-battles-summarized-100947327--finance.html
  3. http://www.bbc.co.uk/news/technology-19391235
  4. http://www.bbc.co.uk/news/technology-19391235
  5. http://www.bbc.co.uk/news/technology-19391235
  6. http://www.asiapacificglobal.com/2012/08/apple-v-samsung-1-05b-verdict-the-beginning-or-the-end-8-25-2012-seoul-korea/
  7. http://www.asiapacificglobal.com/2012/08/apple-v-samsung-expert-opinions-asia-pacific-global-featured/
  8. http://www.pcworld.com/article/261649/samsung_turns_to_microsoft_weighs_postverdict_strategy.html
  9. http://www.itproportal.com/2012/08/31/apple-vs-samsung-a-boost-for-windows-phone/
  10. http://www.bbc.co.uk/news/technology-15400984
  11. http://www.businessweek.com/articles/2012-08-30/apple-vs-dot-samsung-the-longer-view#r=read
  12. http://www.macworld.co.uk/apple-business/news/?newsid=3378757&pagtype=allchandate