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Apple Scores a Pyrrhic Victory

{complink 379|Apple Inc.} has scored a victory it may eventually regret. A California jury has awarded the company a tad above $1 billion in a lawsuit against Samsung Electronics Co. Ltd. (Korea: SEC), which was found liable of “willful infringement” of Apple's wireless patents.

Rick Merritt has been covering the court proceedings extensively at a sister publication, EE Times. “The Android community should be very afraid in the wake of Apple's clear win Friday in its case against Samsung,” Merritt warned in his latest report. “Apple is now armed with a handful of proven weapons it can wield against Android competitors in and out of court on the industrial design of its iPhone and the user interface of both the iPhone and iPad.”

Apple may indeed use this legal club to bludgeon other Google Android device makers into withdrawing their smartphones and tablets from the market or agreeing to pay hefty royalties to the Cupertino, Calif., company. These companies could also adopt the Windows mobile operating system from {complink 3426|Microsoft Corp.}, as Bill Cox, a marketing executive at the Redmond, Wash., company, gleefully tweeted after the verdict was announced. It's more likely that Google will rework its Android operating system to avoid any of the patents involved in the Apple-Samsung tussle.

But Apple should hold off on uncorking the champagne. It might have won this skirmish, but there are many more battles ahead. It is locked in other patent disputes. For example, Google has accused Apple of violating some patents owned by Motorola Mobility, now a wireless hardware division of the search engine provider. That case will take months or years to play out.

The wireless patent battles will also play out in other countries. Last week, for example, a court in Seoul, South Korea, found that Apple and Samsung infringed on each other's patents. The companies were ordered to stop selling certain smartphones and tablets and to pay each other some amount of money as compensation. Apple's bill was slightly higher than Samsung's.

The verdicts in the US and Korea (along with previous ones in Europe) mean the two companies must eventually sit down and hash out a compromise. This won't happen soon, but eventually cooler heads will prevail at the two companies, and I predict a cross-licensing agreement will follow.

In the meantime, Apple isn't winning that much applause in the blogosphere. In fact, the majority of the comments I have seen seem to be against the verdict. That's the bigger danger the company faces as consumers digest its verdict. The victory over Samsung has reinforced the impression Apple acts as a bully, as some observers have said in online comments. Many of the comments on a BBC article on the subject were not applauding the verdict. Even though the writers were not praising Samsung, they focused their ire on Apple, which they said won a verdict for things that should never have been patented. Here are some examples.

  • “Apple need to get over themselves — Samsung have produced a thin rectangular phone with curved edges. Hardly groundbreaking.”
  • “Anyone who wants a clear perspective on Apple's behaviour need only look at the short TED video on remixing. Apple did not invent GUI's, mice or touchscreens. They consciously 'lifted' most of the ideas and are behaving like complete hypocrites. The upshot is less for the consumer and more for Apple.”
  • There were phones that looked very similar to the iPhone way before the iPhone was thought of.”
  • “I think Apple have ridiculously overplayed their hand here, and will upset a lot of formerly neutral consumers.”

Though some analysts say Apple can use its US court victory to whittle down Samsung's dominance of the smartphone market, I don't see this happening. Android OS devices won't fall off the map, either (its 68 percent marketshare may dip a bit), and Microsoft's Windows OS won't move to a double-digit marketshare from its current 5.4 percent. The Samsung devices Apple may ask the California court to ban will be quickly replaced. Samsung rolls out devices frequently, unlike its rival, which has moved more or less to a six-to-10-month iPhone replacement cycle. Soon the effects of the California verdict will be wiped clean from the market's memory and even from Samsung's balance sheet.

What will remain is a vast pool of irritated consumers, an equally disappointed supply base, and a royally ticked off rival-partner. Samsung — Apple's archrival in all of the American firm's markets — happens to be a supplier of critical components to the company. It won't, of course, shoot itself in the foot by endangering the profitable partnership, but didn't somebody say there are many ways to skin a cat?

An interesting comment posted on EE Times aptly sums up the situation: “I hope the next headline isn't 'Enraged Samsung employee starts fire at 32nm fab.'” The Samsung fab referenced here makes what? Components for iPhones. Nuff said.

17 comments on “Apple Scores a Pyrrhic Victory

  1. Houngbo_Hospice
    August 27, 2012

    ” Apple's bill was slightly higher than Samsung's.”

    I have the impression that Apple will likely win its lawsuits in U.S. than in other countries. Some of Apple's complaints are valid but features like “the ability to zoom text with a tap of a finger.”  should not count as patent infringement .

  2. Barbara Jorgensen
    August 27, 2012

    It's no surprise that Samsung “won” in South Korea's courts and Apple “won” in the US. I was surprised at the verdict so I hope I can trust the jury in this regard.

  3. bolaji ojo
    August 27, 2012

    Both Apple and Samsung have put so much spin on the issues that I am amazed the jury so easily reached a verdict. Either these were highly skilled folks with a deep understanding of patents law or the areas they had to decide upon were so narrowly defined they couldn't miss.

    Now it goes to the appeal courts where the final case will be decided on an even narrow basis. Apple gets the first knockdown but it's certainly not knockout yet.

  4. Anna Young
    August 27, 2012

    I hope the court of appeal will give clear directions and hopefully clarify both infringement patent claims. Apple's victory in the US court it's certainly a concern for the mobile industry – there are no new innovations, Apple, Samsung and the rest of them in the mobile market are all building on old ideas.

  5. Houngbo_Hospice
    August 27, 2012

    @Anna,

    “Apple, Samsung and the rest of them in the mobile market are all building on old ideas.”

    It is important that intellectual properties be protected even if they are built on old ideas. But It seems that the patent laws are shifting away from their original purpose.

  6. SP
    August 28, 2012

    Good win for Apple! So looks like all these big companies are getting into patent war. Since Motorola owns so many patents in hardware, only time wil tell what Google has in mind.

  7. Anna Young
    August 28, 2012

    @HH, I acknowledge and respect patent laws. More so understand that technological innovations or any innovations of any sort must be protected. This much I agree. I think this case has highlighted the significance of innovation and I trust the mobile industry will begin to rethink its current model of activities.

  8. syedzunair
    August 29, 2012

    Anna: 

    I think it will set the pace for any future innovations and designs by manufacturers. The designs may be based on old ideas but they do differ a bit from time to time and in this industry there is very little differentiation. Therefore, the decision from the court will act as a reminder to manufacturers. 

  9. Anna Young
    August 29, 2012

    Syedzunair, yes I agree. The court decision may act as a reminder to mobile manufacturers about the consequences of patent infringements.

  10. _hm
    August 29, 2012

    It is quite futile to write against company's quest to protect its innvoation and IPs. It is more ironic to question jury decision.

    Why not try to understand what was logic for jury decision? Why not try to compehend why Apple had go so far to protect its innovations? You should encourage other organization to stive similarly.

     

  11. syedzunair
    August 30, 2012

    Anna: 

    It may act as a reminder but I am not sure how they would react to it. I mean would they change designs of upcoming phones that just vagely resemble another phone? Or will it only pass away as a potential threat unless something happens again? 

  12. Anna Young
    August 30, 2012

    @Syedzunair, good question. I think in this case, Samsung has launched an appeal, this will allow the company to figure out its next move. It might give it time to redesign its next wave of products. I suspect this might be the wise move other companies found in this patent quagmire will seek.

  13. syedzunair
    August 31, 2012

    Anna: 

    Lets see how that goes for Samsung. Although, redesigning products in the pipeline will turn out to be a lot of hassle they might do it just to be on the safe side. 

  14. Anna Young
    August 31, 2012

     Indeed Syed. I'm sure redesigning its products it's not going to be without its challenges. Samsung has the means. Hopefully it won't come to that. We just have to wait for the eventual outcome.

  15. Anna Young
    August 31, 2012

    @HH, what's your view on Samsung's decision to appeal the US judgement in favour of Apple? Will this judgement crimp its position in the mobile device market or is it the beginning of an era for the company?

  16. demeter
    September 2, 2012

    The climate regarding litigation did not begin with samsung. Apple has fought for years regarding the gui with microsoft ,so they are familiar with corporations capitalizing on their marketing ideas,yes its common knowledge that apple markets existing tech above all but apple has always been protecting their patents long before mobile computing and smartphones and samsung came on the scene ,we need to get a historical perspective on apple from home computing infancy to now ,not just one of hundreds of court battles that apple has always had to deal with in regards to protecting innovation,research it all yourselves its public record.apple will continue business as usual…..

  17. demeter
    September 2, 2012

    The climate regarding litigation did not begin with samsung. Apple has fought for years regarding the gui with microsoft ,so they are familiar with corporations capitalizing on their marketing ideas,yes its common knowledge that apple markets existing tech above all but apple has always been protecting their patents long before mobile computing and smartphones and samsung came on the scene ,we need to get a historical perspective on apple from home computing infancy to now ,not just one of hundreds of court battles that apple has always had to deal with in regards to protecting innovation,research it all yourselves its public record.apple will continue business as usual…..

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