Apple vs.Samsung – something good about!

The recent ruling of the jury in Northern District of California in favor of Apple is still a very hot issue and is still sending hit waves around the world.  The ruling comes after one of the most important legal battles between the two giants and, arguably, for the technology industries.  It is difficult – and risky – to jump now into conclusionsregarding the likely effects of the decision confirming that Samsung breached some of tohe Apple’s patents.  
Although such comments and predictions, most of them alarming, started to overflow the websites, the blogs and the magazines all over the world, until the things will start to settle, I would limit myself to say how the decision of the jury in the Northern District of California SHOULD NOT be regarded.  I try to set a different tone to the comments, as I dislike (and disapprove) expressions such as “hardware manufactures lining up to pay license fees to Apple” or “a future Armaghedon on Google”. I understand that journalism need strong words in order to catch the eye of the reader in respect of what just happened but the forecasts and conclusions should be written with calm and equilibrium. Thus, I will refrain from commenting on how correct is the ruling itself.  From old times and for the sake of good order in the society, the legal tradition equates the findings of a court to something which may be called “the truth”.  Although I am not original on this, my only question mark is over the concept of putting the burden of such a case on the shoulders of a jury, i.e. to seek the truth from persons who may act in good faith but who may find difficult to ascertain properly the technical details and the complex relations which are at the core of such a dispute (see, for the technical antitrust issues, the opinion of Professor Herbert Hovenkamp – “juries remain a very weak link in a system where most of the relevant evidence is economic and technical” – The Antitrust Enterprise: Principles and Execution, pag.63).  PS: According to the news, some of the jurors were technology-savvy, which may give more credibility to their verdict –     
So, it looks clear, in this moment, that Samsung did it wrong and failed to respect the legal safety distance from Apple’ innovations.Coming back to the court decision, these are my comments: 1)     The verdict of the California court should not be regarded as a surprise.The verdict of the California jury should not (cannot) be a total surprise for the professionals of the technology industries and for the managers of the major players in these industries.  As it was famously said – “Only the unprepared may be taken by surprise“.  Both hardware manufacturers which walked into the footsteps of Apple and provide now the world’s consumers with smartphones and tablets at lower prices than Apple and software providers – such as Google – should have think to such an outcome, even if undesirable for them, and have prepared alternative strategies.  For those which were, in fact, unprepared, the ruling may be a – necessary – cold shower, with a welcomed wakening effect on the them.  2)     The market for “drawing boards” has just received a boost.Samsung and the other competitors of Apple should learn that the protection of intellectual property is important. They should learn also that the “short-cuts” such as looking over the shoulders of the competitors are short-living solutions. And that, definitely, the “short-cuts” are not highways to the future market success.  3)     The competition is not to be won in a courtroom.The ruling confirming the infringements of Apple’s patents might reinforce the idea that the clash between Apple, Samsung and other major players in the technology is moving into the courtrooms, away from the marketplace but I do not think that this is an efficient strategy on the long run for any of the competitors.  If Apple chooses to follow such a route and use money for lawyers and court experts instead of on research, it will have something to lose, eventually, in the technological race.  No big business in history survived and continued to be successful based mainly on legal strategies and on fighting in court, but based on innovation and making good offers to consumers.  Raging legal wars against your competitors it may slow them down but it will not make you go faster.  The first statements issued by Apple immediately after the decision indicate that the company is not willing to follow this (apparently) easier route but the temptation will remain (Apple should not take Steve Job’s threat against Android “to go thermonuclear” as a legacy).  Apple should not forget also that there is use and there is abuse of any right.  Companies in strong market position may be tempted to keep their competitors at a safe distance and to slow them down.  Eventually, the innovation may start to fade and the company will try to live an easy life by reaping the fruits of its past achievements.  4)     No company has and no one will have a monopoly on innovation and on all the necessary patents.One important aspect Apple should consider is that it is virtually impossible to have a monopoly on all innovation and that someday another technological idea will capture the minds of the consumers and it might not have the patents which encapsulate that idea.  And the world of technology is moving fast, so that patents may start to lose some of their value not because of the infringements but because may start to become obsolete.  Even if Apple will continue to come with good ideas and brilliant innovations, the number of patents incorporated today in a single device make it impossible for all these patents to belong to Apple.  So, Apple should bear in mind that the world of technology is more and more interconnected and inter-dependent.  The recent decisions of the South Korean courts are a good example.  The Korean decision is rather low-profile compared with the US decision but the former gives a better image of the actual status quo of the two parties to the conflict.  As Marshall Phelps, the VP for Intelectual Property at Microsoft puts it – “IP’s greatest value would lie not so much in being a weapon against competitors, but rather in serving as a bridge to collaboration with other firms that would enable companies to acquire the technologies and competencies they needed to compete successfully“. (Phelps, Marshall; Kline, David. Burning the Ships: Transforming Your Company’s Culture Through Intellectual Property Strategy (p. 5). John Wiley and Sons.).  Indeed, Microsoft offers lot of good examples in this direction.5)     Samsung is an innovator, not a villain.The ruling did not say (and could not say)  that Samsung phones were, entirely, copies (clones) of Apple but that Samsung looked too much towards Apple (“benchmarking on it”, as Samung lawyers put it in court) and that it “free ride” too much on Apple’s efforts.    The signal is that Samsung and others should have a change of strategy and demonstrate that their innovations enhance the capabilities of the smartphones and tablets.  The jury only agreed with one third of the damages sought by Apple and rejected many of its claims, such as alleged infringement of the trade dress for the iPad. What happens now seems to have similarities with the car manufacturers disputes involving European and Japanese producers.  In the 70’ and 80’, when Europe started to be flooded with Japanese cars, of good quality and cheaper than some of the European (mostly, German) models, complaints started to be made about the alleged infringement of patents, such as in the Apple vs.Samsung case.  But because consumers were happy with the situation and the Japanese cars did have their glow, people used to say that “the Japanese are replicating the European cars, but are just making them better”!  The Japanese manufacturers might have copied some successful features of the German brands but for sure they were innovators, too.   Samsung has lot of things – and innovations – to be proud of.  Let’s not forget that the range of smartphone and tablets put on the market by Samsung is far more extended than the limited range of Apple.  Samsung strategy means going into new territories that Apple does not dare to explore yet (such as smaller size tablets), whilst Apple has a different strategy and follows the “bitten track” of its famous iPhone and iPad.  The future mini-iPad will come after the market success of lower screen size tablets has been tested by others, Samsung especially. It should be borne in mind that almost all the devices which came under scrutiny in the California trial are from the previous generations.  The newest Samsung products were not affected by the litigation in the US Federal Court (Samusng  Galaxy III, for example).
A personal notice: I use two mobile phones produced by Samsung and having Android operating systems.  I used to have an iPhone -a good phone but Samsung offered me a better user experience, so I gave it up quickly.  I also used for a long time an iPad 2 and I was impressed about the quality of the device.  This did not stop me in turning recently to a Samsung tablet.  I was happy with both Samsung and Apple but I give preference to Android.  Apple products are for those who may afford an iPhone or an iPad, Android is for anyone who can afford a smartphone (and there are more and more low-price smartphones).  The future of the smartphones and their affordability to the ordinary people depends on the success of Android. It depends also on the success of Microsoft software into this area and I think that Microsoft may be a formidable challenger for Apple’s supremacy if it will decide to aim high on the markets for smartphones and tablet PCs. 
So, as a preliminary conclusion, the world of technology may not be the same after the verdict of the California jury but it might well be a better one, if the lessons are well learnt by all the involved parties.  

UPDATE: According to news released by Reuters on 31 August 2012 Google Inc Chief Executive Larry Page and Apple CEO Tim Cook have been conducting behind-the-scenes talks about a range of intellectual property matters, including the mobile patent disputes between the companies. More, on 

1 Comment
  • adrian

    August 29, 2012 at 7:49 pm

    Fascinating case Valentin! Thanks for bringing it up.

    2 comments here:

    1. The irony of this technology-rich case is that the SCJ solved it based on a test ruled upon back in … 1871* which is related to forks and spoons … who would've thought that a banal product such as the fork can have an impact on a technological-advanced product such as the smartphone …? 🙂

    "We hold, therefore, that if, in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other, the first one patented is infringed by the other."

    2. The second aspect is related to the trivial element on which the patent battle revoled – the shape of the Appple and Samsung smartphones, and here jumps in the test quoted above from Gorham. If the shape of the smartphones today is key to a patent war, and that shape is as banal as a basic geometric shape of the iPhone or Samsung, then what is it left of competition on this market (both for smartphones but also for operating systems)?

    Arguably, the research investment required for a shape as banal as the rectangle (I know it is a bit more than this, but I am simplifying a shape which is rather simple for the sake of argument) is small (one of the pieces of evidence brought in the case is a 5-page memorandum drafted by Steve Jobs on the shape of the iPhone). If this is true – the investment is small for a banal shape – then where is the scope of patent law conserved (though the patent-core argument of consumer confusion may remain undisputed), and more importantly and on-topic :), to what extent such ruling will negativelly affect competition?

    That is, if freeriding is questionable for reasons of low research costs for a banal design, then why apply patent law in a way that may convey to competition restriction or even exclusion of certain competitors (this is a very serious prospect for Samsung because, as a consequence of this ruling, Apple has lodged a ban on Samsung products sale in the US; also, other smartphone producers such as HTC now consider switching to the Microsoft as the only unbattled mobile software supplier left on the market (although in a significant worse shape than Android)?