Saturday, August 25, 2012

Apple win US patent fight, but battle far from over

Samsung has lost a major battle in a lawsuit filed by Apple in which it was claimed the South Korean company had violated a number of patents. The US court has ordered Samsung to pay Apple $1.05 billion [£665 million] in damages for infringing intellectual property.

The decision reached by the jury could result in a devastating blow for consumers. Even Apple could lose out in what has been seen as a vindictive and spiteful reaction from the US iPhone maker to competition posed by Android devices.

The jury decided several Samsung devices had infringed iPhone-maker Apple's software and design patents, but rejected counter-claims by Samsung. Apple will now seek import bans on several of its rival's products. Samsung has said it will appeal.

Threat to Android

The jury's verdict Friday that Samsung stole Apple's technology to make and market smartphones using Google's Android software sends a warning to other companies manufacturing similar devices, the biggest marketplace threat to Apple.

"Some of these device makers might end up saying, 'We love Android, but we really don't want to fight with Apple anymore,'" said Christopher Marlett, CEO of MDB Capital Group, an investment bank specializing in intellectual property. "I think it may ultimately come down to Google having to indemnify these guys, if it wants them to continue using Android."

However, Samsung, the Seoul-based global leader among smartphone makers, vowed to fight. Its lawyers told the judge it intended to ask her to toss out the verdict. "This decision should not be allowed to stand because it would discourage innovation and limit the rights of consumers to make choices for themselves," Samsung lead lawyer John Quinn said. He argued that the judge or an appeals court should overturn the verdict.

Financial damages

Meanwhile, Apple lawyers plan to formally demand Samsung pull its most popular cellphones and computer tablets from the US market. They also can ask the judge to triple the damages from $1.05 billion to $3 billion. The damages are less than half the $2.5 billion compensation Apple sought, although that could yet be increased by the judge. It is also comparatively small given it accounts for just 1.5% of Samsung's annual.

There are two potential outcomes resulting from yesterday's court ruling. In one view, if Apple obtains the injunctions and the more than $2 billion in damages it seeks, competition in the handset market will likely grind to a halt.

Samsung sold about 50 million phones worldwide during the second quarter of 2012, amounting to about a third of the phone market during that quarter, while Apple sold about 26 million, or 17%. In the US, Apple and Samsung together have 55% of the smartphone market. If Samsung has to redesign its devices, no other company will be capable of challenging Apple for the foreseeable future. All the other competition - Motorola, Nokia, LG Electronics and HTC - are struggling.

Forcing innovation

There is of course the potential that this and any further Apple victory might drive other companies to come up with truly innovative and new designs, interfaces and functions. If this were to happen, Apple might not feel so comfortable since it would spark even stiffer stiffer competition.

Some analysts suggest that Apple could be the overall loser because the court case has helped boost Samsung's profile. In addition, the South Korean firm has already brought out a new generation of products that should avoid any patent issues.

No winners

So far, the ruling only affects the US, and smartphone buyers are yet to be affected. But that could change very quickly. In South Korea, Apple's lawsuit resulted in both companies being banned from selling some devices.

Apple and Samsung have been ordered to stop selling some smartphones and tablet computers in South Korea and pay damages after a court ruled they each infringed the other's patents. Under the ruling, Apple must stop selling the iPhone 3GS, iPhone 4, iPad 1 and iPad 2 in South Korea, while Samsung must stop selling 12 products including the Galaxy S, Galaxy SII and Galaxy Tab. The sales bans take effect immediately, though the companies can appeal. Fortunately, for both companies, the ban does not cover Apple's iPhone 4S, its newest iPad, or Samsung's latest products including the Galaxy SIII phone, all of which were released after the lawsuits were filed [Telegraph].

Stark warning

But it acted as a stark warning to Apple, that they too could lose out in the tit for tat patent war. It is also playing with fire in that Samsung supplies a significant amount of the technology that is built into its devices. Should Samsung pull out from supplying these chips and other components, Apple might find itself in a very uncomfortable corner. Several key components of the iPhone 4, and Apple's other devices, including the Flash Memory, DRAM memory and applications processor come from Samsung. Together, these account for $45.68 in parts which is 26% of the final component cost of the iPhone 4 [Gizmodo]. The question over what might happen should Samsung cut Apple off is somewhat hypothetical. However the constant court battles certainly raise the prospect of the symbiotic relationship breaking down. While Apple might be miffed at some blatant and less blatant infringements of its intellectual property, it seems to be be playing a dangerous game of biting the hand that feeds it [Economist].

Consumers most affected

It will be consumers that will be most affected. Many will find themselves unable to lay their hands on a device of choice, or that it will increase significantly in price. British consumers of both Samsung and Apple products seem safe for now. A British court threw out claims by the US company that Samsung had infringed its copyright. But the year-long US case has involved some of the biggest damages claims, and is likely to shape the way patent licences are handled in the future.

Apple accuses its competition of stealing its ideas, These 'ideas' are wrapped up in patents that are less about the actual technology, than the way one interacts with a mobile device. This has led many to question whether patent law needs to be seriously overhauled.

Perhaps the final word should be left to Apple founder, the late Steve Jobs, "It comes down to trying to expose yourself to the best things that humans have done – and then try to bring those things in to what you're doing. Picasso had a saying: Good artists copy, Great artists steal – and we have always been shameless about stealing great ideas."

[BBC / Telegraph / Guardian / Independent / Daily Mail / Economic Times / Vancouver Sun / CNET / CNETMashable / Wired / ZDNet

Pictured: The Samsung Galaxy SIII which has angered Apple over alleged patent infringements 

tvnewswatch, London, UK

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