Apple vs. Samsung – Lessons in futility

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The only winners are the lawyers. 

  • Yet another round of tit for tat was launched this week with the date of yet another trial being set for November 12th 2013.
  • The purpose of this trial is to argue the value of the award that was set at the 2012 trial where Apple was awarded $1.049bn in damages, which was subsequently reduced to $598m.
  • By the time all this jumping and down is finished I would not be surprised to find that Samsung has spent more than the current award in legal fees.
  • At the height of its war with Nokia, Qualcomm was spending $300m a year and this was nearly 7 years ago.
  • The real problem here is that the life cycle of a mobile phone these days is shorter than the legal cycle.
  • This basically means that by the time one has succeeded in getting a product banned for patent infringement, it will no longer be shipping.
  • Hence the only recourse that one has is one of back royalties and punitive damages and these issues can be argued endlessly ending up in fights that go on for years.
  • This one is a classic example.
  • The heart of the matter is that it is rapidly becoming in Apple’s interest to settle this case.
  • That way it will at least receive some royalties and the cripplingly expensive legal expenses can be stopped.
  • The onus is on Apple because it is Apple that is losing out as a result of the Samsung Galaxy products shipping in huge numbers and at very healthy margins.
  • Unfortunately, the late Steve Jobs had a very pugnacious attitude when it came to seeking redress against those that he deemed to be copying his innovations and this still seems to be the order of the day.
  • The longer this carries on, the more pointless it all seems and the less scope there is for either side to end up winning anything meaningful.
  • Hence it is in the interest of both Samsung and Apple to settle their claims and get back to the business of making products.
  • I would like to believe that both of these companies have some degree of pragmatism and as a result I hope to see them settle their differences this year.
  • It is their job to enrich their shareholders not the legal profession and the sooner they remember that, the better. 

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.

Blog Comments

Why do you think onus is on Apple? It takes two to tango. It has, after all, settled with HTC, Nokia, Microsoft and maybe others.

The onus is on Apple because it is Apple that is losing most in the current situation. It is in their interest to get something settles. Samsung doesent really care

The new trial is to find how much in additional damages Apple should be given for 13 infringing Samsung products. The additional damages could be less, could be more than the amount awarded in the first trial for those products. Over $600m awarded for the other infringing Samsung products still stands. Then the case will move to the appeal courts.

Both companies are being pragmatic.
Samsung is currently using as many of Apple’s patents as it needs to dominate the Android market, while paying less in awards and litigation expenses than royalties in any likely agreement. In the meantime Samsung gets to see if any of the Android alternatives take off.
Apple, if a sizeable damage award is confirmed on appeal, is litigating with Samsung’s money to progressively cripple Android. Also each highly publicised award against Samsung strengthens Apple in the US – if mobile contracts for the original and the copy cost the same, why buy the copy?

This will be a continuing war of attrition while the profits at stake are so high.

Apple is only litigating with Samsung’s money if Samsung loses the appeal. There is plenty of evidence of prior art in this case and it was only due to the imcompetence of Samsung’s consel that it was not allowed in the original case. Given also whats happened at the PTO since this cae, Apple’s convincing win looks much more unstable.

Apple position in the US now is much weaker than it was before the judgement was handed down. I dont think this does anything to protect Apple in the US without a crippling injunction with immediate effect which has been denied.

Its a horrible expensive mess where both Apple and Samsung are thrpwing huge sums of money away. Only the lawyers win.