An important blow has been struck in the ongoing litigation between Apple Inc. and Samsung Electronics – a South Korean court has reached a ruling regarding the patent clashes between the two companies. Perturbingly, it looks like neither one has escaped unscathed.
The Seoul court reached the conclusion on Friday that Samsung did not infringe upon the designs of the iPhone or iPad, with the judge stating that “these similarities had been documented in previous products”, which constitutes a tactic confirmation of Samsung’s ‘prior art’ defence. The judge went on to note that it would be difficult for consumers to mistake the products, as Apple had claimed, owing to the branded company logos and the significant differences in operating systems, applications, prices and contract services between the two, which also jibes well with Samsung’s defence of consumer intelligence (with a Samsung attorney in the flagship U.S court case protesting that “consumers demand more choice, not less”). Nevertheless, Samsung were fined 25 million Won (approximately £12,000) for infringing upon Apple’s “bounce-back” function in regards to scrolling, and face a ban of ten products, including the Samsung Galaxy S and Galaxy SII.
Apple, meanwhile, were found guilty of infringing upon two of Samsung’s wireless technology patents, and face a fine of 40 million won (approximately £22,500), as well as an embargo of four of their products – including the iPad 2 and iPhone 4. Fines of this size are peanuts to the two companies, who regularly boast revenue above 10 billion USD per year, but even given the modest size of the market in South Korea, those sales bans are bound to sting a little, even if they don’t eat into the profit margins significantly. However, it’s a bad omen for both companies: the much-touted U.S patent trial reached the point of deliberation on Wednesday, with nine jurors currently discussing the high-stakes patent battle between the two. Apple is demanding a staggering $2.5 billion in damages, along with a ruling that Samsung’s ‘infringing’ products face a permanent ban; Samsung, meanwhile, demands $422 million, claiming that Apple have violated several of its wireless technology-related patents.
While both companies face significant loss of face depending on which way the pendulum swings in the US trial, the results could be far worse for North American consumers; if Apple win, Samsung may be forced to pay them significant royalties on every Smartphone they ship, which may result in rising costs (in addition to the distinct possibility that several products – including some of the flagship Galaxy range – are banned). If Samsung wins, Apple may face a similar royalty rate; but far more importantly for the company that prides itself upon ingenuity and originality would be the loss of face incurred through such a ruling. Such a ruling may tarnish their reputation in their coveted North American marketplace, and result in a significant loss of sales from the traditional Apple faithful. And if a similar conclusion to that of the Seoul trial is reached, everyone loses – except the lawyers and expert witnesses, who will pocket a pretty penny for their involvement in what’s fast becoming the technology trial of the century.
For our part, we echo Judge Lucy Koh’s optimism, and hope that both companies manage to reach an understanding in the future. When companies like Samsung and Apple cease focusing on their superb products in lieu of focusing upon litigation, everybody loses – whether that loss is in money or dignity remains to be seen.
The Seoul court reached the conclusion on Friday that Samsung did not infringe upon the designs of the iPhone or iPad, with the judge stating that “these similarities had been documented in previous products”, which constitutes a tactic confirmation of Samsung’s ‘prior art’ defence. The judge went on to note that it would be difficult for consumers to mistake the products, as Apple had claimed, owing to the branded company logos and the significant differences in operating systems, applications, prices and contract services between the two, which also jibes well with Samsung’s defence of consumer intelligence (with a Samsung attorney in the flagship U.S court case protesting that “consumers demand more choice, not less”). Nevertheless, Samsung were fined 25 million Won (approximately £12,000) for infringing upon Apple’s “bounce-back” function in regards to scrolling, and face a ban of ten products, including the Samsung Galaxy S and Galaxy SII.
Apple, meanwhile, were found guilty of infringing upon two of Samsung’s wireless technology patents, and face a fine of 40 million won (approximately £22,500), as well as an embargo of four of their products – including the iPad 2 and iPhone 4. Fines of this size are peanuts to the two companies, who regularly boast revenue above 10 billion USD per year, but even given the modest size of the market in South Korea, those sales bans are bound to sting a little, even if they don’t eat into the profit margins significantly. However, it’s a bad omen for both companies: the much-touted U.S patent trial reached the point of deliberation on Wednesday, with nine jurors currently discussing the high-stakes patent battle between the two. Apple is demanding a staggering $2.5 billion in damages, along with a ruling that Samsung’s ‘infringing’ products face a permanent ban; Samsung, meanwhile, demands $422 million, claiming that Apple have violated several of its wireless technology-related patents.
While both companies face significant loss of face depending on which way the pendulum swings in the US trial, the results could be far worse for North American consumers; if Apple win, Samsung may be forced to pay them significant royalties on every Smartphone they ship, which may result in rising costs (in addition to the distinct possibility that several products – including some of the flagship Galaxy range – are banned). If Samsung wins, Apple may face a similar royalty rate; but far more importantly for the company that prides itself upon ingenuity and originality would be the loss of face incurred through such a ruling. Such a ruling may tarnish their reputation in their coveted North American marketplace, and result in a significant loss of sales from the traditional Apple faithful. And if a similar conclusion to that of the Seoul trial is reached, everyone loses – except the lawyers and expert witnesses, who will pocket a pretty penny for their involvement in what’s fast becoming the technology trial of the century.
For our part, we echo Judge Lucy Koh’s optimism, and hope that both companies manage to reach an understanding in the future. When companies like Samsung and Apple cease focusing on their superb products in lieu of focusing upon litigation, everybody loses – whether that loss is in money or dignity remains to be seen.
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Why is this a surprise, you may ask? Well, for a start, Google bought Motorola Mobility for 12.5 billion dollars, a huge amount of money even compared to the lofty standards set by the search giant. For their money, it doesn’t appear as if Google has gained very much; they outsourced the manufacturing of their recent (wildly popular) Nexus 7 tablet to Asus, a Taiwanese company they’ve previously worked with, despite having complete control over Motorola, who are well-known for high-quality past products such as the Droid Razr. And this trend doesn’t seem likely to change, either – if rumours are true, Google’s next “pure Android” Smartphone, the latest in their Galaxy Nexus range, is to be manufactured by Samsung, the South Korean mobile giant that presently dominates the Android market. Why would Google purchase Motorola only to let the company languish in pre-existing financial turmoil, without even offering their new subsidiary the chance to climb up on Google’s bootstraps?
The answer could be simple; Google may not have been interested in Motorola Mobility for its manufacturing potentialities. Google gained one very definite advantage from their purchase of the mobile manufacturer; their impressive portfolio of over 17,000 technology patents. Given that Google’s chief competitor in the Smartphone software marketplace is Apple - who have recently been on the legal warpath with suits, countersuits, litigation and patent infringement claims of every stripe imaginable – the search giant may have considered it a prudent step to safeguard their own interests by quietly acquiring as many registered patents as possible. By amassing such a huge quantity of registered patents, Google have buffered themselves against future allegations of copyright infringement by Apple; and while Apple have yet to go directly for Google in the courtroom, they have simultaneous suits against HTC and Samsung regarding the software on devices such as the Galaxy Tab and HTC One S – devices which run Google’s open-source Android operating system. It seems like it’s only a matter of time until Apple goes for Google’s jugular, and it’s only natural for Google to want to be prepared.
But even so, a $12.5 billion investment seems steep for a patent arms-race in what, thus far, has amounted to a Cold War between Google and Apple, with no direct shots fired. Perhaps Google do have plans for Motorola in the future, and perhaps downsizing the company plays into those plans: after all, if Google intends Motorola to manufacture “pure Android experience” devices to Google’s own exacting specifications, a great deal of the chaff can be slimmed down from Motorola’s existing employees, many of whom are focused upon the manufacturing of weaker, low-end mobiles that are simply not profitable in today’s marketplace. If Google no longer wants Motorola to create low-end feature or mobile phones, they can probably stand to trim the fat somewhat - if only to keep costs low. Preliminary rumours suggest that Google has by no means abandoned Motorola entirely, with reports that artificial intelligence and supply-chain experts are being recruited to assist in the manufacturing of high-end Smartphones, intended to compete on direct footing with Samsung, HTC, Apple et al. But that opens up a whole new can of worms entirely – will other, lesser Android adoptees such as Sony and LG feel threatened by Motorola, who now have a favoured place at Google’s right-hand, and potential access to the kind of cutting-edge technology that only Google possesses? Only time will tell what kind of ramifications Google’s acquisition of Motorola Mobility has for the Smartphone market at large, but one thing is for sure – it’s bound to be exciting!
Look at the statistics: though Amazon’s recent Kindle Fire dominates the smaller, 7” tablet market, its sales are grossly outmatched by Apple’s ubiquitous 10” iPad. Despite being more than twice as expensive - the Kindle Fire retails at $199; iPad prices start at $400, and rise to $800+ for superior models – Apple regularly boast sales which leave Amazon in the dust. While Amazon confidently expects to sell 17 million Kindle Fire’s this year, Apple is equally sanguine about the possibility of selling 70 million iPad’s. Apple dominates over 60% of the tablet market, in fact – and it’s entirely possible that the Kindle Fire only lays claim to its humble piece of the pie because of its comparative cheapness. What are they going to do when Google’s Nexus 7 retails at $199 for the basic model, with superior spec and hardware to the Kindle Fire?
It’s a similar story in the Smartphone market. Google’s Android OS currently lays claim to over 51% of the US market, with Apple’s iOS close on its tail with around 30%. The rest of the market is divided up between smaller operating systems, such as Windows Phone, Symbian, Tizen and others. The same applies to the consumer side of things; Samsung and Apple together dominate over 50% of Smartphone sales, and – owing to their high-end devices such as the Galaxy S3 and iPhone 4S – over 90% of Smartphone profits. So in essence, the operating system war is a two-horse race between Google and Apple, and the sales war is a two-horse race between Samsung and Apple. How much of a dent can a new contender possibly make, when long-going mobile phone manufacturers such as Nokia and RIM have already been edged out of the running by the current industry leads?
There’s a more pressing problem, as well – patents. As anyone with a passion for Smartphones will be aware, litigation is rife amongst Smartphone manufacturers. Apple is leading the fray, with simultaneous lawsuits against companies as diverse as HTC, Samsung, Motorola and Google, courtesy of their enormous legal department and impressive cash reserves. But even Nokia have been getting in on the act recently, launching a patent suit against Google for allegedly infringing upon one of Nokia’s Wi-Fi patents with their new Nexus 7 tablet. Most of these companies have spent years building up solid patent portfolios; Apple is well-known for registering enormous amounts, and Google has a reputation for buying out companies in order to acquire their patents: they recently bought out Motorola for $12.5 billion, obtaining more than 17,000 patents in the process. Amazon, by contrast, recent balked at the possibility of spending $400 million to outbid chipset manufacturer Intel on a number of Smartphone-related patents, despite the obvious impact this would have on their plans to diversify.
So how committed are Amazon to their new Smartphone? And how do they expect to gain substantial profits in a market already saturated with Smartphones of every stripe? Only time will tell.
This is just the latest imbroglio in Apple’s crusade against Samsung (and, indeed, Android Smartphones as a whole). Following Steve Job’s famous pledge to “go thermonuclear” on Android devices – which he claimed massively infringed upon Apple’s intellectual copyright – Apple have launched attack after attack on companies ranging from Google to Motorola. But some of their most famous clashes have been with Samsung, and for good reason, as the South Korean conglomerate is currently their biggest rival in the Smartphone market: together, Apple and Samsung account for over 50% of Smartphone sales, and over 90% of Smartphone profits.
However, the importance of banning sales of the Galaxy Tab 10.1 is largely symbolic. The newer iteration of the device – the Samsung Galaxy Tab 2 10.1 – is still on the marketplace; in fact, the Tab 2 was created specifically in order to circumvent a similar ban faced by the original Tab in the German marketplace. The scope of Apple’s design patent is fairly narrow, meaning by differentiating the Tab 2 just enough from the iPad, Samsung barely had to alter the specifications of the new device. So the banning of the Galaxy Tab 10.1 amounts largely to petulance on behalf of Apple; the real battle to retain Samsung’s Smartphone supremacy begins on July 30th.
