After a tense and protracted legal battle between the two premier manufacturers of Smartphones, the jury adjourned, deliberation began, and a decision was reached – and just as the jury in South Korea (Samsung’s base of operations) reached an outcome favourable to their home-grown manufacturing giant, so too did the North American jury reach a decision which favoured their team of choice, Apple. And though the Cupertino-based company didn’t manage to reach the $2.75 billion settlement they sought, they still attained a success, with a fine of more than one billion dollars.
Surprisingly given the great complexity of the case, the nine juror-strong contingency took a mere three days to reach a decision; and that decision was simple – that Samsung had infringed upon six of the seven Apple patents that were in dispute, with five of the six constituting wilful infringement. Though the South Korean conglomerate counter-sued, asserting that Apple had wilfully infringed upon five of its patents (which largely pertained to wireless internet access standards, in lieu of the more subjective design patents levied by Apple), the jury ruled against these assertions, allowing Apple to escape the legal tussle unscathed. This stands in stark opposition to the Seoul ruling a mere week ago, in which the judge ruled that Apple had infringed upon Samsung’s wireless patents, and that the mitigating factor of prior art (design precedent set within the industry) was enough to say that the similarity in appearance between Samsung’s Smartphone and tablet ranges and Apple’s iPhone/iPad was coincidental – or at least coincided with the shift in design across the entire industry.
However, as a professor based in Singapore correctly pointed out, the South Korean standards of intellectual property are significantly less strict than in the US; there’s a long tradition of ‘borrowing’ ideas, and given Samsung’s history of manufacturing their designs in bulk as swiftly as possible (a tradition which has allowed them to supersede Apple in overall global sales, if not profit), it’s likely the South Korean chaebol was not able to vet their designs as comprehensively as an American company like Apple. Statements like this represent the sense of resignation that people now have regarding these Smartphone patent struggles; while Samsung has vowed to appeal the decision, and while the disputed devices have yet to be banned (a court case is set in December for this particular detail), a precedent has now been set, and it doesn’t bode well for Android manufacturers of any stripe, whether it be Sony or HTC.
Apple has long insisted that the Android operating system is a spit in the face of their longstanding Smartphone iOS, and Steve Jobs’ famous declaration to “go thermonuclear” on Google, its godfather, has become a virtual holy war for the Cupertino-based company. While the design patents levied against Samsung (and concurrent court cases with companies such as HTC and Motorola) may have validity, most people versed in the topic now accept that Apple is waging a proxy-war – going for the appendages of the hydra before they tackle the beast itself, in the form of Google Inc. And with this precedent now set, Apple has a much greater chance of succeeding in a legal tussle with the search and software giant. But what does this mean for Samsung? Well, it may not mean that much, to be honest – while a $1 billion payout may have crippled many lesser Android manufacturers, Samsung are currently ranked as the top manufacturer globally, and even with a significant stock hit from the decision (7.5%, or over $12 billion) they’re unlikely to be going anywhere anytime soon, considering their vast diversification into fields such as chipset, TV and tablet manufacturing. Their flagship device, the Samsung Galaxy S3, was exempt from the case, and its features are generally regarded to be distinct enough from Apple’s iPhone to not warrant any kind of sanction – a few tweaks here and there, a little time to cleanse the palate of the consumer, and Samsung should be back to doing what they’ve always done.
But the significance of Apple’s victory shouldn’t be underestimated, nevertheless. Now that they have proven their mettle in court against their biggest manufacturing foe, they possess the tools needed to go head-to-head with their foe in the arena of software. We here at Mobile Madhouse confidently expect a dramatic showdown between Apple and Google to occur within the next year or so, an impression bolstered by Google’s recent decision to attack Apple in the form of subsidiary company Motorola Mobility. And rest assured, we’ll keep you up-to-date with all aspects of this trial, should it indeed break out!
Surprisingly given the great complexity of the case, the nine juror-strong contingency took a mere three days to reach a decision; and that decision was simple – that Samsung had infringed upon six of the seven Apple patents that were in dispute, with five of the six constituting wilful infringement. Though the South Korean conglomerate counter-sued, asserting that Apple had wilfully infringed upon five of its patents (which largely pertained to wireless internet access standards, in lieu of the more subjective design patents levied by Apple), the jury ruled against these assertions, allowing Apple to escape the legal tussle unscathed. This stands in stark opposition to the Seoul ruling a mere week ago, in which the judge ruled that Apple had infringed upon Samsung’s wireless patents, and that the mitigating factor of prior art (design precedent set within the industry) was enough to say that the similarity in appearance between Samsung’s Smartphone and tablet ranges and Apple’s iPhone/iPad was coincidental – or at least coincided with the shift in design across the entire industry.
However, as a professor based in Singapore correctly pointed out, the South Korean standards of intellectual property are significantly less strict than in the US; there’s a long tradition of ‘borrowing’ ideas, and given Samsung’s history of manufacturing their designs in bulk as swiftly as possible (a tradition which has allowed them to supersede Apple in overall global sales, if not profit), it’s likely the South Korean chaebol was not able to vet their designs as comprehensively as an American company like Apple. Statements like this represent the sense of resignation that people now have regarding these Smartphone patent struggles; while Samsung has vowed to appeal the decision, and while the disputed devices have yet to be banned (a court case is set in December for this particular detail), a precedent has now been set, and it doesn’t bode well for Android manufacturers of any stripe, whether it be Sony or HTC.
Apple has long insisted that the Android operating system is a spit in the face of their longstanding Smartphone iOS, and Steve Jobs’ famous declaration to “go thermonuclear” on Google, its godfather, has become a virtual holy war for the Cupertino-based company. While the design patents levied against Samsung (and concurrent court cases with companies such as HTC and Motorola) may have validity, most people versed in the topic now accept that Apple is waging a proxy-war – going for the appendages of the hydra before they tackle the beast itself, in the form of Google Inc. And with this precedent now set, Apple has a much greater chance of succeeding in a legal tussle with the search and software giant. But what does this mean for Samsung? Well, it may not mean that much, to be honest – while a $1 billion payout may have crippled many lesser Android manufacturers, Samsung are currently ranked as the top manufacturer globally, and even with a significant stock hit from the decision (7.5%, or over $12 billion) they’re unlikely to be going anywhere anytime soon, considering their vast diversification into fields such as chipset, TV and tablet manufacturing. Their flagship device, the Samsung Galaxy S3, was exempt from the case, and its features are generally regarded to be distinct enough from Apple’s iPhone to not warrant any kind of sanction – a few tweaks here and there, a little time to cleanse the palate of the consumer, and Samsung should be back to doing what they’ve always done.
But the significance of Apple’s victory shouldn’t be underestimated, nevertheless. Now that they have proven their mettle in court against their biggest manufacturing foe, they possess the tools needed to go head-to-head with their foe in the arena of software. We here at Mobile Madhouse confidently expect a dramatic showdown between Apple and Google to occur within the next year or so, an impression bolstered by Google’s recent decision to attack Apple in the form of subsidiary company Motorola Mobility. And rest assured, we’ll keep you up-to-date with all aspects of this trial, should it indeed break out!
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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.
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.
HTC are hopeful, however, that there’s light at the end of the tunnel. A recent ruling means that HTC is free to sell its wares in America while the courts mull over the patent war, the judge correctly noting that a long delay in deliberation could cripple HTC financially if the allegations turn out to be unfounded. And though HTC faces fierce competition in its established market of high-end Smartphones (the recently-released Samsung Galaxy S3 is touted as a direct competitor to the HTC One X), it’s competition that HTC can face head-on, in the market arena where they are comfortable - rather than in an American courtroom.
