Apple Crush Samsung in US Patent Dispute

In a case which neatly illustrates the competing tensions created by a patent system, and in one of the largest patent disputes yet seen, a US jury has found for Apple in its US lawsuit that Samsung’s Galaxy infringes Apple’s patents protecting the technology behind its hugely successful iPad and iPhones.

The jury has awarded Apple over one billion dollars. Samsung having also been found by the jury to have acted “wilfully“, means that the Judge has the power to increase the damages yet further. Apple is also now going to apply for an injunction preventing further sales of the infringing products.

It is a truth universally acknowledged that every successful product will shape a market, inspire competitors and ultimately be copied. One of the tensions in intellectual property (IP) law is where the line should be drawn between what is fair competition and what is not. Obtaining a patent is a powerful tool in helping ensure the widest degree of protection available is obtained.

Apple has long recognised the value of its IP and the importance of protecting it. Its press release following the case makes reference to the fact that as a company they “value originality and innovation… and pour our lives into making the best products on earth“. It has sought to enforce its rights aggressively on many occasions around the world and uses its rights to seek to preserve its market share where it perceives competitors take shortcuts by copying its cutting-edge designs and technologies and so cross the line between inspiration and copying.

In this case, Apple claimed that Samsung had infringed seven of its patents, including:

Samsung defended these claims and bought its own, alleging Apple had infringed five of its own patents. These predominantly were standard-essential patents (where technology is protected which allows an industry standard feature to operate). The patents covered:

Such technology has to be licensed on payment of reasonable royalty rates. Samsung said terms were offered but Apple had not been prepared to agree to them, offer its own proposals or pay for their use.

Apple’s attorney in his closing submissions summarised Apple’s position in a classic statement of why IP rights are regarded as so important:

Samsung took a different view. They argued that “rather than seeking a competitive edge in the marketplace, Apple seeks to gain it in this Courtroom.” Samsung complained that Apple was seeking to extend the monopoly awarded by its patents too far and was using the patents to try and stop legitimate competition.

Not surprisingly, the parties’ respective statements put out following the decision continued to reflect this tension. Apple has applauded the outcome, saying:

By contrast, Samsung has said that the decision will be to the detriment of the consumer, who will face “fewer choices, less innovation and higher prices” as a result. It argues that “patent law is being manipulated to give one company a monopoly over rectangles with rounded edges“.

Commentators are divided on whether innovation will be helped or hindered by this decision, what impact it may have in the market, and whether it may even prove counterproductive if Apple faces an anti-US backlash as a result of being perceived as being too aggressive.

The litigation is far from over. Samsung has already announced they are to appeal. On the same day, the same parties arguing over patent infringements in South Korea were both on the receiving ends of injunctions (but only nominal damages). There are over 50 other lawsuits ongoing around the world between these companies. The lawyers will be kept busy for some time yet as the parties continue to battle for control of the market through the courts.

But ultimately it is a battle that will be decided in the marketplace. And there’s the rub. Patents are a crucial and necessary tool for companies in protecting their investment in innovation. But it is the companies that can keep innovating and delivering what the customers want who ultimately stand the best chance of long-term success. Litigation is an essential part of a strategy for every company, but litigation can never be the only strategy.

Comment

Despite the extensive litigation here, it is a lesson both these technological giants know well. That is why both have delivered product after product to delight consumers and enjoyed sustained success in a highly competitive field. The key battle will ultimately not be decided in the Courts, but in who can provide the next generation of products to capture the imagination of consumers.