Tuesday, August 28, 2012

Apple vs. Samsung

Patents are probably one of the best ideas that almost never work.  The economic advantage of being second is overwhelming.  You don't incur the enormous costs and risks of discovering a new market and building something that fills it.  You have a chance to improve on the original.  Etc.  Knowing this, the government in places like USA stepped in to protect the original inventor by instituting patent laws—establishing the patent office was one of the first things this country did.  But if patents were instituted to protect the honest inventors, patent laws are the territory of some of the more Predatory legal schemers.  Knowing this, many Producers are reluctant to even bother with patents.  Henry Ford, for example, hated the patent system.  Such Producers rely on trade secrets and technological complexity to protect their inventions.

Apple's iPad seems like it would be the perfect example of something that requires patent protection.  The innovation was obviously Apple's.  It was not only their idea but if anyone recalls the jeering that met this product's announcement, most pros didn't even believe it was a good idea.  And while the iPad isn't all that easy to copy, it is easy enough so that Apple surrounded the product with as much patent protection as they could muster.

It didn't take very long before Samsung, a South Korean company with plenty of resources to copy the iPad, and Apple met in court.  The arguments were pretty boilerplate for a patent fight but it was clear from the outset that Apple's position was rock-solid.  In fact, it took the jury less than three days to return a $billion+ judgement against Samsung.

But while the patent implications are fairly clear, the outcome is not.  The Koreans barely acknowledge patents at all and so Samsung will likely shop for a new trial venue.  Apple just happens to be Samsung's largest customer so under the theory of "the customer is always right" one would think these companies could work out some agreement.  But one never knows.  There are complicating issues and patent lawyers really have no reason to ever settle in a fight that guarantees them a long-term income stream.

Me?  Even though I am not an iPad / iPhone user so have no dog in this fight, I find it interesting because it is such a classic Producer-Producer spat.  It demonstrates the various cultural differences over the subject of intellectual property.  It highlights the problems of just who invented what in the world of advanced electronics where such issues are FAR from clear.  And the speed by which a jury reached a verdict in this trial suggests that folks from USA have grown exceeding weary of the Asians copying so shamelessly.

Apple's victory could mean fewer phone options

By PAUL ELIAS | Associated Press – Sat, Aug 25, 2012

SAN JOSE, Calif. (AP) — Apple Inc.'s $1 billion legal victory could mean fewer smartphone options for consumers to choose from, analysts said.

A federal jury's verdict Friday that Samsung Electronic Co. 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."

That's if the verdict stands. 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.

Apple lawyers plan to formally demand Samsung pull its most popular cellphones and computer tablets from the U.S. market. They also can ask the judge to triple the damages from $1.05 billion to $3 billion.

U.S. District Judge Lucy Koh will decide those issues, along with Samsung's demand she overturn the jury's verdict, in several weeks. Quinn said Samsung would appeal if the judge refuses to toss out the decision.

Apple Inc. filed its patent infringement lawsuit in April 2011 and engaged the country's highest-paid patent lawyers to demand $2.5 billion from its top smartphone competitor. Samsung Electronics Co. fired back with its own lawsuit seeking $399 million. more

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