About Us | Login | Follow CITO Research:

The Apple vs. Samsung Verdict: A Case of Copying Gone Too Far

Gavel in court

When the jury decision in the Apple v. Samsung trial was announced, I was expecting a rather somber response. Litigation never really has a winner. It’s a court decision that attempts to resolve what the parties could not resolve themselves. However, thousands of often emotionally charged articles were written following Samsung’s argument that the verdict restricts freedom of choice for the consumer, fully aware that such an argument would rally the American public. But I seriously doubt that there will be fewer choices going forward. From where I sit, Samsung's copying had gone too far and I'm glad it was curtailed.

Copyright, trademark, and patent laws protect investments in intellectual property. In the Apple v. Samsung case, the scope was quite narrow. Given that certain patents had been granted to Apple and were not found invalid, the jury had to find for Apple. The main issue was how much should be awarded for damages. Juries tend to overreact and award high damages, but in this case the jury significantly reduced Apple’s claim to better reflect actual damages suffered, as much as this is even possible.

If freedom of choice were paramount, restrictions protecting intellectual property would be meaningless. You can’t have one without the other, nor would anyone want a free-for-all approach. Investments in new ideas would be severely limited. However, there is a middle ground. For example, most European companies exclude patents on general ideas in software, simply because copying existing approaches often does more good than harm.

When Copying Works

The traditional wisdom is that more choice is better, and that competition spurs innovation. Many books have been written about how copying makes for lively competition especially in fast moving industry sectors. It prevents companies from resting on their laurels and motivates new ideas and trends.

The fashion industry is a classic example. Many countries do not protect fashion designs. New York City street vendors sell fashion “knockoffs” right in front of luxury retail stores. And these stores do surprisingly little about it. Why? Customers that can’t afford the original stay out of the store, and the “knockoffs” introduce them to a brand that they may eventually buy.

In technology, copying endorses the solution of a competitor and creates quasi-standards where none existed. It helps to create common device-device or user-device interactions, making such devices easier to understand for users, and frees company resources to focus on further innovation.

When Copying Fails

There are occasions when copying plainly fails. In 2011, when Intel tried to sell the Ultrabook as an innovative product, it plainly lagged the MacBook Air, introduced in 2008.

Car makers often fall into this trap. Low-quality copying of luxury German brands to produce a similar looking car at half the price looks as fake as a knockoff handbag. And when car companies claim that their suspension has the same pedigree as an Italian supercar costing five times more, we wonder how this is possible. A simple review of the specs confirms that of course it isn't.

When Copying Goes Too Far

There is a point when copying goes too far. Legal street vendors in New York City sell their knockoffs openly on the street, mostly in compliance with the laws. But thousands of illegal vendors, hiding in building entrances or having straw men working for them, sell exact replicas of luxury brands, sometimes even before they are available in stores. Everybody knows instinctively that something isn’t right here.

Willful Infringement Separates Good from Bad

As evidence was presented in the Apple v. Samsung case, Samsung created the impression of being less forthcoming with information relevant to its defense. Instead of addressing Apple’s claims head-on, for example, bringing the people that wrote the documentation about Apple’s design for engineering to implement, Samsung chose a less concrete defense strategy. First by doubting that patents—though officially granted and widely know to exist—were valid. Then by making wider claims that any infringement claim would hurt the consumer by resulting in less competition and less freedom of choice for America. Something just didn’t feel right.

It was the little word “willful” that received little attention from the public. The jury found that Samsung willfully infringed on Apple’s patents. And while very few people will ever know what really happened behind closed doors in both companies, judging by the documents that leaked on the Internet, Apple had been offering a licensing deal to Samsung, which Samsung repeatedly declined. But, after the lawsuit, Samsung made a statement that they had been trying to seek out a settlement deal, but could not agree to terms. It just didn’t add up.

What's the Big Deal Behind Patents and Inventions

People have been asking what’s the big deal behind inventions and patents such as “slide to unlock” or “grid layouts” for applications. In 2007, I participated in one of the very first Apple iPhone development events and met one of Apple’s technology evangelists. [Full disclosure: I do not have a business relationship with Apple.] We spoke at length about how much work was necessary to make the iPhone just right. Until then, I had never thought that so much work could be done on so many seemingly trivial tasks. Consider the application grid layout. To size the application icons, and to define the space between them, required countless so hours to ensure that people with small and large fingers alike could operate it successfully.

When you read some of the internal documents from the Apple v. Samsung trial, you see a cookbook for copying many little ideas that took years and millions to develop. Samsung’s copying of seemingly unimportant features saved millions in development costs and clearly went too far.

Neither Apple Nor Samsung are Innovative Companies Per Se

What Apple and Samsung really do is bring the most innovative technology ideas that they can find (copying, acquiring companies, developing etc.) to consumers at the fastest speed possible, making money for their shareholders in the process. Apple has also been accused of copying; for example, they took the original graphical user interface from Xerox. But there is an intention gap. When you copy from your direct competitor with the intention to gain market share, it’s clearly different from when you copy good ideas from somewhere to bring them out of the lab and to the public.

The underlying problem is that companies are using the US patent system to protect their investments in developing and adopting these innovative ideas for mobile devices. However, the patent system is old, clearly creaking, and ill-adapted to current market conditions for consumer electronics. Patents are awarded for minor inventions, just to be weaponized by patent “trolls” to extort money from companies with threats of patent infringement claims.

That a leading company is litigating on patent infringement at this scale is new, but not unexpected. And we are not at the end of this battle. Samsung will appeal, maybe up to the Supreme Court, and may file separate lawsuits against Apple for other products. Both companies have very large patent portfolios, and could sue each other on many fronts. In the current case, some shortcuts were already mandated by the court. If Apple had sued Samsung (and vice-versa) for all patent violations, the lawsuit would have taken an eternity. It’s just no longer practical.

It will be interesting to see how the Apple v. Samsung lawsuit plays out in other countries where it is being litigated. In some countries, Apple’s claims have been rejected with the argument that Apple doesn’t need protection as it is a dominant market player anyhow. Other countries have very minor penalties for copyright claims and patent infringements, and some do not honor commonly accepted legal principles, like patent exhaustion on supplied parts covered under patents by the supplier, or standard essential patents according to FRAND (fair, reasonable, and nondiscriminatory) terms.

While the verdict looks like a win for Apple, it also puts a huge responsibility on them. Apple will need to work out FRAND-like licensing terms and continue to innovate to come up with new ideas. Patent litigation is a method of last resort, expensive for all parties involved.