Copy that

August 25, 2012 Editor 0

AFTER a jury in a federal court in California ruled on August 24th that Samsung had violated some of Apple’s patents, one wag online began referring to the South Korean company as “Samesung”. But for Samsung, the verdict is no laughing matter. As well as vindicating Apple, the jury awarded it $1 billion in damages—an amount that could be tripled because Samsung is deemed to have “willfully” copied some aspects of Apple’s wildly popular iPhone and its iPad tablet computer.

The outcome of the case will have significant repercussions in the tech world. For a start, it will encourage Apple to lob even more lawsuits at firms it believes are ripping off its intellectual property. It will also encourage other companies that make smartphones and tablets either to license patents from Apple or to modify the design of products to minimise the risk they will be hit with lawsuits too. And the whopping size of the damages will intensify the debate over whether or not America’s system for protecting innovations needs revamping.

Samsung has already made clear that it intends to appeal against the ruling, a process that could take months or, more likely, years. But legal experts think the chances of getting it overturned are slim. The jury concluded that the company had violated a number of Apple’s patents covering things such as a “rubber-banding” feature in its firm’s operating system, which makes lists jump back when pulled beyond their limit, and a “pinch-and-zoom” feature which is now found in a wide range of mobile devices. It also upheld Apple’s claim that Samsung had infringed on its design patents by copying aspects of the iPhone’s design, such as the system used to display icons.

At the same time, the jurors tossed out Samsung’s charge that Apple owed it money for violating several of its patents, including one that allows a user to listen to music in the background while carrying out another task on a device. On the same day that the American ruling came out, a court in South Korea that had been hearing a similar case between the two firms concluded that both were guilty of violating patents and banned some of their devices from being sold in the country. But because America is the world’s largest market for consumer electronics, the Californian ruling will have a far bigger impact.

The fight between the two companies had been brewing for some time and was a litmus test for Apple’s determination to thwart the progress of Android, a rival mobile operating system championed by Google and embraced by Samsung and a host of other mobile-device makers. (Gartner, a research firm, says that more than two-thirds of the smartphones shipped in the second quarter of 2012 were powered by Android.) Before his death last year, Apple’s co-founder, Steve Jobs, told his biographer Walter Isaacson that he believed Android had stolen important features from Apple’s iOS operating system and said he would wage “thermonuclear war” on it.

His successor, Tim Cook, who celebrated his first year at the helm of Apple on the same day that the court ruling came out, isn’t about to declare a truce. During the trial, the notoriously secretive American firm revealed details about its design process and put on the stand a couple of its most senior executives. It also crowed about the verdict. In a statement the firm thanked the jury for sending “a loud and clear message that stealing isn’t right” and said that the evidence presented in court “showed that Samsung’s copying went far deeper” than even Apple had suspected.

Samsung, unsurprisingly, had a different view of the outcome, describing the ruling as “a win for Apple, and a loss for the American consumer”. “It is unfortunate,” it added, “that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies.” The South Korean firm did, however, have a couple of consolation prizes: the jury found that its Galaxy Tab tablet computer had not copied the iPad’s design, as Apple claimed, and it refused to grant Apple the full $2.5 billion in damages it had asked for.

Robert Scoble, a tech pundit, has even argued that the outcome of the case could be seen as a victory for Samsung on the ground that the penalty is a small price to pay for copying stuff that has helped the firm become a powerhouse in mobile devices. But other experts have pointed out that Apple has a huge stash of patents that it is now likely to defend more aggressively. And it is bound to step up its efforts to have offending Android devices banned from sale. The firm has already asked for a preliminary injunction against Samsung to stop it selling the products that infringe on Apple’s patents in America. A hearing is set for September 20th.

As a result of all this, makers of Android devices will either have to fork out money to license Apple’s technology, which will push up the price of their gadgets, or alter the design of their products sufficiently to shield them from legal challenges. That could slow the roll-out of new devices in the short term. But it could also spark a new round of innovation in the long run, as firms in the Android ecosystem seek to differentiate their offerings to protect them from more legal strikes by Apple.

The case will also stir up further debate about the way America’s patent system operates. Its fans are already hailing the California ruling as proof that the patent system protects inventors and that its benefits outweigh the costs. But critics will seize on the ruling as evidence that the litigation frenzy and a proliferation of software patents are having a chilling effect on innovation, leaving society worse off. If Samsung pursues its appeal all the way through the America’s legal system, the Supreme Court may end up having to decide which camp is right.

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Categories: The Economist

Tags: Apple, patent, samsung