American electronics giant goes in for the kill on rival

On Tuesday Reuters reported from Australia, revealing that a lawyer for Apple, Inc. (AAPL) had announced his company's decision to reject a cross-licensing offer from Samsung Electronics Comp., Ltd. (SEO 005930).

I. Apple Seeks Court-Enforced Smart Phone and Tablet Monopoly

Apple and Samsung are currently number one and number two, respectively, in global smartphone and in global tablet sales.  While Apple currently holds the lead, Samsung last quarter posted over three times the growth of Apple, making it the world's fastest growing smartphone company.  In a bid to try to slow its surging rival, Apple is going after Samsung in court [1][2][3][4] [5][6][7] with lawsuits.

While Apple claims that it approached Samsung prior to the lawsuit with an undisclosed proposal, Apple has thus far refused all settlement offers from Android manufacturers, instead looking to ban their sales in court.

Australia, Sydney harbor
Fig. 1: An Australian court is pondering whether to grant Apple a court-enforced monopoly on multi-touch, minimalist tablets. [Source: Island Glory]

Apple claims that it owns sole rights internationally to make a rectangular glass multi-touch tablet with a "minimalist" design (typically interpreted as a design having one or less face buttons).  It holds multiple regional patents on a minimalist tablet design from 2004, which it is using to try to enforce this claim.

The Cupertino gadget maker also claims ownership of mobile multi-touch.  In the U.S. it was granted a patent on multi-touch in mobile devices, despite the fact that Myron Krueger and the University of Toronto developed and published papers on virtually equivalent technology almost 25 years prior to Apple producing its first multi-touch device (the iPhone).

In Australia, where the case in this report is being contested, Apple holds three key multi-touch patents --  a patent on the manufacturing of a capacitive touch screen used in the iPad 2 and Galaxy Tab 10.1 (patent AU 2005246219), a patent covering selective rejection of inadvertent finger movements on a touch screen (patent AU 2008258177), and a heuristics patent used to correct a user's finger movements when scrolling vertically on a screen (patent AU 2007286532).

Essentially, Apple pieced together seemingly obvious or widely used techniques and sought patents on them. For example with the AU 2008258177 patent, it combines the common input filtering mechanism found in wireless mice, electronic steering, and more with a multi-touch input device and asserts that to be patentable.  In AU 2007286532, Apple combines mild artificial intelligence -- a heuristic (experience-based algorithm) -- with multi-touch finger motions to provide superior motions.

Without input filtering virtually any electronic input device feels glitchy and temperamental.  But Apple is in essence claiming that it owns exclusive rights to apply well researched techniques -- filtering and AI learning -- to multi-touch.  Needless to say, this is a claim that its rivals, including Google, Inc. (GOOG), find questionable; particularly given the body of peer-reviewed research on the topic published in the 80s and 90s.

If Apple succeeds in either of its claims, it will essentially be able to force Android smartphones and tablets in certain regions to adopt undesirable modifications -- for example glitchy touch interfaces and clumsy extra buttons.

Early multitouch devices
Fig. 2: Apple claims exclusive rights to apply commonly used software techniques like filtering or artificial intelligence to multi-touch input, despite the fact that most of these multi-touch technologies were developed in the 1980s and 1990s [pictured: Early multi-touch interface by Myron Krueger shows pinch zooming; source: Bill Buxton].

Samsung's lawyer, Neil Young, was frustrated with the slow pace of the court proceedings in Australia.  He commented that if a ruling did not come soon, that his company's Galaxy Tab 10.1 tablet was "commercially dead" in the large Australian market.  He remarks, "If we can’t get a decision out by mid-October, there is no urgency."

II.  Crucial Ruling May Decide Android and Apple's Fates

If the tablet indeed perishes, it would be Apple's second major victory over Samsung.  Earlier Samsung saw its tablet sales banned by a German judge.  Germany is Europe's third largest tablet market.

However, Samsung has somewhat of a victory under its belt as well.  In a decision largely misinterpreted by many news outlets, Apple won a single infringement claim against Samsung in the Netherlands.  However, that infringement claim only applied to one easily-removable feature within a single Android app, while Apple's broader claims were rejected.  Thus Samsung is not expected to see significant tablet or smartphone sales disruption in the Netherlands -- a victory for the South Korean firm.

The most important ruling, arguably, for Samsung may come this week, when a federal judge decides whether to bow to Apple's request for a preliminary injunction banning all Samsung Android smartphone and tablet imports to the U.S.  Apple is suing Samsung in Northern California District Court and claims that the the ban is necessary to prevent Samsung from "slavishly" copying its products.

Galaxy devices, in hand
Fig. 3: A decision on whether to ban U.S. sales of Samsung's Galaxy smartphones and tablets could come as soon as this week.

If a ban were to be put in place Samsung's last hope would be to succeed in banning Apple's imports in its countersuits [1][2].  Such a dual-ban could force Apple to agree to cross-licensing out of self-interest.  Apple clearly would prefer a one-sided ban, which would allow it to stifle Samsung's product lineup, but it remains to be seen if it will be able to have its way with the American trade court.

The Samsung ruling is very important to the market in general as a preliminary injunction could signal the first of several similar rulings against the top Android manufacturers.  These rulings could give Apple a court-enforced monopoly in the U.S. -- or alternatively, be the final nail in the coffin of Apple's bid for market dominance.

Deutsche Telekom AG's (ETR:DTE) T-Mobile USA and Verizon Communications, Inc. (VZ) have filed amicus curiae ("friend of the court") briefs [1][2] opposing Apple's request for a preliminary injunction stating it would have a catastrophic effect on the American phone market, where Android currently accounts for over half of smartphones sold.

Source: Reuters

“We do believe we have a moral responsibility to keep porn off the iPhone.” -- Steve Jobs

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