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A trial could deeply hurt the pair's relationship, regardless of the outcome

Samsung Electronics Comp., Ltd.'s (KSC:005930) and Apple, Inc. (AAPL) will have one final talk before they take their case before a federal court jury in the United States, in a war that could limit U.S. consumer selection or grant artificial dominance in the smartphone market.

I. A Bitter Battle

As the world's largest display manufacturer and a top maker of DRAM, NAND, and mobile CPUs, Samsung is vitally important to Apple.  Samsung makes the system-on-a-chip (SoC) brains inside every iPad and iPhone.  

Yet in 2010, growing competition between the pair in the tablet and smartphone space prompted late Apple CEO Steve Jobs to accuse Samsung of "slavishly copying" his company's devices, filing suit in U.S. District Court for the Northern District of California.  Samsung hit back shortly thereafter, and the war was on.

The court battle has been fierce.  

Judge Koh
Judge Koh has admonished both sides in the case, at times. [Image Source: IB Times]

Judge Lucy Koh has admonished Apple's lawyers for belligerent filings, while earlier chastising Samsung from destroying potential evidence.  

The case currently dangles in the realm of subjectivity.  

While emails and internal documents demonstrate that Samsung was indeed looking to imitate traits of Apple's highly successful star tablet/smartphone, Apple was shown to borrow ideas for those devices from Samsung, Sony Corp. (TYO:6758), and other players who predated its market entry.

There are some visual similarities between Samsung's original Galaxy S smartphone and the iPhone -- likewise for iPad and Galaxy Tab.  There are also noticeable differences.  

At the end of the day much of Apple's design claims boil down to its assertion that it "owns" exclusive rights to produce rectangular tablets/smartphones with rounded edges.  Apple claims that some tablets/smartphones may be sufficiently different from the iPad/iPhone to escape design infringement, but its design experts have struggled to quantify discrete details of how Samsung and others can escape design infringement.

II. One Last Effort at Peace

Amidst this backdrop Samsung CEO Kwon Oh-hyun will call Apple CEO Tim Cook, in a final chance at settlement before the trial heads to the jury for a verdict.

Tim Cook and Kwon Oh-hyun
Apple CEO Tim Cook (left) and Samsung CEO Kwon Oh-hyun (right) will have one last attempt to make peace. [Image Source: Reuters (left); Bug.hr (right)]

At stake in the battle is the $219.1B (valuation by Bloomberg) smartphone market.  Combined with the tablet sector, these two markets could easily eclipse a trillion dollars in the next several years.

Apple would love to gain a monopoly in the smartphone market, to complement its dominant position in the tablet space.  But it has seemed sluggish in advancing the experience of its handheld devices opting for a slower pace of changes than Android.  As a result Android devices today have many capabilities and hardware advantages that their Apple counterparts do not -- such as larger screens, LTE modems, and near field communications.  Those factors have given Android phonemakers approximately 68 percent of the global market at last count [source].

To counteract that, it’s taken up the sword.  Apple is looking for $2.5B-$2.75B USD in infringement damages, as well as multiple sales bans on Samsung product -- a crippling outcome.  It is still pursuing similar terms in its case against HTC Corp. (TPE:2498), as well.  In the U.S. only Motorola Mobility -- a Google Inc. (GOOG) subsidiary is free from the wrath of Apple, after the pairs legal strife was twice dismissed "with prejudice" by a federal judge.

III. Samsung Presents Quandary for War-maker Apple 

The Samsung case is made unique by two factors.

First, Apple and Samsung are expected to do $12B USD in business in 2012, up 50 percent from the $8B USD in 2011.  Without Samsung's chips Apple could not make its products.  Fortunately, regardless of the lawsuit outcome, Samsung is contractually obligated to provide those chips to its archrival.  But the danger for Apple comes for the future.

If it hurts Samsung too bad, Samsung could retaliate by refusing to renew chip production contracts.  And given the level of design expertise employed by Samsung in making the chips -- particularly the SoC -- that could amount to almost a redesign for Apple of its smartphone chips.  Further, quality would likely suffer -- initial trial runs with third-party fabs reportedly did not go well for Apple; it was hard for them to match savvy Samsung's level of chip-making prowess.

Samsung iPhone 4S
Without Samsung, the iPhone could get a lot dumber. [Image Source: Snapguide]

Second, Samsung is the largest of the Android phonemakers, and the only one to approach Apple in profitability.  However, the promise of killing Android's superstar offers powerful motivation in the other direction -- for war.

It was Judge Koh who suggested the second peacemaking effort, with Samsung and later Apple agreeing.  The Judge called herself "pathologically optimistic" in her hope that this second round of intimate talks between company chiefs would produce a different outcome.

If it does not, the jury should be in for an arduous trial, as both companies -- after initial reductions -- argued that they were unable to further reduce their claims or exhibits.  At least one member of the jury has family members who reportedly hold a significant number of shares of Apple stock, something Judge Koh said was okay, as the individual themselves would not directly profit off of damaging Samsung and boosting Apple.  Still it's hard to imagine that couldn't introduce a certain level of bias in that member's mind.

Source: Bloomberg



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RE: Monopoly
By danjw1 on 8/20/2012 5:20:19 PM , Rating: 2
Childish lens? They managed to convince a patent examiner, that they could patent the rectangle? That is childish? That Apple would very much like to have a monopoly on the rectangle for phones and tablets? That they also have a patent, also having convinced a patent examiner, on the wedge shape for an ultrabook, laptop.

So, Apple should be the only one that can use the only reasonable shape for cell phones, tablets, and ultrabooks? And they get this because, they managed to convince some idiot that those were unique designs?

Design patents are a joke, there are only so many ways to reasonably shape certain types of devices. The same goes for software, there are only so many efficient ways to do certain things. Neither, rises to the level of non-obvious that is required by the most recent SCOTUS ruling on what is required for a valid patent. But that doesn't stop patent loving judges, like Koh, from letting frivilous suits like this going forward.


RE: Monopoly
By Tony Swash on 8/20/2012 5:47:23 PM , Rating: 2
quote:
They managed to convince a patent examiner, that they could patent the rectangle?


What's the number of that patent and how is it summarised in the patent notice?


RE: Monopoly
By ChronoReverse on 8/20/2012 6:13:33 PM , Rating: 3
Patent USD504889

[quote]We claim the ornamental design for an electronic device, substantially as shown and described.[/quote]

This is followed by drawings of rectangular screens without even things like button placement.

http://www.google.com/patents/USD504889


RE: Monopoly
By amanojaku on 8/20/2012 6:25:54 PM , Rating: 3
I looked at the patent, and it said it had images. So I tried to load them. I'm missing a plug-in. So I tried to install it. It's QUICKTIME. So I canceled. The US Patent and Trademark Office uses QUICKTIME to display images, eh? Curiouser and curiouser...


RE: Monopoly
By ChronoReverse on 8/20/2012 6:39:35 PM , Rating: 2
Or you could use the link I provided which mirrors it and doesn't require Quicktime. Not sure what your point is though.


RE: Monopoly
By amanojaku on 8/20/2012 6:53:38 PM , Rating: 2
I used your link, and it links to the USPTO, where the original content is. My point is, why does the USPTO website use Quicktime to display images, which should be JPGs or PNGs, when even Google's link has a PDF of the whole patent? I've never seen Quicktime used for images, even though I know it's possible. Is there some relationship between Apple and the USPTO?


RE: Monopoly
By Reclaimer77 on 8/20/2012 6:58:06 PM , Rating: 1
Using Quicktime format for images on a public website has to be one of THE dumbest things I've ever heard of.

Just...wow. Bias much USPTO? Way to use a format that only about 10% of the computer using population can view natively.


RE: Monopoly
By Shadowself on 8/20/2012 7:27:44 PM , Rating: 2
How is this any different than for many years the USPS and most DoD sites requiring the use of IE? (They coded MS IE specific implementations and when you tried to access them with anything other than IE [or another browser spoofing as IE] you got either a) a pop up stating the site was not accessible to you, or b) a significantly degraged experience [often even with non IE browsers spoofing as IE].)

How is USPTO choosing Quicktime as their preferred medium, while others methods are available too a bias? [I personally prefer the PDF route and I don't have Quicktime on my work machines at all] -- especially since other means are easily available as have been discussed above.

And please don't try to tell me that it's because IE was the 90% browser. Many of those sites transitioned to IE exclusive designs/implementations before IE got a majority installed base.


RE: Monopoly
By Reclaimer77 on 8/21/2012 9:23:18 AM , Rating: 2
Quicktime is strictly an Apple users format, that's why. More specifically OSX. Now some Apple fan will come here and say QT is great for movie trailers or whatever, but it's BS. Quicktime is a horrible format, the Windows version of the QT software package runs like ass and is buggy. And there's frankly just no need to have it installed whatsoever.

Countering this with some IE example from 20 years ago or whatever when everything was in flux in personal computing is just..irrelevant. It's 2012 and the only people who still think Quicktime is a relevant format are so few as to be insignificant.


RE: Monopoly
By ChronoReverse on 8/20/2012 7:16:39 PM , Rating: 2
Ah I see. I linked the Google one since it was easier to view (I had also noted the Quicktime plugin requirement, which I didn't have installed, on the USPTO site).

I doubt there's any nefarious reason for it though. More often than not, stupidity is a better explanation than malice.


RE: Monopoly
By Tony Swash on 8/20/12, Rating: -1
RE: Monopoly
By name99 on 8/20/2012 7:39:43 PM , Rating: 1
Did you actually LOOK at the source of the web page?
The issue in question is that the web page is serving up TIFs (NOT some QuickTime proprietary format) BUT rather than serving them up with img tags and assuming that any modern browser can handle TIF, it is serving them up with an embed tag. Embed means the browser needs to find a plugin that says it handles TIF.
It is your BROWSER that is asking for the QuickTime plugin, because that is the only one of the plugins it knows about that says it handles TIF.

Point is
(a) the USPO writes crappy web pages, but aren't doing anything QT specific.
(b) your browser is only mentioning QT because it doesn't know of any other "embed" style plugin that handles TIF.

This is, in a microcosm, the Apple hater attitude: Find something that looks strange then run your mouth off with conspiracy theories rather than taking one minute to investigate the matter more deeply.


RE: Monopoly
By Solandri on 8/21/2012 12:05:25 AM , Rating: 2
quote:
Design patents are a joke, there are only so many ways to reasonably shape certain types of devices.

Actually, I can see a good argument for having design patents. The unique shape of a Coca Cola bottle (if you're old enough to remember them), the macho front end of a Camaro, the distinctive appearance of Crocs sandals (hate em or love em, they're easily recognizable). All are characteristic of the manufacturer's product, and someone imitating them could cause confusion among consumers.

The problem comes about when you grant a design patent on a minimalist design. By definition, a minimalist design is nothing but the essential utilitarian features of the product, which should automatically disqualify it for a design patent (in the U.S., design patents have to be non-functional).

A design patent on a minimalist design forces everyone else to add unnecessary ornamentation or use non-optimal designs. That means rather than protecting the one manufacturer's brand, it's arbitrarily putting other manufacturers at a competitive disadvantage. That does considerable harm to the economy.


RE: Monopoly
By name99 on 8/21/12, Rating: -1
"We’re Apple. We don’t wear suits. We don’t even own suits." -- Apple CEO Steve Jobs














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