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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: Apple WANTS a fight, not a settlement
By dgingerich on 8/20/2012 6:55:57 PM , Rating: 2
I find it funny that people call Apple's copying of Sci-fi concepts, market trends, and plain old concepts that have been in use for decades to centuries "innovation."


RE: Apple WANTS a fight, not a settlement
By Tony Swash on 8/20/12, Rating: -1
By momorere on 8/20/2012 8:18:09 PM , Rating: 3
It is sad that Apple copied (I mean invented) so many designs from a single company/designer from 50 years ago.

http://gizmodo.com/343641/1960s-braun-products-hol...


RE: Apple WANTS a fight, not a settlement
By Iketh on 8/20/2012 10:27:08 PM , Rating: 1
lol, of course someone can invent a warp drive... you can begin your debate after someone invents it and then sues someone else that does the same thing...

THAT is the analogy, please try to think


RE: Apple WANTS a fight, not a settlement
By Tony Swash on 8/21/12, Rating: 0
By Iketh on 8/22/2012 11:35:48 AM , Rating: 2
No one said you're not allowed to patent a warp drive..... What is wrong with your head?


RE: Apple WANTS a fight, not a settlement
By dgingerich on 8/21/2012 1:41:08 PM , Rating: 1
The moment someone invents a warp drive that uses anti-matter and "dilithium crystals" to generate a warp plasma, send that through mysterious "warp coils", and generate a "warp field", yeah, they won't be able to patent that. (Don't get on me about warp drive, I was a Star Trek expert back in my younger years, and I'm not ashamed of it.) However, the current patent system would allow someone to patent a "warp drive" based on the basic concept of altering the space around an object, regardless of how it is performed, and that is specifically what is broken.

The fact of the matter is that certain things are completely made up, like Star Trek's warp drive. There is no foundation in science for how those work. The basic concept is there, but the mechanics is what matters.

Yes, Apple should be allowed to patent the specific way they built their iPad and iPhone, as far as battery construction, circuit layout, and screen layout, if they invented it. (They didn't invent the layout of their touchscreen, though, as that was invented far earlier, and they just copied Mitsubishi's layout, under license.) They should be allowed to patent their way of detecting a finger slide across the screen, or multi-touch gestures even, if they invented it. (In case you were wondering, they didn't, as that was invented back in the mid-90's.)

No, they shouldn't be able to patent a simple flat rectangle, as that has been in science fiction for decades, and they did nothing to innovate that. They should not be allowed to patent anything general, like multi-touch gestures or finger sliding in general, only the technique on how they detect and manage it. There is nothing innovative on general concepts, only on how to do it.

Edison didn't get a patent on electrically generating light, only using certain filaments to do so. If he had been able to patent that, as he would under the current system, we would all be paying $100 for a lightbulb these days, and most of us would be in the dark.

Don't get on me about the particulars. I know exactly what's wrong with the system: lawyers.


By Cheesew1z69 on 8/21/2012 1:44:10 PM , Rating: 1
quote:
(In case you were wondering, they didn't, as that was invented back in the mid-90's.)
Actually, no one is wondering. We all know they don't "invent" things. They take existing technologies, and package them.


"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone














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