Smartphone Wars

Apple sues Samsung for patent infringement. In response, Samsung files international countersuits on patents of its own. Courts around the world grant preliminary injunctions to each company on a number of their claims, while United States and European Union government agencies investigate allegations of antitrust violations. What’s going on here? Let’s start with the shiny new weapon that Apple added to its arsenal in June of last year: a patent on the original iPhone, the paperwork for which had been in the works since December of 2007. That patent claims, among other things, the finger-gesture-based set of input methods that has become integral to the functionality of today’s smartphones. Enter Samsung, now the world’s largest manufacturer of smartphones and owner of numerous patents covering globally standardized technological protocols. Samsung’s use of those input methods, as well as overlaps in product design, in its line of Android-based devices has put it squarely in Apple’s crosshairs.

Flicking your index finger up to scroll through an address book? Pinching a map or image to zoom out? Slicing watermelons to bits in Fruit Ninja? They’re all (arguably) covered by United States patent number 7966578 (“the ‘578 patent”). Though the capacitive touchscreen technology incorporated in the iPhone and most every modern smartphone is not itself claimed in Apple’s patent, the very means by which mobile phone users interact with that piece of hardware apparently is. The strength of the ‘578 patent has more recently been called into question by Judge Lucy Koh of the Northern District Court of California, who in October of 2011 ruled that although Samsung’s devices indeed infringe Apple’s patent, Apple still bears the burden of demonstrating the patent’s validity before relief may be granted. Judge Koh more recently denied Apple’s zealous bid to enjoin sales of Samsung smartphones and tablets in the United States.[i]

Apple has additionally based a significant portion of its legal battle against Samsung on similarities in design between the companies’ respective device families. In a recent and rather embarrassing courtroom exchange, Samsung’s attorneys themselves were unable to differentiate their new Galaxy 10.1” tablet from Apple’s iPad 2 while the two were held over the presiding judge’s head at a distance of ten feet. Samsung’s lead mobile device designer last week voiced offense at Apple’s allegations concerning such similarities, declaring, “the Galaxy [smartphone] is original from the beginning,” and the child of Samsung’s own independent efforts. Hardware design similarities are further aggravated by software-based visual overlaps, including the incorporation of rounded square icons in the modified Android operating system that ships with so many of Samsung’s new phones.

Adding fuel to the fire, Samsung filed numerous countersuits hinging on its ownership of patents in standardized technologies like 3G and UMTS communications protocols. That move was frowned upon in the European Union, where Samsung is presently being investigated by the European Commission’s Directorate-General for Competition for alleged antitrust violations on that basis. Due to the necessity of wide access to those industry-standard protocols, Samsung is legally required to license the manufacture of devices incorporating those technologies in a fair, reasonable, and non-discriminatory manner. Samsung’s attempts to secure injunctions against Apple in Europe have failed as a result of those protocol patents’ essentiality to cross-compatibility between different manufacturers’ devices and the wireless networks on which they reside.

So what does this all mean for consumers?  Germany has granted a preliminary injunction against Apple’s sale of the iPhone, while Australia temporarily banned sales of Samsung’s Galaxy tablet. Apple’s litigation with Motorola over two patents unrelated to the Samsung dispute further prompted a German court to enjoin sales of certain Apple devices within its borders. German smartphone buyers are now faced with a market severely limited by the effects of these interwoven lawsuits. Samsung has further sought to enjoin the sale of Apple products in its home country of Korea, as well as in Italy, Japan, and a handful of other prominent markets. Indeed, the Apple-Samsung dispute now comprises at least 21 separate suits in ten countries. The outcomes of these lawsuits could have dire effects on the availability of the mobile technologies that consumers have already begun to take for granted.

Apple has never been friendly to the idea of licensing its technologies out to competitors, and unlike Samsung, does not hold patents subject to mandatory licensing under European Union law. Experts opined last year that Apple was trying to knock Samsung, HTC, and other prominent competitors as far down as possible in anticipation of the upcoming holiday season, but domestic sales figures have remained strong on all sides. Apple’s March 16 release of the iPad 3 brought with it nearly $1.5 billion in revenue when upwards of three million units were sold over the opening weekend. If not for the fact that Android device sales significantly eclipsed iOS units’ in 2011, Apple would not appear to need any additional assistance in securing mobile device market share.

As much as Apple fanboys (and girls) would love to see the company’s family of i-devices remain at the top of the pack, some argue that litigation wins on these patent and trademark issues could spell disaster for competitive, and therefore innovative, markets. Google’s Android operating system, which relies heavily on the methods of use allegedly covered in Apple’s patents, would likely suffer significant immediate losses, presenting the risk that consumers will be forced into a “very closed world of Apple’s making.”

On the contrary, the mobile device market has developed so rapidly since Apple’s 2007 release of the original iPhone that Apple’s legal victories could work to usher the development of revolutionary new interfaces for the next generation of mobile devices. In developing its Kindle Fire, released in November of last year, Amazon worked hard to dodge intellectual property infringement issues by designing a tablet that is more easily distinguishable from the iPad than the Galaxy has proven in court. The device is notably smaller and incorporates a proprietary set of algorithms governing the use of pinch-zoom functions and the like. Consumers appear to have greeted Amazon’s device warmly as a marriage of low price and respectable functionality, though solid sales figures have been difficult to pin down. Whether it, along with other Android-based devices, will maintain strong market presence over the long term depends largely upon the wider impacts of the Apple-Samsung litigation and concurrent government antitrust investigations.

Additional considerations in the present round of litigation include the fact that Apple is one of Samsung’s biggest parts consumers, regularly buying huge quantities of capacitive touchscreens and semiconductors from the vertically integrated Korean giant. Samsung further owns patents in the iPhone 4S antenna design, but has yet to use this ammunition to its advantage in the present rounds of litigation. How these factors play into the smartphone wars is a dynamic yet to be observed, but here’s hoping that whatever happens means more and cooler options at market in the months to come!

[i] Blog Editor’s Update: The oral argument for the appeal of this case before the Federal Circuit, which took place on 6 April 2012, can be heard here.



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