By way of disclosure, let me say that I own a Samsung Galaxy II and I love it. But others may not get the same opportunity after Apple won a $1.05 billion verdict in what was described in technology circles as the trial of the century. The jury in San Jose, California, not far from the Apple campus in Cupertino, ruled that Samsung violated a series of features from the iPad and iPhone for its smart phones and tablets. More important, a ruling by Judge Lucy Koh on September 20 could lead to the banning of several Samsung products from stores, including the Galaxy phone line, due to patent infringement. One product, the Samsung Galaxy 10.1 tablet, has already been banned.
Ultimately, Samsung will be fine. $1.05 billion represents less than 1.5% of annual revenues for the company. And Samsung plans to appeal to the DC Circuit Court, which routinely lowers monetary damages. Even if it remains the same, Samsung won’t be paying out to Apple for years.
The jury said Samsung’s Galaxy Tab products did not infringe on Apple’s technology, so they’re free to resume in that iPad-competing space. They dominate the smart phone market by 2-1 over the iPhone currently. And it’s likely that future smart phone updates will be able to get around the infringement; in fact, the company has already moved in that direction. The products that would potentially get banned are the legacy products that may no longer be in current production anyway.
Samsung could also see its popular Galaxy smartphone banned from sale in the United States. But its skill as a “fast executioner” – quick to match others’ innovations – would likely mean tweaked, non-patent infringing devices would be on the market soon after any ban came into place.
“Samsung has already made some design changes to new products since the litigation first started more than a year ago,” said Seo Won-seok, an analyst at Korea Investment & Securities. “With the ruling, they are now more likely to make further changes or they could simply decide to raise product prices to cover patent-related payments.”
Also, Apple’s demands for Samsung to pay it a royalty on its phone sales could hit rival phones using Google’s Android operating system more than it hits Samsung. If anything, the blaze of publicity from the high-profile, high-stakes U.S. litigation has made Samsung’s brand more recognizable.
The big loser will be consumers, who will pay more for phones across the Android line due to licensing fees. Moreover, companies will find greater hurdles to enter the smart phone space with innovations, fearful of Apple’s patent stranglehold. It’s not like there are that many ways to organize a graphical interface for a smart phone. In fact, one possible outcome is that Samsung and Apple enter into a cross-licensing agreement, making it virtually impossible for any other competitor to enter the market (the two companies already have a large supply relationship, so this wouldn’t be too surprising). At that point, Apple and Samsung divvy up the profits. Companies like HTC, LG, Motorola and Sony could end up having to drop their phones if the Android licensing fees imposed by Apple become too great for them to maintain their profit margins.
Maybe Samsung suffers some reputational risk, but I doubt it. If you’re looking for a loser here, it’s clearly the smart phone consumer. The choices in the market will be constricted, the patent-based fees will climb higher, and innovation will be chilled, because instead of building on designs, an upstart would have to completely design around these landmine patents. This is another example of rent-seeking by large corporations who sit on a market and take every opportunity to control it. Patent expert and author Leah Shaver told Wired, “When companies turn to litigation rather than innovation, consumers lose.”
In a separate case, a South Korean court ruled against both Apple and Samsung for copyright infringement, banning the Samsung Galaxy S II and the iPhone 4 from the country.




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The irony burns.
Scanning geekdom this AM, it appears that no one really has any issue with Samsung. In fact, Samsung is having a Chik-fil-A moment with mobs of geeks planning to buy, buy, buy. Apple however appears much more petty and more of the nasty behemouth than ever before.
There is also much more buzz about the fact that Apple is not a USA friendly country. That billion will probably just get spent in Asia or on upgrades to slave camps…err… Chinese factories.
Bottomline, Apple fanboys have something to keep their juices flowing until there is another “rumour” about some minor overpriced upgrade that will make the product they bought 9 months ago not work anymore. People who see Apple as just another tech company just have one more reason to dislike them. If Apple goes crazy and whips out the iron fist, there is a pretty big segment of consumers who will avoid their products even more.
DD doesn’t delve into the biggest exploitation of all – the slave labor in Apple’s factories. Many in the same crowd that pisses on Wal-Mart for its exploitative ways wiles away their time on iphones, ipads, iwhatevers, oblivious to how and by whom their toys are made.
Along the same lines (rent-seeking, consumer-suffering), a diabetes researcher has made significant inroads toward finding a cure. The money statement from the article is this:
Faustman and her colleagues at Massachusetts General in Boston are working to get the vaccine to market. After their early findings in studies with mice, she said they tried to interest every major drugmaker in developing the vaccine as a possible cure for diabetes. All told her there wasn’t enough money to be made in a cure that used an inexpensive, generically available vaccine, Faustman said.
CURE! Oh my God, no drug company wants a cure. How else can they endlessly collect from us peons?
Sorry, I don’t know how to do the link-y thing. In re comment #4: http://www.bloomberg.com/news/2012-08-08/diabetes-may-be-reversed-by-long-used-vaccine-for-tb.html
And unless you LIVE with this disease, from the moment your feet hit the floor in the morning until lights out (and beyond), most people do not understand what a truly nasty (and costly) disease Type 1 diabetes actually is. Living with this disease sometimes leaves one feeling like a second-class citizen. But then, when the money continually goes from your pocket to the medical/pharma/insurance complex, you feel you are nothing more than a money-stream–which IMO is lower than 2nd class citizenship.
I’m surprised the trial occurred only 10 miles from Apple’s headquarters. Samsung should have requested a change of venue because any local jury is undoubtedly partial to Saint Steven. Excellent analysis, DD. Thanks!
Heh.
IANAG. The only apple product I own is an ipod & I hate it bc I listen to books and you can’t load more than one book disc at a time, blah blah blah.
I have always been skeptical of apple polishing. Has always seemed like a cult to me. But WTF do I know, JMO.
Now evidence comes out. Slave labor, planned obsolescence, geek neighbor tells me that, though apples go rotten less often, when they do, they’re irreparable.
Not that Microsoft is anything to write home about.
Oh, I forgot to mention. For some reason this strikes me as the beginning of what will become aggressive trade wars of U.S. 1%ers. Again, JMO, have no idea why & no evidence yet.
Two other things to mention. A split decision came in the trial in South Korea.
Also, U.S. is trying to revive Cold War. Trying to outmaneuver China in Africa and surround it with U.S. naval bases. That is also in my mind about how the apple trial could be an early indicator of a U.S. tactic that will be used against China.
Here’s an opinion piece on U.S. v. China. http://www.voltairenet.org/Obama-s-Geopolitical-China-Pivot
So at what point does this become an anti-trust issue?
If there are only a few manufacturers, this is screaming for a lawsuit, or more likely an anti-trust exemption. (Which sucks, b/c I don’t care for Apple)
When it comes to Android, you’ve got to remember that Microsoft makes more money on each Android phone than Google does due to patent licensing fees. And if phone makers are willing to pay Microsoft for licensing, why aren’t they willing to pay Apple? (Apple, itself, cross-licenses patents with Microsoft.)
This isn’t about “consumer choice”. This is about which way the billions of dollars of profits in mobile technology will flow. Some of the money Samsung hoped to make will now flow to Apple. And, then, some of it will flow back to Samsung because they’re one of Apple’s biggest suppliers. Samsung took a gamble in not seriously trying to license Apple’s technology and it lost. I won’t shed any tears for them. Oh, and if you think Samsung’s factories are a nirvana compared to Apple’s, you haven’t done your homework.
Me, I think our entire patent system has gone off the rails and the entire technology industry should go into open revolt. One example: Google tried very hard to create a truly open standard for audio/video compression and transmission. It didn’t work out that way, because nobody was willing to believe that somewhere, deep in the standard, wasn’t something that someone else had, at one point, patented. That’s the sort of negative you can’t prove and is the sort of thing that does stifle innovation. Giving Samsung a handslap for egregious behavior, not so much.
I think antitrust is passe among neolibs.
David:
I think you’ve fallen for the “Walmart” argument: whatever is cheapest for consumers is automatically the “best.”
As completely broken as the current patent system is, there needs to be some way for innovators to make money. Even giant piles of money as Apple does.
The evidence in the trial showed convincingly that Samsung did indeed copy Apple, even when patents were known to exist. That’s the reason for the award as well as the very swift verdict.
That the patent system is awful, that Apple (directly or indirectly) exploits labor, that Apple isn’t above using other’s patents, and that Apple is wildly successful and therefore easy to hate, doesn’t change that fact at all.
All consumers are losers, always and often. Why can’t you write ‘users’ when that’s what it’s about? You’re in a trance, DDay.
Sometime in the later 1970s, the US society was transforming from being a civic society to being a consumer society. The 1970s also saw the transformation of the US economy from industrial production of products to a financial economy that produced financial products. By the mid-1980s, both transformations were complete: the economy was de-industrialized, and the populace self-identified as consumers instead of as citizens.
It’s not as though no one noticed. But ‘the public’ had been turned into the masses, though always referred to as ‘the consumer’. (Endless scholarly papers discussed the role of envy in commercial advertising, the envy intended to delude the consumer into feeling separate and above the masses.)
1970s: local and regional shopping malls had mostly vendors that were local and regional. Then the first commercial TV satellites and cable Super Stations, meaning everyone between the oceans could watch the same shows at the same time. Continental sameness. With national commercial advertising, national retail franchises and chains occupied the malls, so that by the mid-1980s, every mall was like every other mall, which consumers loved.
You’d swipe your credit card at the mall, your money went to a multinational corporation’s account somewhere in New York, London, or Hong Kong. Pennies dribbled into your local economy to pay the store’s ‘manager’ and ‘assistant manager’. Eventually the Christmas season had to start right after Labor Day.
You want a society that works and can function now, you’ll have to do a lot of behavior modification all over again. Either that, or figure out how to make a consumer politics work.
Full disclosure: I’m a gadget and gizmo lover, and obsessive over them, but have no smart phone or tablet only because I’m retired from active life. (When my iPod dies, I’ll get an iPod Touch to replace it.)
It seems innovation has been stifled for decades. Compare major new inventions of the first 50 years of the 20th Century to the final 50 years. Nothing in the final 50 years compares to the phenomenal invention of the airplane, the jet engine, the television, the transistor, etc. Even the invention of the internet doesn’t compare. New cancer vaccines of the last 60 years make you survive an average of 3 months longer than if such vaccines were not invented. Big whoop! I would bet that patent law and patent lawyers stifle innovation, as people on this thread have said.
The basic tablet and notepad computing, like almost all the Apple UI designs, were invented at Xerox PARC. Touchscreens did not exist at the time, and buttons were used instead, but the basic visual elements were invented there. See, for instance, “An overview of the PARCTAB ubiquitous computing experiment” link, the picture of an early tablet from 1992, here, discussion with PARC CEO Mark Bernstein here.
I have no idea why Samsung’s lawyers didn’t show this work.
I’m looking forward to the Microsoft/Nokia release of the new Windows 8 phone on Sept 5!
Apple didn’t invent the tablet computer: Xerox PARC did. If you look at the history of innovation, truly original inventors in electronics and computing seldom successfully profit from their inventions; others get the IP rights, often by manipulating the courts. Look up Sarnoff vs. Armstrong and the Eckert and Mauchly computer patent.
If the Samsung lawyers were looking at earlier iterations, they would have known about Apple’s Newton MessagePad, introduced in 1993, after Apple probably had acquired rights if they were needed. (Word is those tablets still work.)
So what IP rights do you believe in then? There are many problems with software patents and I support patent reform as much as anyone but as long as they exist don’t you believe they should be enforced?
Microsoft licensed some of Apple’s patents in their phone and worked around / created their own ideas in other areas. Google regularly ignores IP rights of many others. Android is just one of the most egregious examples. Should they be allowed to do this and thus disadvantage players like Apple who lead the way by solving extremely difficult user interface challenges and Microsoft who is attempting to play by the rules?
If we’re going to do away with software and design patents / IP rights then all players should know those are the rules so they can play by them. Supporting Samsung in this case is like supporting the big banks who knowingly break the rules assuming they can get away with them. It is supporting sleaze, corruption, and disregard for the law.
I am disappointed at what appears to be a knee-jerk reaction with little understanding of the substance of this case here at FDL. Yes the patent system and IP rights more generally are in dramatic need of reform. That does not mean we should revert to a lawless state in the meantime.
Book Salon up with Kim Stanley Robinson’s 2312 (novel) hosted by Siun
the answer is to shut these corporations down by boycotting and refusing to buy any of their products.
instead the dopes cant wait! to buy more of their junk.
no one needs more than a basic phone for one example.
i get by perfectly well spending 15 bucks a month.
cut the BS.
You concerned about the poor corporations that screw you at every turn?
then start putting their officers in jail instead of locking up people for growing a food garden!
after all they are people like your guy willard likes to tell us.
I am concerned with fair markets and level playing fields for all participants including consumers, small businesses, and corporations.
I agree that many corporate officers (such as at Wall Street banks) have committed serious crimes, but certainly not all of them have.
ROFLMAO.
Hope you got paid well for posting that comment.
Give me a break. You don’t seriously think every corporate officer in America has committed a serious crime do you?
Yep.
Samsung manufactures In Kaesong, which basically uses slave labor provided by North Korea. As we discovered during the KORUS debate, it’s North Korea’s only source of cash to develop it’s nuclear program.
Anybody looking for moral high ground here had better keep looking.
You may not think there’s a moral high ground in the larger picture of how tech products are manufactured, etc but that is well beyond the scope of this case. If you don’t believe there is a moral problem with stealing IP then I’m sure you wouldn’t have a problem with somebody stealing all of your content here at FDL.
If you don’t think Apple deserves IP rights to some of the items they have patented you clearly have no experience in user interface design and no grasp of how difficult some of the tradeoffs are. I believe patent law is too extreme and much more restricted rights would be more appropriate. That said, to deny the innovation of Apple in touch user interfaces or to assert that it was not significant enough to deserve some form of protection is taking a pretty extreme position on IP rights.
I want to repeat what I said in another thread: I am very glad FDL is taking up IP issues and believe in serious need for dramatic reform. I hope you will dig deep on this issue and understand that *some* protections are necessary (even if current protections are extremist and go way to far). This site depends in no small part on IP rights for its own viability. Without your IP rights larger players would steal your content and most of your traffic immediately…
First, the US Patent system is a total clusterfuck and is totally invalid. To paraphrase a USPTO patent examiner: “We don’t get paid to reject patents.” This leaves everything to the (very expensive) courts and obviously incompetent “regular people” juries.
Refreshing my memory with Wikipedia: “The Clinton administration appointed Bruce Lehman as Commissioner of the USPTO in 1994. Unlike his predecessors, Lehman was not a patent lawyer but the chief lobbyist for the Software Publishing Industry. In 1995, the USPTO established some broad guidelines for examining and issuing software patents. The USPTO interpreted the courts as requiring the USPTO to grant software patents in a broad variety of circumstances…”
That is right, the depraved motherfucker Bill Clinton, not only fucked up Wall Street regulation, but fucked up computer technology too.
Your joking right? A monkey can do software user interface design. I don’t think software user interface design should be patentable. Of course, the richest company in the world gets a billion dollars award, an individual software innovator struggling to get by, good luck in the courts. Or with our shithole software patent system, the small guy shouldn’t even try because he doesn’t have the $$$ to cross license all those wonderful “software innovations” from the behemoth corporations.
Exactly. As Jane pointed out in her piece on the subject and in the comments section thereof.
New cancer vaccines?
Uh, dude, you obviously missed Jane’s post on this subject.
As I said over in the comments of Jane’s thread:
And later:
And again, as Jane points out both here and in the thread of her own post, there are no “good guys” so much as there are competing interests in the tech field — and we’re quite lucky that they’re competing as much as they do, because if the tech industry could present a united front they’d outdo the dirty-energy crowd in terms of efficient ruthlessness. Or, to paraphrase an old saw, it’s because the tech giants are falling out that honest and average folks have a chance of coming into their own.
It wasn’t up yet when I made that comment. I posted a thank you in the comments for her post.
I actually disagree with this. I think Apple has been a pretty good player over most of its life. But I am also thankful for the competition as I don’t think we should *rely* on such behavior. Sooner or later (hopefully much later) it is probable that some typical corporate types will get their hands on Apple again…
It’s really a bad news for Samsung yet I hope that both companies will enter into cross-licensing agreement. After-all these two companies did really great job when it comes to technology.