You may have read it on your tablet or smartphone. You may have read it on your computer. You may be old-school, in which case you read it in a newspaper. But you will have read the news that Samsung has been ordered to pay Apple some US$ 1 billion in dam
So just when did patent infringement become world news? Well, when you have two of the most high profile companies in the world slugging it out (one of whom has just been declared the most valuable company of all time), and when the products at issue are ones that we all either own or aspire to, it’s bound to make the news. But just what was at stake here? And what lessons can we learn from the case?
On 24 August 2012 a US jury made some significant findings. It found that a number of patents that are owned by Apple, and that relate to the technology used in and appearance of, the iPod and IPad products were valid. It held that Samsung had infringed these patents in its Galaxy smartphones and Galaxy 10 tablet and that Samsung’s infringement had been ‘wilful’. And it dismissed Samsung’s counterclaim that Apple had infringed various patents that Samsung owns. A pretty comprehensive win for Apple.
The patents that had been infringed covered various features of Apple’s products, including the following: the so-called ‘bounce-back response’, which makes lists jump back; the ‘pinch-to-zoom’ feature, which the user uses to magnify images; the feature that allows the user to zoom into text by tapping their finger; and the appearance of the iPhone (including the system of displaying text and icons), which is protected by way of design patents.
The two companies reacted predictably. Samsung said that the judgment would lead to ‘fewer choices, less innovation and potentially higher prices,’ adding that it was ‘unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners.’ Apple, on the other hand, praised the court ‘for finding Samsung's behaviour wilful and for sending a loud and clear message that stealing isn't right.’
So what exactly does the decision mean? Well, from a legal point of view, it’s very significant, although it’s not yet clear whether Samsung will be prevented from selling it products in the USA – there will be a further hearing on 20 September 2012, at which the judge will decide whether or not to issue a sales injunction, or alternatively an order requiring Samsung to pay licence fees to Apple. At the further hearing the judge will also decide whether to confirm the damages award or increase it – apparently the judge is entitled to triple it because Samsung’s conduct was found to be wilful. Samsung has already made it clear that, whatever happens, an appeal will be lodged.
The US case is part and parcel of litigation that’s been going on around the world. Interestingly, a short while back a court in South Korea dismissed Apple’s patent infringement claims against Samsung, with the exception of the claim relating to the ‘bounce-back’ feature. It also held that a number of Apple’s patents were invalid, having been anticipated by earlier patents. Lastly, it held that Apple had in fact infringed two of Samsung’s patents. As any sportsman will tell you, home ground advantage counts for a great deal!
The commercial implications of the US judgement are equally significant. The market for smartphones and tablets is huge, with Apple and Samsung accounting for more than half of all sales. Samsung has been making serious inroads into this market – it sold 50 million smartphones in the quarter April to June 2012, with Apple selling just 26 million units over the same period. So, if Samsung is barred from selling its products in the USA, it will be an enormous boon to Apple and a very large blow to Samsung (although the company does apparently have at the ready a new generation of products that avoid the patent issues). To complicate matters further, Apple is a major customer of Samsung’s, buying a large number of its chips from the South Koreans.
It’s also worth noting that Samsung’s products are powered by Google’s Android, a system that is used by other smartphone manufacturers too. Some commentators have described Apple’s attack on Samsung as a ‘proxy war’ against Google, and predicted that Apple will go after Google next.
What can we learn from this? Well, it teaches us, if indeed that lesson be necessary, that innovation and design can be legally protected – in South Africa technical innovation is protected through patents, whereas product design, such as shape or configuration, is protected through design registrations which, like patents, also require novelty. It teaches us that that you cannot ignore patent and other intellectual property rights when you bring a new product to market - infringements can and will be punished, with huge damages awards where necessary. And it’s proof that intellectual property is enormously valuable – for many technology companies intellectual property rights, and especially patents, form the basis of the business, and these companies often have huge patent portfolios that are in themselves worth vast sums. Some, known as patent trolls, even acquire patents not because they need the technology, but simply so that they can enforce the patents against other companies. Patenting has become big business, and you ignore it at your peril.
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