The Fallout Of The Apple Vs. Samsung Battle

By Aaron Levitt | August 16, 2012 AAA

They aren't calling it the patent wars for nothing. The current battle between two of technology's biggest heavyweights could set a historic precedent in the sector. As both Apple and Samsung fight for the smartphone and tablet crown, the latest battle isn't being decided by flashy new phones or consumer preference, but by lawyers and judges.

In an almost telegraphed move, Apple sued the South Korean firm, alleging that Samsung's devices infringed on Apple's rich patent portfolio. The lawsuit has now completed the jury phase, and it's the latest in a global campaign of smartphone patent litigation that began more than two years ago. The legal battles mainly pit Apple against rival handset makers whose products are generally powered by Google's Android software. This includes big players such as Samsung, HTC and Motorola Mobility. Overall, dozens of lawsuits and countersuits have been filed in courtrooms around the world. A patent case of this magnitude could impact phone technology for years to come.

Stolen Ideas
The heart of the case comes down to stolen ideas. Apple maintains that Samsung made "a deliberate decision to copy" the ideas for its devices from the popular iPhone's universal interface and user-experience programming. This includes the general layout as well as features like "rubber-banding" and Apples' voice-activated navigation system Siri. Apple's lawyers have brought in various designers and prototypes to illustrate its case and prove that Samsung willfully copied the design.

On the flipside, Samsung has countersued saying that Apple borrowed its ideas from other companies like Sony, as well as its own patents for wireless communication. Additionally, Samsung has alleged that the iPhone uses an Intel chipset that was patented by the Korean firm. According to Samsung, Apple was clearly innovative in refining the ideas of others, but it was not the original inventor.

Analysts estimate that there could be more than 250,000 patents up for grabs in the latest legal fight. Experts say the speed of innovation in product development makes it hard to determine a winner in this sort of litigation. One thing is for sure, there is plenty at stake for both companies if they win or lose.

Apple Wins Round One
With the verdict in the ongoing battle going Apple's way, the first damages are being tallied. Based on the August 24 jury decision, that concluded that the Korean electronics giant had violated patents covering the iPhone and iPad, Apple was awarded more than $1.05 billion in damages. This amount is between the $2.7 billion Apple wanted to win and the $518 million Samsung expected to pay. Either way, that's still a big chunk of money.

The second piece of the puzzle involves Apple asking a federal judge to temporarily prohibit U.S. sales of eight Samsung mobile devices. The request includes popular models in Samsung's Galaxy product line. Judge Lucy Koh has ordered Samsung to pull its Galaxy 10.1 computer tablet from the U.S. market pending the outcome of the patent trial. Likewise, Samsung will now be forced to rework the product line in order to conform to the new patent rules or pay large licensing fees to cover the infringement. This will lead to increased costs for both consumers and Samsung.

Samsung Tries to Take a Bite Back out of Apple
However, all isn't lost for Samsung. The Korean firm has alleged that Apple stole ideas from them as well. If the electronics firm is successful in its pursuits, Apple will owe Samsung in excess of $400 million upfront as back pay on the wireless communications patents. At the same time, Apple will be forced to pay royalty rates of 2 to 2.75% if it continues to use Samsung's technology in its popular iPhone. Those stiff royalty payments could lead to higher iPhone and iPad prices down the road, and potentially send fickle consumers directly into Samsung's products.

Then there is the appeals process to contend with. Lawyers for Samsung contend that the jury ignored various instructions, miscalculated damages and generally seemed more eager to wrap up the case than get it right. One of the biggest issues was that despite deciding that Samsung should pay $2.2 million for certain actions, the jury found no actual infringement on those charges. Lawyers for both sides expect the appeals process to take months.

The Bottom Line
With two technology industry heavyweights finally coming to blows in the courtroom, the smartphone sector could be altered forever. The patent battle between Samsung and Apple will not only affect the companies, but the technology industry and consumers, too.

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