Friday's record-breaking jury award of more than $1 billion to Apple in its patent lawsuit against rival smartphone-maker Samsung (read more about Apple v Samsung) is a big deal, and pundits, analysts and lawyers have been scrambling since the jury verdict came down to dissect it and figure out what it means for the future. The verdict was announced after less than three days of deliberation, a swiftness that caught many by surprise, given the complexity of the case.
Samsung intends to appeal the decision, a move that makes sense. If nothing else, when you're talking about a $ 1 billion hit, not to mention other long-term business effects, spending a few million more on lawyer fees in the hope of reducing or overturning the verdict is a no-brainer. Legal minds world-wide have already weighed in about Samsung's chances of success, and there are aspects of the jury decision that could give Samsung hope. But it's probably a long-shot that a U.S. Circuit Court will overturn the core patent findings, even if it decides to tweak the verdict or reduce the amount of the award.
If that award stands, Samsung will not be deeply hurt financially -- $1 billion, while a large figure, is a fraction of one quarter's profit for the company. For the same reason, it's only a blip, albeit a nice one, for Apple, which made $8.8 billion in profit in the last quarter alone. The judge in this case has the option to triple the award and add the considerable legal fees to Samsung's costs, but even if that happens, the total amount will still be no more than $3.5 billion or so. That's real money, but not something that will change the game for either Samsung or Apple.
The long-term impact isn't even tied to the majority of the patents Samsung infringed upon. The design patents, having largely to do with device look and feel can be worked around, and while that could cause a scramble by Samsung (and every other smartphone manufacturer) to redesign potentially-infringing elements, there are more damaging aspects of the decision.
First, in the short-term, Apple can use the victory to get an injunction against the sale of a wide range of Samsung devices, effectively preventing them from being sold in the U.S. If that happens, it would still have a largely short-term effect, affecting some products no longer being sold and mitigated by a redesigned line of Samsung devices, many of which are already in the pipeline. The same goes for other manufacturers, which Apple could pursue next.
Much more critical are the jury findings around Apple's "utility" patents, covering user-interface (UI) elements. The most familiar elements in question have been referred to as "tap-to-zoom" (or pinch-to-zoom); these patents cover gesture-based elements that most smartphone users at this point probably consider standard. This one is a very big deal. Imagine if, due to patent restrictions, different brands of cars had not just different styling, but had to put their accelerator and brake pedals in different places, or had to use motorcycle style handgrips instead of a steering wheel.. There has been debate whether these kinds of UI elements should even be considered patentable, but the Apple-Samsung verdict says they are -- and there are an increasing number of them on the books.
If different types of phones have variations not just in design and detail, but in fundamental function, -- especially basic interaction elements -- one powerful effect could be increased "lock-in" to one manufacturer or another. "Motor memory" -- how we physically interact with things -- even more than mental processes, takes time and effort to unlearn and relearn. If you have to spend a lot of time re-learning fundamental aspects of how to use a phone just to switch brands, how often would you make that switch without some extremely compelling reason? Some analysts have pointed out that the Apple-Samsung case could spur increased innovation, as manufacturers go to greater lengths to avoid infringing on current and future patents. This may well be true, but it could also lead to decreased ability to move between devices as core aspects of their use diverge.
Finally, if Apple's patents stand, the most likely scenario is that Samsung and other smartphone makers will feel compelled to license Apple's patents for some negotiated dollar amount per handset. This adds extra profits to Apple's already deep coffers, increases its industry-leading profit margin and lowers the profits of rival smartphone makers. That's likely to make it marginally harder for them to compete. Apple then makes real money, in perpetuity, from competitors' smartphone sales.
In short: Apple is in the driver's seat here, and now has the clear threat of legal action with a very successful suit already on the books to increase its leverage and license demands.
The fight with Samsung echoes an earlier Apple battle. In 1988, it filed a lawsuit charging Microsoft with violating copyright laws by copying the "look and feel" of the Macintosh GUI in creating the then-new Windows OS. Microsoft won that case hands-down, and Apple learned, among other things, that copyright law is a weak foundation from which to defend your intellectual territory. That loss likely informed its successful strategy of numerous patent filings covering as much as possible of its work in smartphones and tablets.
If Apple had won that suit against Microsoft, imagine how different, the computing landscape might look today. If the Apple-Samsung verdict stands, we may see a replay of that scenario in the smartphone and tablet world. And given the increased convergence of desktop and phone/tablet operating systems, environments and interfaces by both Apple and Microsoft, the impact of this decision could have farther-reaching consequences.
Richard Hoffman is a technology analyst, IT strategist, systems architect and a former editor at several technology publications. He can be reached at Richard_Hoffman@me.com.
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