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Wednesday, 5 September 2012

Put an end to patent battle

An early settlement of the dispute between Samsung and Apple would benefit consumers and the global mobile device industry as a whole. 

An Apple Inc. iPad 2 and iPhone 4S smartphone, left, and a Samsung Electronics Co. Galaxy Tab 10.1 tablet computer and Galaxy S III smartphone are arranged for a photograph in Seoul, South Korea, On Tuesday. (Bloomberg)

SEOUL: Samsung Electronics has suffered a crushing defeat in a landmark patent battle against Apple Inc. A US jury last Friday found that the Korean smartphone maker infringed upon a number of patents held by Apple, while the American tech giant did not violate any of its Korean rival’s intellectual properties.

The jury’s judgement is widely criticised here as unfair. But it is highly likely to be upheld by the California court, dealing a serious blow to Samsung, the world’s largest mobile device producer. Samsung accounted for 32.6% of the global market in the second quarter against Apple’s 16.9%.

The nine-member jury ordered Samsung to pay US$1.05bil (RM3.28bil) in damages to Apple. The damages – much larger than expected – could be doubled or even tripled by the judge overseeing the trial, given the jury’s scathing verdict that Samsung “willfully” infringed on Apple’s coveted patents.

Samsung also faces a US sales ban on its mobile devices. Following the trial win, Apple presented to the judge a list of Samsung products it wants barred. Apple identified eight Samsung smartphone and tablet models but did not include Samsung’s new flagships, the Galaxy S3 and the Galaxy Note. Consequently, the sales ban, even if accepted by the court, is unlikely to have a serious impact on Samsung.

The US court’s ruling could also negatively affect patent battles between the two under way in nine countries over four continents. Unfavourable rulings in these countries would pour cold water on Samsung’s ambition to cement its global market leadership.

Furthermore, the jury seriously wounded Samsung’s pride by slamming it as a copycat. This is an insult hard to swallow, as Samsung has worked hard to secure leadership in mobile technology.

Given the high stakes involved, it is only natural that Samsung has decided to file post-verdict motions to overturn what it saw as the jury’s one-sided judgement. It plans to take the case to the court of appeals if its motions are rejected.

This suggests that the patent war will not end any time soon. Samsung is determined to continue the legal battle to make its case that Apple did encroach upon its hard-won patents for mobile technologies.

At the same time, Samsung is seeking to turn the tables in the next round of the battle by utilising its patents for fourth-generation technologies called “long-term evolution.”

Samsung is betting that it would be able to use some of its LTE patents as weapons against its rival because they have not been made open as industry standards. It is wondering how Apple can produce its next-generation model, the iPhone 5, without using its patented LTE technologies.

In light of Samsung’s technological prowess and deep pockets, the company will be able to overcome the grave challenge it is facing now.

For instance, it won’t have much difficulty paying the US$1.05bil (RM3.28bil) damages set by the jury, given that its net profit amounted to US$4.5bil (RM in April-June alone.

Yet Samsung should learn a lesson from the costly patent war. It is imperative for the company to transform itself from a fast follower to a first mover. It needs to go back to the drawing board to make its products truly innovative both in design and functions. It might want to risk a radical design that can differentiate its products from others.

Apple, emboldened by last Friday’s triumph, may be tempted to expand the patent war to collect royalties from other smartphone makers that rely on Google’s Android operating system. Yet it should realise that no company has ever succeeded in establishing market leadership through patent litigations. A company can only become a market leader through competition in the marketplace.

Apple also needs to know that any attempt to drive Android-based smartphone producers into a corner could backfire in the long term, as it will spur their efforts to become more innovative. With their survival at stake, they will be compelled to change the game as they cannot beat Apple at its own game.

In this regard, we urge Apple and Samsung to reach a deal that can benefit both. Apple could set royalties for Samsung at a level that would not undermine the Korean company’s earnings too much. An early settlement of the dispute would also benefit consumers and the global mobile device industry as a whole.

Korea Herald 

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