Last week, Samsung decided it was ready to pay Apple the $548 million that the federal courts said it owed for infringing Apple’s patents. In the spirit of the holidays, however, Samsung gave itself its own money-back return policy, in the event any appeals were to go in Samsung’s favor. But even assuming Samsung never gets back that $548 million (and all the legal fees spent so far in litigation), is it a loss for Samsung and a victory for Apple?
I say no – Samsung, and to a lesser extent, Google and other Android-based smartphone manufacturers, have come out ahead in this worldwide spat.
The real victory for Samsung was avoiding an injunction – an order from the court that would have brought a halt to all sales of infringing Samsung phone models (a number of Galaxy models and others) in the U.S. Such a disappearing act might have relegated Samsung’s phones to the likes of recent Windows or Blackberry models – pretty much a non-factor. Luckily for Samsung (at least with respect to its dispute with Apple), over the past few years, the patent pendulum has swung (or jumped) from favoring patentees to now favoring accused infringers. Likely overreacting to the patent troll phenomenon that seemed to hit its peak around 2013 or so, courts and Congress have consistently made it more difficult for patentees (even those with legitimate inventions) to enforce their patent rights.
Hardest hit by this anti-patent sentiment have been the software and biotech areas, in which patent applications are now routinely rejected or invalidated as not being directed to patentable subject matter. But another trend is the relative rarity with which permanent injunctions are being granted. Courts are more likely than ever to find that permanent injunctions are an unnecessary burden to place on an adjudged infringer; instead, they’re always able to find some amount of money that can sufficiently compensate the patentee, thus reducing infringement to a “cost of doing business.”
In a sense, by paying Apple $548 million, Samsung is reinforcing the trend away from injunctions. Apple might argue that it spends much more than $548 million on some of the industry’s brightest engineers and designers in order to produce the high quality, Jobs-cool products its fans have come to expect. Samsung, meanwhile, has its own bright engineers and designers but can also point to the $548 million as a sort of collaborative contribution toward moving smartphone technology in general to what consumers want and need (even if those consumers don’t yet know those wants and needs). It’s an unlikely pairing that Apple surely doesn’t want; remember Steve Jobs’ comment in Walter Isaacson’s biography of Jobs?:
I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong. I’m going to destroy Android because it’s a stolen product. I’m willing to go to thermonuclear war on this.
It’s been a long and bloody patent war, but not anywhere close to thermonuclear. The closest to “thermonuclear” a litigant can get is spending lots of money to force the other side to spend a correspondingly large amount of money. But for a company like Samsung, backed up by Google, the maker of its operating system, momentum in the marketplace gives it the money necessary to match Apple’s spunk, even if the merits haven’t favored Samsung.
That marketplace momentum clearly exists. According to Counterpoint’s third-quarter 2015 mobile market monitor, Samsung had a 23 percent market share of global smartphones, compared to 13 percent for Apple. With the exception of perhaps Huawei in some markets, nobody can argue that Apple and Samsung are not the clear leaders in smartphones right now.
And having two market leaders is good for the consumer. Samsung and other Android-based smartphones always seem to be on the cutting edge of technical specs (speed, capacity, and features), while Apple is frequently at the forefront of design and usability. The fans of both companies’ smartphones will continue their fervent support for one or the other (but not both). And that support will likely have little to do with patents.
The pace of innovation exhibited by the two companies has effectively outpaced the patent system’s ability to police infringement: Many features and designs are obsolete by the time patent rights are adjudicated. But the patent pendulum will swing back in favor of patentees one day – it always has over the past half-century of back and forths. And with that will come corresponding changes in how patents are enforced, in the courts and otherwise. Samsung will have moved on, spending its smartphone profits on the next big thing. Until then, Samsung will be, at least inwardly, content with losing the occasional patent cases against Apple, as long as money is all that is at issue.
Marcus Thymian is a partner at McDonnell Boehnen Hulbert & Berghoff LLP, an intellectual property law firm headquartered in Chicago, with offices in Mountain View, CA, and Durham, NC. He is a patent attorney who focuses on patent protection and enforcement in the electrical and software areas, with current interest in the 3D-printing and Internet of Things (IoT) spaces.