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The legal war between Apple and Samsung began in the U.S. in April of 2011 when the U.S. company accused Samsung of “slavishly” copying the iPhone and iPad. Since then, the fighting has expanded across the world to Germany, the Netherlands, Australia, Japan, China, and South Korea (just to name a few). Although Apple enjoyed some initial successes with injunctions being granted against Samsung in a few of the cases, Samsung is fighting back and the war is far from over.
This week, Samsung filed a patent infringement lawsuit against Apple in South Korea (Samsung’s home base). This is the second lawsuit filed by Samsung against Apple in South Korea. The patents at issue in the newest lawsuit are different from those involved in the previous lawsuit, which accused Apple of violating Samsung’s patents pertaining to telecommunications standards. Samsung’s most recent lawsuit claims Apple’s iPhone 4S and iPad 2 infringe on three of its utility patents.
Throughout this patent war, Apple has pursued an aggressive litigation strategy. Commentators have expressed concerns about Apple’s inflexible approach. According to Kevin Rivette, a managing partner at 3LP Advisors LLC, an intellectual property advising firm, Apple’s rigorous approach may not be in the best interest of their shareholders. Commenting on Apple’s uncompromising litigation strategy, Rivette suggests settlement may be more beneficial to Apple in the long run:
“A scorched-earth strategy is bad news because it doesn’t optimize the value of their patents — because people will get around them. It’s like a dam. Using their patents to keep rivals out of the market is like putting rocks in a stream. The stream is going to find a way around. Wouldn’t it be better to direct where the water goes?”
Marshall Phelps, the former head of intellectual property at IBM and Microsoft, agrees with Rivette’s assessment. Because software can usually be changed slightly and become non-infringing, “[n]obody has ever kept competitors out of any market with patents,” Phelps said.
But not everyone agrees with Rivette and Phelps. Christopher Marlett, chairman and co-founder of an investment bank that advises on buying and selling patents, embraces Apple’s stern approach. Marlett sees no reason for Apple to relax its strategy since it is the “clear leader.” In the words of Marlett, “Apple has the patents, the money and the expertise to go to war.”
Well, it seems Samsung has declared war. And according to Samsung’s spokesman Steve Park, Samsung will continue to fight to protect its intellectual property.
But at what cost?
The Apple vs. Samsung patent war involves over two dozen cases in multiple countries. Although defending intellectual property rights is important to each company’s future in the mobile industry, this legal battle comes at an undoubtedly high cost. Pursuing or defending against a lawsuit can be a very expensive undertaking. Clearly, the cost for Apple and Samsung to pursue and defend against the numerous lawsuits filed around the world is significant. These lawsuits result in an increased cost of business to the companies. While the extent of the damage caused by this patent war is still unknown, one thing is clear – the cost of this war will ultimately fall on shareholders, investors, and consumers. And if product prices are any indication, consumers are already bearing the very high costs of war.
– Carolina Blanco
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