Saturday, June 30, 2018

NY Times - Apple and Samsung End Smartphone Patent War

In Apple and Samsung End Smartphone Patent War, the NY Times argues the patent war that began in 2011 was a waste because the technology is outdated and became largely a fight about money rather than an exclusion of infringing Samsung phones.

This article doesn't make sense to me. Successful tech companies management would not engage in patent litigation unless it was economically rational. So should we jump in after the fact and speculate they after careful consideration wasted time and money? One way to consider if it is wasteful is to take the value of infringing a patent multiplied by the probability of a successful defense. If that product is greater than the cost of defense, the defendant should litigate as a matter of economics. This appears to be Samsung's approach. I am not sure how they conclude hundreds of millions were spent on defense even after seven years of patent litigation. On the other hand, if you own patents like Apple and are a marketplace leader, you would be rational to enforce the patents against others copying or infringing to catch up. Otherwise you encourage many others to free ride off your R&D.

Samsung had seven years of patent litigation and setbacks and victories that should have been opportunities to settle the cases. Yet Samsung didn't and managed to whittle down the damage awards. However, a jury ordered Samsung to pay Apple $539 million for patent infringement in May. This is a large value for infringing the patents, the defense had failed, and shortly after Samsung settles. Santa Clara University law professor Brian Love claims the litigation "didn't really accomplish anything" because "at the end of the day, no products went off the market." I have trouble accepting this "didn't really accomplish anything" given the likelihood substantial money was transferred to Apple in settlement after the $539 million award. Finally, the Apple and Samsung phones contain the patented technologies the article says is long outdated. Again, nothing in the article to support this claim.

Rutgers law professor Michael Carrier saying "the case is likely to serve as a lesson that 'the courtroom is not always the place to try to get ahead" sounds right but to me Apple was not trying to get ahead; Samsung was trying to catch up and decided to infringe/copy patented features and Apple said not so fast and sued after failing to reach a settlement.

Professor Carrier's statement "there’s always the trade-off between litigation and innovation, and in the time these companies spent in the courtroom, they weren’t innovating." This lost time idea might make more sense for a small company but appears inapplicable to Samsung and Apple given that large tech companies largely insulate key innovators from the litigation. Moreover, reasonable litigation of patent rights should protect the incentive to innovate.

Copyright © 2018 Robert Moll. All rights reserved.