It's all about money — the new IP battleground

 iPod, iPad, iPhone, Galaxy, Nexus 7, Kindle Fire…all are inventions using some of the same types of technologies.    Competition is at fever pitch, and lawsuits are playing a major role. In the last issue of Eye on Innovation, you read about the patent wars in the mobile technology industry.  Patent warfare has caught fire with the latest judgment in the patent litigation case of Apple vs. Samsung.  This extremely complex case examined the use of multiple technologies on over 30 mobile devices.

Photo: Licensed under the Creative Commons Attribution-Share Alike 2.0 Generic license.

In a $1.03 billion decision, the jury said Samsung smartphone and tablet products violated a series of Apple patents protecting a number of designs and functions — including the rectangular shape and rounded edges of the iPhone and the pinch-to-zoom gesture that magnifies an image on Apple devices. How will this decision on patent infringement affect mobile phone manufacturers, software developers and the consumer? To the winners of the patent wars, the rewards will be rich. Mobile computing, including smartphones and tablets, is the most lucrative and fastest-growing market in business.

As a result of the Apple vs. Samsung decision, a whole new front in the patent wars could open up as companies race to file applications for design patents. Other industry watchers think the smartphone patent wars will subside and an accommodation will be reached. What might it mean for future mobile products, and how companies attempt to compete?

Sources: Marketing Week, Presswire, Daily Herald

Manufacturers scramble
The disputes are fueled, legal experts say, by companies rushing to apply for patents as both defensive and offensive weapons. Some in the industry believe that Apple's court triumph will drive innovation, not stifle it.

These analysts think the verdict is unlikely to drastically affect Samsung or other handset makers because Samsung has already begun to revamp its mobile products. Moreover, Apple will have to truly innovate, rather than maintain the status quo, to keep up with their competitors' patents.

Software developers innovate
Will the mobile device market become increasingly complex? Software developers already have a complicated mix of mobile devices to make apps for, and the pressure on manufacturers to design devices differently could make it even harder. Consumers could be confused about which phones have which apps and functions, and it may grow harder to persuade phone users to switch to another system, presenting another roadblock to competition.

This means the complexity faced by mobile developers is going to get worse. Several companies such as Research in Motion (RIM), maker of the BlackBerry, and Nokia are already losing ground. Palm, one of the industry's pioneers, has disappeared. The big players will also be looking at acquisitions to increase their patent portfolios. The current Apple decision will make RIM far more attractive because RIM's patents are thought to be strong enough to hold off Apple.  It's possible that both Samsung and Google may make a play for the company, and both Microsoft and Apple may move to block them.

Consumers worry
What does the Apple verdict mean for consumers? Will Samsung phones still be available for sale? Will they be more expensive? Will owners of existing phones need to worry? Speculation is widespread. Although the judge in the Apple case may ban U.S. sales of several Samsung devices, most recent ones will not be affected. Samsung may be required to pay substantial royalties on each phone and most likely this will be passed on to consumers in some form. Moreover, because Android phones, including those from LG Electronics Inc., HTC Corporation, and Google's Motorola Mobility all use the same operating system, Apple could also use similar arguments in further patent infringement cases. However, important facts to remember: courts can reach different decisions, and this verdict does not apply outside the United States.

Sources:  Financial Times, San Francisco Chronicle, Jakarta Post, ArabianBusiness.com, Economic Times from Dialog databases: Global Reporter, Dialog NewsRoom, Gale Group PROMT^®, Gale Group Trade & Industry Database™

What's next?
Although the vast majority of patent disputes usually settle before trial, particularly between competitors, in this market too much is at stake.  So, worldwide patent battles among tech giants are hardly over, and appeals in this industry seem inevitable. Will the San Jose Apple vs. Samsung verdict be upheld? Will Apple be awarded more money? Will Apple's request for an injunction to stop Samsung's ongoing infringement be granted? All eyes will be on district court judge Koh, who has the decision on injunctive relief. Will manufacturers have to change the design of their current phones? Will software developers have to create apps for multiple type phones? And, will the patent wars increase innovation or curtail new ideas?

The verdict could give Apple even greater leverage in its efforts to discourage other handset companies, like Samsung, that make devices based on Google's Android operating system. For now the decision in this critical case could re-set the competitive balance in the industry.

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