The Apple vs. Samsung Verdict Actually Demonstrates that Patents Do Promote Product Innovation

Apple’s win over Samsung actually demonstrates a functioning aspect of our dysfunctional patent system.

In the time that the Apple vs. Samsung patent fight has been underway, we have been inundated with an untold number of articles on how Apple is stifling innovation in the SmartPhone world.  (Haven’t seen these:  just do a Google search for “Apple stif . . .” you don’t have to type any more than this–the search auto-completes itself.)

I often take a contrarian view from that stated by most “expert” commentators–be they members of the press or actual patent professionals, and the Apple v. Samsung verdict is no exception:  I think the result actually demonstrates that the patent system is working just fine in this instance, thank you very much.  But how can this be when Samsung got hit with more than a BILLION US DOLLAR jury verdict last week?!?  Doesn’t the fact that Samsung could not make a product without infringing Apple’s multitude of patents mean that Samsung is effectively prevented from competing with Apple in the Smartphone market?

Not necessarily, as is shown by this great post from The Verge entitled:  “How Android has evolved while steering clear of Apple’s designs”.  What is most interesting to me about this article is how we see that while making phones for Google, Samsung was nonetheless capable of creating non-infringing and–yes–innovative designs.  The illustrated “evolution” of Google’s Nexus branded products demonstrates to an IP Strategist like myself that Google’s team understood clearly the scope and content of Apple’s patents BEFORE they began the process of designing their products.  Their innovation and patent teams apparently worked together to define the available design path available to them and that which was closed off due to Apple’s (and presumably others’). This resulted in their bringing to market products that (at least for now) avoid Apple’s pre-existing patent rights.*

In contrast, the verdict in  the Apple vs. Samsung lawsuit indicates that the jury found the testimony that Samsung’s product designers used Apple’s successful iPhone as a design template.  It defies logic to think that Samsung’s team did not know about Apple’s patent rights, but for whatever reason their design path dictated creation of a suite of products that willfully infringed 5 Apple patents.  Significantly, willful infringement is a legal determination that requires the satisfaction of 2 essential elements:  (1) that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent” and (2) that the infringer had knowledge (or should have known) of this risk.   In other words, the jury effectively found that Samsung’s product designers knew (or should have known) that their efforts were too close to the Apple’s previous designs.

Ignoring the patent issue for a moment, how does copying or almost copying another company’s designs equal innovation unless there is some other benefit associated with Samsung’s actions, like a lower-priced Smartphone?  And, therein lies the rub.   Those who contend that “patents stifle innovation” in cases like Apple vs. Samsung are effectively railing against the reality that Apple’s patents are a significant (but not the only) reason that Apple’s products seem to be virtually immune from price erosion.   Unfortunately for those who cannot or do not wish to shell out the money for an Apple product, innovation doesn’t mean consumers get a really cool product for minimum cost after another company (here Apple) has invested tons of financial and brand capital to create a new market.  Without their multitude of patents, Apple would certainly have been locked in a downward price war with Samsung to retain market share.  However, Apple’s coupling of being first to market with desirable products with strong patent protection allows the company to extract premium pricing.   The rules of this game are clear for sophisticated multi-national companies like these, and I shed no tears for Samsung if they couldn’t play it as well as Apple.

I also find it highly interesting that when directed by Google, Samsung’s team can create a cool product that (at least for now) avoids Apple’s patents, but when its designers are on their own, they can only come up with what a jury found to be an infringing product.  ( In this regard, note this testimony that Google demanded that Samsung make design changes to the Nexus phones.)  Surely, Samsung is capable of creating innovative products, but it appears that their internal design resources are not up to the task if they do not receive direction from truly innovative teams–here Google’s.  Arguably, this signals a problem with Samsung’s strategic direction and management, not the US patent system.

In conclusion, I submit that Google shows us that Apple’s patents, in fact, do not stifle but, rather, successfully promote new product innovation.  The US patent system supremely dysfunctional, but the  Apple vs. Samsung verdict actually shows that the US patent system is working quite well as originally intended.  Hopefully, someone in the press will pick up on this fact.

* In an interesting twist, a few days before the Apple v. Samsung verdict, Google sued Apple contending that the iPhone and other products infringed a number of patents Google acquired from Motorola recently.  Who could’ve seen that one coming?–(said with tongue firmly in cheek).

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