Apple-Samsung fight continues

Late last week, a San Jose jury awarded Apple Inc. $1.05 billion in damages for patent infringement, a huge win for Apple in its worldwide patent fight with smartphone manufacturers that, like Samsung, sell devices equipped with Google’s Android operating system. The award, the third largest in the history of US patent litigation, will likely cruise into first place next month when US District Court Judge Lucy Koh decides what additional amount Apple should receive from Samsung based on the jury’s finding that much of the infringement was “willful.” But even without that enhancement, which could add another $2 billion to Samsung’s tab, the jury’s $1 billion-plus verdict breaks down to just under $48 for each of the roughly 22 million infringing phones sold by Samsung. To the jury, 50 bucks per phone must have sounded like a reasonable figure, and it may well to you too. But it’s not  it’s way too high and here’s why: The average smartphone may arguably infringe as many as 250,000 patents, not to mention myriad copyrights and other design-related intellectual property. (Companies don’t sift through every patent coming out of Washington before engineering and releasing a product; they create devices and battle claims as necessary.) If you were to divide the average retail price of a smartphone - about $400 - by those 250,000 potentially applicable patents, you’d find that each one would account for just $0.0016 of the phone’s value. And, in reality, even that’s too much, once you factor in the costs of raw materials, labor, transportation and marketing, which also contribute to a phone’s value. Yet for infringing just a handful of Apple’s patents, Samsung faces a minimum payment of $48 per phone, a shocking 30,000 times the average per patent value. Put another way, if the owners of all the 250,000 inventions that might be present in Samsung smartphones were awarded damages at the same level as Apple, Samsung would have to charge a ludicrous $2 million per phone just to break even. But wait, you say, the San Jose jury no doubt included some level of punishment in its award, in order to “send a message.” But, by law, patent damages are meant to compensate not punish, as the jury was expressly instructed. Or maybe Apple’s patents are worth far more than average intellectual property and are therefore deserving of a higher rate? Perhaps so. But thousands of times more valuable? For that matter, why shouldn’t we also entertain the possibility that Apple’s patents are actually worth less than the average? It may sound blasphemous to question the value of intellectual property owned by the world’s most valuable company, but consider this: When purchasing a phone are you willing to pay more for rounded corners and stylish icons or for the device’s ability to transmit data to a cell tower? In the smartphone wars, Apple is primarily enforcing patents on the former, Samsung and Motorola on the latter. Surprisingly, Apple is well aware of arguments about the real worth of each patent per phone: “In a world where a device can be made up of thousands of patented components, patent infringement damages should be proportionate to the value of the component in question rather than the entire product.” That’s a 2008 quote from the Coalition for Patent Fairness, an advocacy group formed by Apple and other tech companies frequently sued for patent infringement. Indeed, Apple makes this same point in some form or fashion dozens of times a year when playing defense against patent suits filed by other, much smaller patent owners. Over the last five years, no company has been sued more times for infringement than Apple. When the shoe was on the other foot, however, it was content to check its patent law principles at the courtroom door: It actually asked for far more than it received, about $2.5 billion total in “compensatory” damages. So, Apple, congratulations on your large award. Next time you’re accused of patent infringement by a start-up, an individual inventor or a dreaded “patent troll,” I’m sure you’ll be flattered when the patent owner uses your own damages calculations against you. Actually, on second thought, here’s betting you won’t like it much at all. The award, the third largest in the history of US patent litigation, will likely cruise into first place next month when US District Court Judge Lucy Koh decides what additional amount Apple should receive from Samsung based on the jury’s finding that much of the infringement was “willful.” A Tokyo court ruled on Friday that Samsung Electronics’ mobile devices did not violate an Apple Inc patent involved in synching mobile devices and computers, awarding the South Korean maker a victory a week after it lost a bruising landmark patent case in the United States. In rejecting Apple’s suit, Tokyo District Court Judge Tamotsu Shoji said Samsung’s products did not infringe on the US firm’s technological scope. A US federal jury found last week that Apple did not infringe on any of Samsung’s patents, while the South Korean firm had copied key features of iPhone. The same jury awarded Apple $1.05 billion in damages and it is now seeking speedy bans on the sale of eight Samsung phones in the US market. “We welcome the court’s decision, which confirmed our long-held position that our products do not infringe Apple’s intellectual property,” Samsung said in a statement following the verdict from the Tokyo court. A representative for Apple in Japan declined to comment. In Seoul, Samsung shares were up 0.7 per cent in a flat market. A spokesman for NTT Docomo Inc declined to comment, while a KDDI Corporation spokeswoman said she did not see any major impact from the decision. Both Japanese mobile carriers sell the popular Samsung Galaxy series. Shares in NTT Docomo last traded down 1.8 per cent at a 2-week low, while KDDI was down 1.2 per cent. Shares in local rival Softbank Corp, the first Japanese carrier to sell the iPhone and which doesn’t sell the Samsung Galaxy line, were down 1.1 per cent. Meanwhile, Apple has authorised Apple Stores to price-match other retailers’ discounts on the iPhone 4S, according to a report. The discounts are limited to $49.01, but appear to apply to all versions of the iPhone 4S, in black and white versions. An image posted online by MacRumors shows a graphic that says Apple Stores can match discounts from Target and Sprint for the 8-gigabyte device. The stores can also match discounts for 16-GB and 32-GB models from Sprint. Not all details are known about this new price-match program, but at first glance, it appears the biggest beneficiaries are people looking for a 16-GB or 32-GB iPhone 4S for AT&T or Verizon’s networks. The discounts, though, come about a month before the expected announcement of the sixth-generation iPhone. That means that not only will the iPhone 4S soon be outdated but it might also receive even larger discounts come mid-September. Along with discounts for the iPhone 4S, the graphic shows Apple Stores will be allowed to match discounts on 8-GB versions of the iPhone 4 from Target, the three carriers and RadioShack, which would bring the phone’s price down to $49.01. But the program does not apply to Apple’s online store, and to receive the discount, consumers must first bring up the price-match. They must also reference the retailer that is offering the discount, according to the report.  From gulftoday