Apple vs Samsung: The tech trial of the century and why it matters

apple iphone samsung galaxy phone

—-

UPDATE: June 27, 2018 – At long last, the case has finally come to a close…in a settlement.

“This case has always been about more than money,” the company said at the time. “Apple ignited the smartphone revolution with iPhone and it is a fact that Samsung blatantly copied our design. It is important that we continue to protect the hard work and innovation of so many people at Apple.”

Samsung declined to comment.

Based on the above, we could probably guess who came out on top.

—–

In this age where technology appears to rule all, two tech giants are battling it out over design.  In October, the Supreme Court will decide once and for all how much Samsung will have to pay Apple for infringing its design patents. This trial marks the culmination of litigation saga that began over five years ago.

 

A judgment in 2012 ordered Samsung to pay Apple $930 million. But with a successful appeal Samsung was able to reverse part of the ruling related to trademark liabilities. With the amount owing now at $548 million Samsung believes this is still excessive and appealed again to reduce it even further to $399 million – the amount attributed to the infringement of Apple’s design patents.

 

Why is this trial so important? Suing the heck out of each other is what big companies do? How is this different from any other trial?

 

The money in question is pocket change to both of these companies so it’s not that.  A couple of interesting points,

 

(1)  this will be first time in 100+ years that the Supreme Court will be hearing a case related to design patents and

(2) the current law governing design patents states that since design is what sells the product, anyone who infringes on a patented design is liable for 100% of the total profit earned.

 

Yes you did read that last part correctly. 100% of profits. As you can imagine then,  the outcome of this trial will impact not just Apple or Samsung but the entire tech industry as well as any industry that relies on intellectual property agreements to protect their designs.

 

 

Enter the Amicus Brief:

Last Thursday, over 100 of the world’s top design professionals filed an amicus brief with the Supreme Court pledging their support for Apple.

 

 

An Amicus Brief is document submitted to a court containing supplementary information, arguments and/or a different perspective from non-litigants that have vested interested in the subject matter. The name comes from a Latin phrase amicus curiae that means “friend of the court”.

 

The list of signees reads like a who’s who of the design world. Among them are fashion designers like Calvin Klein and Alexander Wang (who have both seen their fair share of IP lawsuits with their own brands) as well as ground breaking Industrial designers from Dieter Rams and Del Coates to architects like Norman Foster. (add a few more and link to complete list?)

 

Charles Mauro, industrial designer and founder of New York design consultancy Mauro New Media, has led the charge on putting together the brief in collaboration with a law firm. Mauro says that if Samsung was to prevail,

 

“It would create an existential threat to design professionals who rely on intellectual property for value and protection. Modern marketing and cognitive science shows very clearly that visual design in consumer decision -making overrides underlying functionality. We would see the return of exact copyists and a flooding of the US market of copycat products because nobody would be afraid any more.”

 

An example: the Coca-Cola bottle

One of the examples included in the brief is the Coca-Cola bottle. The distinctive bottle, with its contoured shape and the words “Coca-Cola” scrawled in cursive, was “the catalyst that Coca-Cola become the most widely distributed product on earth.” A 1949 study showed that more than 99% of Americans could identify a bottle of Coke by shape alone. But the contour bottle represents more than just marketing for the brand—it has become synonymous with the beverage itself.

original glass coke bottle
The original bottle had straight edges and was indistinguishable from other bottles.
hourglass shaped glass coke bottle
The newly designed bottle was “the catalyst that helped Coca-Cola become the most widely distributed product on earth”
aluminum coke can with silhouette of glass bottle
Even today, the iconic shape of the bottle is reproduced in silhouette form on aluminum cans.

Another example: the duplicating machine

An original copy machine (called a ‘duplicating machine’) was another example cited in the brief. Here’s an image of what the original design by Sigmund Gestetner looked like.

original duplicating machine
The original duplicating machine.

And an image of the same machine redesigned by industrial designer, Raymond Loewy.

redesigned duplicating machine
The redesigned duplicating machine.

 

According to the brief, after Loewy’s re-design sales increased so much that three additional factories were needed to meet the demand, and the company kept the same model for 30 years.

 

So what’s Apple really saying?

 

Consumers come to equate design with a product’s underlying functional features – The outside becomes a representation of the entire thing in the mind of the customer.

When it comes to complex technology products where consumers don’t necessarily understand every working detail of a product, the visual design is even more heavily relied upon.

So when someone copies a design in order to enter the marketplace, they do so on the back of the brand who has spent the money, time and effort to design, develop, quality check, market, sell and promote the product.

By stealing designs, an infringer also steals the consumer’s understanding of what a product does and what the product means. Design patent infringement therefore “steals much more than the design itself—it robs innovative companies of the entire positive mental model that consumers have created for their brand.”

 

Samsung phone designs before and after the iphone
Some might say the decision is obvious, or is this chart just really well designed?

 

Read the full Amicus Brief here.

 

 

Samsung’s Response

 

In response to Apple’s brief was one filed by the amicus curie in support of Samsung. This brief argues that a judgement in favor of Apple (an a 100% award of profits)  will lead to

 

“absurd results and have a devastating impact on companies, including amici, that spend billions of dollars annually on research and development for complex technological products and their components.”

 

(the ‘amici’ here of course refer to Dell, eBay, Facebook, and Google among others, who have all sided with Samsung)

 

The amici argue that  that the current design patent law is not in-line with modern day technology and must be revised to reflect the nature of complex technology products and their consumers today.

 

A law that was written to cover simple, single-component items like as carpets, spoons and wallpaper is not one that is applicable to “multi-component technological products of today that distinguish themselves in the marketplace based on a cornucopia of different features.”

 

In contrast to Apple’s argument that  consumers equate the design of a product as one with all the functions contained within it, Samsung’s amici argue that consumers frequently consider the purchase of a multicomponent technological product as the purchase of several individual components. They state this as an example

 

“Customers may purchase an iPhone in part because they wish to use the iCloud file-sharing application, or because they prefer the quality of its camera, or because they know that they can synchronize it with other Apple products—not simply because of the design of the iPhone’s rectangular front face with rounded corners. That is why technology companies apply their research and development budgets to numerous aspects of a multicomponent product, including its hardware, software, and services, and not just to its design.”

 

They argue that “To the extent that total profit may ever be awarded from the proceeds of such products, patentees must demonstrate that the design of the infringing article drives nearly all of a consumer’s demand for the product; otherwise, damages should be limited to the profit attributable to the component to which the design has been applied.”

 

Read the Amicus Brief submitted on behalf of Samsung here.

 

 

Other Vested Interests

 

Of the companies siding with Samsung on this case, Google more than any of the others has a vested interest in winning.  Some have said that this case isn’t really Apple vs Samsung, it’s Apple vs Google. Why?  Steve Jobs wasn’t one to hold back and was quite vocal about his feelings about Android. In Water Isaacson’s book he was quoted as saying,

 

“I’m going to destroy Android, because it’s a stolen product.”

 

He called Android a knockoff of the iPhone and that he was willing to go to “thermonuclear war” just to kill Android. He also admitted in the book that earlier lawsuit with HTC (another Android handset maker) was also really about Google.

 

So as the developer of the Android operating system that Samsung smartphones run on, an Apple win could open Google up to further patent infringement lawsuits as well as force them to make changes to key features of their own OS that currently runs over a billion devices around the world.

 

 

So who’s right?

 

If you put yourself in either party’s shoes, both arguments make a lot of sense. But if Apple were to win the case and along with it 100% of Samsung’s profits , what kind of implications does this have for the rest of the industry? other industries? consumers? Any verdict that might diminish innovation for fear of litigation will not just pave the way for design trolls but move us backwards in time.

The Samsung Amicus brief sums up the “disastrous practical consequences” of a verdict Apple in this statement:

 

“By making the most trivial design patent worth exponentially more than the most innovative utility patent, the rule would distort the patent system and harm innovation and competition.

The rule would encourage companies to divert research and development from useful technologies to ornamental designs.

It would encourage design-patent holders to litigate even weak infringement claims in a quest for outsized awards. And it would encourage non-practicing entities to use design patents as the next big thing for extracting holdup value from targeted businesses, with such extortionate demands posing especially grave threats to small businesses for whom a single design misstep could be an existential threat. Congress could not have intended any of these results.”

 

 

It’s clear that the current law is deeply out of step with modern products and this case provides an excellent opportunity to rewrite it. In the short term, a winning a design patent case might give one a competitive edge over another but long-term the consequences would become a disadvantage to all, consumers included.

However,  this cannot give patent violators an excuse to continue, especially those whose make it part of their strategy  to use a patent without authorization – to deliberately copy a competitor with the intention to deceive the consumer. We can’t speculate here if this was Samsung’s strategy in this case but it has been reported that they have a history of doing this and if proven true in this case they must be held accountable.

 

With the Samsung Galaxy 7 recall underway and the announcement of the iPhone7  coming next week, is this a preview of things to come? We won’t know until the trial gets underway this October 11th.

 

UPDATE: October 11, 2016 – In a strange twist of events,  due to the battery problems being much larger than the first recall anticipated, Samsung has decided to permanently discontinue sales of the Galaxy Note 7. This news, however, has no impact on the Supreme Court Case.

 

UPDATE: October 12, 2016 – It’s going to cost them at least $2.3 billion in lost profits.

UPDATE: June 27, 2018 – At long last, the case has finally come to a close…in a settlement.

“This case has always been about more than money,” the company said at the time. “Apple ignited the smartphone revolution with iPhone and it is a fact that Samsung blatantly copied our design. It is important that we continue to protect the hard work and innovation of so many people at Apple.”

Samsung declined to comment.

Based on the above, we could probably guess who came out on top.