case study of apple vs samsung

Apple vs. Samsung: A Case Study on the Biggest Tech Rivalry

Harshit Verma

Humans are amazing animals, I mean we are smart and can do almost anything. Be it flying, cooking, innovating, and even revolutionizing the whole world with unbelievable technology. Think about this, the first computer was built in 1822, by a smart human called Charles Babbage. It used to have vacuum tubes and large compartments for storage. We have grown from that time at a rapid scale and efficiency, we have seen multifold growth in technology.

So much so, that the computer that once occupied a whole room by itself, now sits in your hand. Moreover, it just sits on our palms for a long time now as our screen times jump.

The smartphone industry has grown and has become one of the biggest industries in the world. Right now, there is a smartphone user base in the billions. This growth has led to the establishment of smartphone giants. Behemoth organizations like Apple and Samsung.

We all have that friend who is an ardent fan of apple, and we all have got a friend too who is always in love with Samsung. This takes us back to the smartphone war that has continued since time immemorial. The android vs apple war. This disparity in demographics is a good indicator of the product market. The user market is much skewed in different directions.

This article is the dissection of the silent raging war between Apple and Samsung. Read on to discover stories and not many known facts about the tech hulks.

Apple Apple Product Line Samsung The Rivalry Inception of Samsung and Apple How Samsung and Apple Turned From Friends to Foe The Billion Dollar Samsung Apple Lawsuit The Court Rule and Afterwards FAQ

It's not a necessity to introduce Apple . The reason is that it is already a brand, a valuable brand which has managed to make a place in the hearts of people all around the world. That also explains why the company has no ‘about us’ section on its website.

Apple is the brainchild of Steve Jobs. It is an American multinational company specializing in consumer products in the tech line. The company is the biggest technology company with its magnanimous revenues and the most valuable company in the world . That too started from a garage and managed to become the most recognizable company in the world. It has been revolutionizing personal tech for decades.

Apple Product Line

Apple 1 was the first computer handmade by Steve Wozniak (Apple co-founder) under the name Apple in 1976. It was a computer encased in a wooden block. Then followed by Apple 2 which was more successful than the predecessor. After the success, they faced good losses in the fall of Apple 3. It faced overheating issues.

After seeing such failure they started to work on innovating something new. To come out of this deep pit, Something that will hopefully revolutionize personal computing.

They began to work on the Macintosh. It was their first computer that supported GUI or Graphic user interface, which allows the user to communicate with the computer in graphical mode. Launched the Macintosh in 1980 and this began the winning strike for apple.

It was in 1983 when Steve Jobs famously asked Pepsi CEO John Sculley to be Apple’s next CEO or if he wanted to “sell sugared water for the rest of his life or change the world? ” The relationship went bad later.

To remove him, Steve initiated a move that backfired and ended up removing himself from the board. The company saw good growth under the leadership of Sculley until he was removed because of some failed products.

Later Apple bought ‘Next ’ which was founded by Steve Jobs bringing him back as an advisor. He immediately trimmed most of the product density in Apple and made the company as slim as possible and launched new sleek products.

He worked secretly on the first iPhone and launched it in 2007. It was an instant hit. Since then, iPhones have been the most popular phones in the world. A major part of Apple's revenue comes from them.

The Samsung that we know today, wasn’t this when it started. It has gone through enormous shifts. Surprisingly, the company was not even in the technology business at its inception in 1938. It was a small company dealing in fried fish and noodles. In the 60s it entered the smartphone segment and today is the largest manufacturer of smartphones , televisions, and memory chips in the world.

In 1938, Lee Byung-Chul dropped out of college and founded a small business he named Samsung Trading Co. The initial corporate logo had three stars and was based on a graphical representation of the Korean Hanja word Samsung. It operated with the same Japanese culture as every corporate body, the employees did as they were told.

Soon with a good culture and with government assistance it entered domains like sugar refining, media, textiles, and insurance and became a success. So at this time, it was in good economic condition.

After the succession of third heir Kun-hee, the company saw an opportunity in technology and he invested heavily in semiconductor technologies and transformed Samsung from a manufacturer into a global technology powerhouse.

After Kun’s death, his easy-going son succeeded to the throne and began investing more in smartphones and more in tech. Later the company saw the most profits from smartphone sales. The most famous Samsung phones are Galaxy, after the first launch in 2009. During the third quarter of 2011, Samsung surged past Apple to the number one spot among phone manufacturers, based on shipments.

Samsung, as it saw handsome revenues in the smartphones segment, mocked Apple in many ways. You can still see those commercials on YouTube . So did Apple. They released commercials that defame other pioneer brands openly. This makes the rivalry public and leads to polarisation in the market. Let us discuss it in further detail.

The Rivalry Inception of Samsung and Apple

As the smartphone market and the hype around this continues to grow, smartphone leaders fight for greater dominance in this segment of the product. Behemoth organizations Samsung and Apple are the pioneers in this segment and one of the most famous rivals in the world. They not only fight for a greater market share but the main rivalry is a little off topic, it is a long legal battle into dark plagiarism.

Samsung not only competes with Apple in the notebook, tablets, and smartphones market, It also supplies Apple with crucial items for iPhones like OLED display and flash drive memory chip for storage. The Samsung we know today has not been constant as we consider its long history.

In the 80s the company was primarily focused on the semiconductor business . Apple was one of Samsung's largest buyers, ordering billions of dollars of parts for electronic devices. Its CEO at that time did meet several times with Steve jobs for advice or negotiations. The two companies had friendly relations with each other. Until something happened.

In 2007 the first iPhone was unveiled to the world. Two years later, in 2009 Samsung came up with a touchscreen device for their market running on Google's android system. Apple CEO Steve Jobs called Samsung a Copycat. ‘POOF’. Apple filed a lawsuit against Samsung. The rivalry began.

How Samsung and Apple Turned From Friends to Foe

According to Walter Issacson, Steve’s biographer, He wanted to start a thermonuclear war against Android in this case of plagiarism and copying apple’s authenticity. From that event, Samsung dared from being a supplier of technological equipment to a competitor in market share. It went from being an ally to a fierce enemy.

Apple was extremely infuriated with this and dragged the matter into court, showcasing that the company is super sensitive about this issue. It filed a lawsuit against Samsung in serious violations of patents and trademarks of Apple’s property rights.

However, the court case wasn’t the first guard of Apple against Samsung. Both the companies Apple and Samsung had a long history of cooperation, so Apple first thought of talking the matter out rather than taking the case to court.

Apple proposed a licensing deal for Samsung for the patents and trademarks. The document stated that Samsung will pay 30$ on selling every smartphone and 40$ on every tablet.

Samsung ofcourse declined the offer, stating that the company hasn't done anything wrong and is not involved in copying Apple or violating any of the trademarks mentioned in the lawsuit. Not only this, Samsung reversed the licensing agreement onto Apple stating that they are the ones who are copying. This began the row of court cases by these tech hulks against each other.

The lawsuit filed by Apple was specific about the number of patents and the type of patents Samsung violated, let us discuss a little about the violations Apple mentioned.

The Billion Dollar Samsung Apple Lawsuit

The first lawsuit demanded 2.5 billion dollars in damages from Samsung. So we can assume it wasn’t a normal lawsuit. Apple was very serious about their smartphone launch and now with this case too. Samsung however seemed like it was ignoring Apple’s claims of plagiarism and trying to put the burden on Apple themselves.

Trade Dress

It is a visual form of patent, that deals with the visual and overall look of a product. Sometimes companies copy some famous brand’s product look and hope to generate sales. As people tend no not to look about details of a product, rather they just pick up based on the appearance of something. It instills confusion in consumers. Samsung Galaxy phone was the first touchscreen phone in the Samsung product line and it looked mostly the same as the newly launched iPhone.

Trademark Infringement

While Samsung could argue on the physical appearance being similar with iPhone but another thing the lawsuit included was trademark infringement. The icons on the iPhone were strikingly similar to those in Samsung’s phone. This turns the eyebrows up for Samsung. As there can be thousands of ways of designing icons and GUI effects, Samsung chose in most cases icons similar to that of the iPhone.

Other than these the lawsuit also concluded the methods of copying of the home screen, the design of the front button, and the outlook of the app's menu. All these were some specific irks for Samsung.

The Court Rule and Afterwards

The case began in 2011 and went on to go worldwide. By July 2012, the two companies were still tangled in more than 50 lawsuits around the globe, with billions of dollars in damages claimed between them.

Hearing both sides, the law court ruled in the favour of Apple. The basis was their legitimate concerns about their product being copied in the open market. Samsung paid $1 billion in compensation to the iPhone designer .

“I am talking to you on a phone right now that Apple just copied,” said Brian Wallace, Samsung’s former vice president for strategic marketing. “It’s a giant phone that Steve Jobs made fun of. Who was right? Samsung was right.”

After this and all the cases in between this first court case, Samsung didn’t stay shut. It widely talked against Apple and filed lawsuits claiming infringements of their company policies and patents. These behemoths fought each other like wild animals. Suffering millions on each side, Tore each other apart in claims.

Apple claimed that Samsung had copied the iPhone, leading to a long-running series of lawsuits that were only finally resolved in 2018, with Apple being awarded US$539 million. Issues between the two companies continue. They are now perhaps best described as ‘frenemies’.

While tech hulks like these two fight for global dominance and the crown of the most innovative technology pioneer, it is sure that smartphones are a hot topic. It seems like everyone wants the latest phone to set a trend. From the latest Samsung foldable phone to the iPhones sold as a jewel. This market kind of seems like a fashion innovation.

Apple and Samsung will most probably rule until someone innovates in between. Whatever it will be, humans are fascinated and the future is exciting.

Who won the Samsung Apple lawsuit?

Apple won the patent dispute against Samsung and was awarded $1.049 billion in damages for 6 of the 7 patents brought to bear.

Why did Apple sue Samsung?

Apple initially sued Samsung on grounds of patent infringement.

Who launched first smartphone Apple or Samsung?

Apple iPhone was launched in 2007 and two years later, in 2009, Samsung released their first Galaxy phone on the same date.

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Apple v. Samsung heads to Supreme Court: What you need to know

FAQ: Remember that tiff about how Galaxy phones look like iPhones? The highest court in the land hears arguments Tuesday.

The biggest patent case to hit the modern tech world is back again.

Apple and Samsung will appear before the US Supreme Court on Tuesday to argue why their opponent was wrong when it came to a patent case from 2012. This is the first time a design patent case has been examined by the Supreme Court since the 1800s.

A decision by the court could have a ripple effect across the technology industry and ultimately affect the gadgets you buy. What's at question is how much money one company has to pay for copying the designs of another. Samsung says an Apple victory would stifle innovation. Apple argues that a Samsung win would weaken the protections afforded to new creations.

Notably, none of the devices in question has been on the market for years.

Samsung's infringing devices (pictures)

"One of the interesting things about this whole odyssey is it's a great demonstration of how slowly the law moves relative to technology," said Mark A. Lemley , a Stanford Law School professor and one of the people who signed a friend-of-the-court brief in support of Samsung. "Here, we're on the first-generation trial, but...we're generations behind what the companies are selling."

You're forgiven if you don't remember what this was all about beyond phones and patents. Don't worry, CNET has you covered. And we've done the homework about SCOTUS so you don't have to scramble to remember your high school civics class.

Samsung said in a comment that it looks "forward to the Supreme Court's guidance on a very important matter that has the potential to stifle innovation and consumer choice. Samsung is honored to lead the charge in helping pave the way for future innovators and foster an environment where the fear of unreasonable law suits don't impinge upon their creativity."

Apple didn't have a comment ahead of Tuesday's hearing.

What was this about again?

Yeah, this all seems like it happened a long time ago. The original Apple v. Samsung trial in 2012 captivated Silicon Valley and the tech industry because it exposed the inner workings of two notoriously secretive companies. It was just one of many cases around the world as the rivals sparred both in the marketplace and in the courtroom.

At issue were design patents for a black, rectangular, round-cornered front face; a similar rectangular round-cornered front face plus the surrounding rim, known as the bezel; and a colorful grid of 16 icons. Those three patents are what's being considered in the Supreme Court case.

For more on Apple v. Samsung

• CNET's full Apple v. Samsung coverage
• Supreme Court steps into Apple v. Samsung fray
• Samsung to Supreme Court: Apple got too much money for its design patents
• Apple tells Supreme Court that Samsung case is 'legally unexceptional'

What devices were accused of infringing Apple's patents?

The products in question included the Galaxy Prevail, Gem, Indulge, Infuse 4G, Galaxy SII AT&T, Captivate, Continuum, Droid Charge, Epic 4G, Exhibit 4G, Galaxy Tab, Nexus S 4G, Replenish, and Transform.

What was the decision in the original case?

In August of 2012, a nine-person jury sided with Apple on a majority of its patent infringement claims against Samsung. At that time, the jury awarded Apple $1.05 billion in damages, much less than the $2.75 billion sought by the Cupertino, California, electronics giant. Samsung, which asked for $421 million in its countersuit, didn't get anything.

How much did Samsung end up paying Apple?

District Court Judge Lucy Koh, in striking $450.5 million off the original judgment against Samsung, ordered a new trial to begin in November 2013 to recalculate some of the damages in the case. South Korea-based Samsung ultimately paid Apple $548 million in damages in December 2015.

The amount was based on the total profits Samsung made from its infringing devices. That's what Samsung -- and other tech companies like Dell and Facebook -- want the Supreme Court to change. In this case, Samsung sold 10.7 million infringing devices, generating $3.5 billion in revenue.

Only $399 million of the $548 million paid to Apple -- considered the "additional remedy" amount under Section 289 of the Patent Act of 1952 (35 U.S.C. 289) -- is being examined in the Supreme Court case. The additional $149 million in damages Samsung paid Apple is not at stake.

So what's the issue with money?

This is what the entire Supreme Court case is about. Samsung wanted the court to give guidance on what's covered by design patents (which protect the way an item looks) and also on what damages can be collected. But the Supreme Court is looking only at the second issue: "Where a patented design is applied only to a component of a product, should an award of infringer's profits be limited to profits attributable to that component?"

Samsung believes design patents are given too much value when it comes to legal damages. The company contends that Apple should get profits only from the parts of a smartphone that infringe Apple's patents -- the front face and a grid of icons on a user interface -- not the profits from the entire phone.

Apple, meanwhile, quotes Congress in saying that "it is the design that sells the article" and, because profits attributable to design are often "not apportionable," it wants the Supreme Court to uphold the lower court ruling. It did admit, in recent court filings, that sometimes a patent holder shouldn't collect profits on an entire product, but instead only on an infringing portion. But it said Samsung didn't provide enough evidence of that during this case.

Weren't there some other cases between Apple and Samsung?

Yes. The 2012 case wasn't the only time Apple accused Samsung of patent infringement. The two companies also battled in April 2014 over newer devices, specifically the Galaxy S3 and iPhone 4S. In that case, a jury told Samsung to pay Apple $119.6 million for infringing some of its patents, while Apple owed Samsung $158,400 for infringing one of the Korean company's patents.

Another damages retrial -- which would have been the fourth showdown between the companies -- was slated to start in late March in San Jose, California. But Koh put the trial on hold until the Supreme Court reviews the case.

The companies also were battling in overseas courts but agreed in August 2014 to settle all litigation outside the US.

Who sides with Samsung?

Dozens of legal experts, nonprofit organizations and technology companies filed amicus , or friend of the court, briefs in support of Samsung in January when it was trying to get the Supreme Court to hear its case.

Tech companies that support Samsung include Dell, eBay, Facebook, Google and HP. Other groups supporting Samsung included 50 professors of intellectual-property law, from places like Stanford and Georgetown universities, and digital-rights nonprofits like Public Knowledge and the Electronic Frontier Foundation.

Who sides with Apple?

More than 100 design industry professionals , including well-known fashion names like Calvin Klein and Alexander Wang, signed a friend-of-the-court brief in support of Apple. The designers and educators said the iPhone's distinctive look drove people to buy it, so a similar-looking Samsung phone could hurt Apple's sales.

How is the government involved in this?

The US Department of Justice's Office of the Solicitor General (the group tasked with supervising and conducting government litigation in the Supreme Court) in June filed an amicus brief "supporting neither party." The attorney for the US will be Brian Fletcher, assistant to the solicitor general

Top evidence in Apple v. Samsung according to juror (pictures)

But it largely sided with Samsung in believing the lower court interpreted the law incorrectly. Still, it kept open the possibility that Samsung didn't present enough evidence to show it shouldn't have to pay remedies on the entire profits from its infringing devices.

The Justice Department believes patent holders should get full profits from the sale of an "article of manufacture," (as detailed in the patent law) but it doesn't believe the definition of an article is clear. Instead of an article being the entire phone, an article may actually be only the physical shell of the phone.

The agency said the ruling of the US Court of Appeals should be vacated and the case should be sent back to a lower court for further proceedings.

When is the Supreme Court hearing?

It starts at 10 a.m. ET on Tuesday and lasts for an hour.

Who will be representing the companies at the Supreme Court?

Kathleen Sullivan, a partner at law firm Quinn Emanuel , will be speaking for Samsung. Her firm represented Samsung in the earlier trials. She's argued nine cases before the US Supreme Court.

Seth Waxman, a partner at law firm WilmerHale , will be speaking for Apple. He's a former solicitor general of the US and works for the same firm as Bill Lee, one of the lead attorneys in the previous trials. Waxman has delivered 75 oral arguments in the Supreme Court.

Wait, there are only eight justices now. Could there be a tie?

Yes. Because there are eight justices, there's no tiebreaker. The Supreme Court was split 4-4 in June in a case challenging Obama's 2014 immigration policies . If there's a tie, the lower court's ruling is affirmed.

But over the last three SCOTUS terms, seven patent cases were decided unanimously. And patent cases typically don't split along liberal versus conservative lines.

What happens if Apple wins?

More court time. There's still litigation going on between Apple and Samsung for other patents, and a second damages retrial from the 2012 case was slated to start in mid-March. Along with the $548 million Samsung agreed to pay, Apple argued its rival owed an additional $180 million in supplemental damages and interest. Koh put that trial on hold until after the Supreme Court reaches its decision.

What happens if Samsung wins?

Yep: more trials. If the Supreme Court limits the money that can be collected on infringing patents, a lower court will have to decide how much Apple is owed.

Other current design patent cases and those going through appeal would face the new Supreme Court interpretation, which means damages would be much lower than in the past.

When will there be a decision?

The Supreme Court recesses for the year on June 30, which means a decision should come before then. It's likely a ruling will come in the first quarter of 2017.

Inside the Apple v. Samsung courtroom (sketches)

First published October 9 at 5:00 a.m. PT. Updated through October 11 at 5:50 a.m. PT Added details, including the profits Apple wants to collect, and clarified the description of design patents.

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• Top Negotiation Case Studies in Business: Apple and Dispute Resolution in the Courts

Negotiation strategies drawn from a negotiation case study involving two of business' largest companies

By PON Staff — on April 30th, 2024 / Business Negotiations

One significant negotiation to observe happened in August 2012. A California jury ruled that Samsung would have to pay Apple more than $1 billion in damages for patent violations of Apple products, particularly its iPhone. The judge eventually reduced the payout to $600 million. In November 2013, another jury ruled that Samsung would have to pay Apple $290 million of the amount overruled by the judge in the 2012 case.

Conflict Between Apple and Samsung: The Argument

In negotiation, Apple argued that it had lost significant profits in the smartphone market to its most significant competitor, Samsung, due to blatantly copied features. But Samsung contended that consumers had purchased its phones for other reasons, such as Samsung’s bigger screens and cheaper price, according to the New York Times .

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Negotiations to Resolve Business Disputes

Given that Samsung is one of Apple’s biggest suppliers, the companies have a strong incentive to move beyond their dispute and build on their ongoing partnership. Yet court-ordered mediation between the CEOs of the two companies in 2012 ended in an impasse. And the disputants continue to fight in courts worldwide, with the advantage going to Apple in the United States.

Sunk Costs in Negotiations

When negotiators feel they have spent significant time and energy in a case, they may feel they have invested too much to quit. Moreover, the longer they spend fighting each other, the more contentious and uncooperative they are likely to become. All the more reason, then, to work hard at negotiation and mediation in an attempt to stay out of court.

What are your thoughts on the negotiations between large corporations like Apple and Samsung?

Related Business Negotiations Article:   Coming Up with Win-Win Solutions at the Bargaining Table  – Does a value-creating, win-win negotiation style have a place in modern business? In integrative negotiations strategies, a negotiator seeks to maximize his or her value claim while also creating more value for herself and her opponent. It is a cooperative style that lends itself to forging long-term agreements based on trust and mutual goodwill. How to integrate these strategies into your approach to the negotiation table is a different task entirely – how does a negotiator effectively secure her interests, expand the pie, and forge a relationship with her counterpart? This article drawn from negotiation research explores ways to build relationships with your counterpart in business negotiations.

Originally published in 2012.

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By expanding the pie to understand total market share involved the two dominant market players may come to realize that they share a common interest in preventing other players from taking away a significant slice of the market and the longer the dispute continues the larger a slice will be lost to other players. Dragging Negotiations out too long may result in a settlement after the market has peaked on a bell curve of innovative value of the technology in dispute.

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Preparing for negotiation.

Understanding how to arrange the meeting space is a key aspect of preparing for negotiation. In this video, Professor Guhan Subramanian discusses a real world example of how seating arrangements can influence a negotiator’s success. This discussion was held at the 3 day executive education workshop for senior executives at the Program on Negotiation at Harvard Law School.

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Apple v. Samsung timeline: The guide to what's happening

[Updated August 22, 2012]

The high-profile battle between technology giants Apple and Samsung has managed to cross not only country borders, but probably the comprehension of many trying to follow the trial, which is taking place in San Jose, Calif.

So, without further ado and in bite-size portions, here is a rundown of the trial's events thus far, all the way from the beginning:

• In the original lawsuit filed by Apple against Samsung in April 2011, the former stated that the South-Korean firm had ripped off the design and technology of Apple products.
• The actual terms used? Apple alleges that Samsung "slavishly" copied its designs.
• In response, Samsung counter-sued, saying that Apple had infringed a number of patents to do with 3G.
• Hitting the ball back, Apple then pushed on, stating Samsung copied the "look and feel" of the Apple iOS range of devices, namely the Galaxy line of smartphones and tablets.
• The lawsuit has spread to over 30 courts across four continents, and after negotiations failed, landed in front of a judge for the true showdown in July 2012.
• Apple is seeking $2.5 billion in damages, and Samsung is also seeking financial restitution.

The Timeline

Apple sued Samsung for patent infringement, namely through products including the Samsung Galaxy Tab 10.1. Samsung then counter-sued over 3G patents, which are owned by the firm. Samsung says that the iPhone 4, iPhone 4S and iPad 2 infringe these patents.

August 2011:

Samsung's Galaxy 10.1 tablet was put on hold in Australia after an intellectual property and trade practises hearing. Apple Australia acquired the U.S. version of the Galaxy Tab 10.1, studied it, filed a lawsuit, and claimed intellectual property right infringement based on the design of the iPad.

The case Apple bought against Samsung was speedy -- and effective . 

The two smartphone and tablet giants then struck a deal. Samsung agreed to restrict the sales of its Galaxy Tab tablet in Australia and would also give Apple sample devices and source code of devices that apparent crossed the line for study -- and approval.

However, it did not end there. Apple then won a victory in a German court, securing a preliminary (i.e. temporary) injunction against the sale of the Galaxy Tab 10.1 throughout the European Union, with the exception of the Netherlands. This took  immediate effect in Germany . 

Was that it? Not at all. In the same breath, researchers accused Apple of modifying images of Samsung's tablet, which were then presented to the Düsseldorf court who granted the original injunction . Afterwards, the judge claimed he also handled the tablets and did not rely purely on the supplied images.

In addition, Samsung filed an emergency complaint that the German court overstepped the mark in trying to impose a ban on sales in other EU countries. As a result, the ruling was lifted across the EU -- except for in Germany.

Basically, Apple believed that the 10.1-inch variant -- the American type -- of the Galaxy Tab looked far too similar to the iPad, and tried to prevent its sale. Not only this, but Apple alleged that Samsung had breached several of its patents , including "slide to unlock" and "edge-bump" functions. 

September 2011:

The new Galaxy Tab 7.7 was next to fall afoul of the German courts, being banned by a court injunction, and was unable to be showcased at one of the world's largest technology shows in Berlin, the IFA electronics show . 

Meanwhile, in Australia, Samsung set about counter-suing Apple after delaying the Galaxy Tab 10.1 launch down under. The claim was filed with the Federal Court of Australia in New South Wales, and stated that Apple infringed seven Australian patents related to 3G networking on its third- and fourth-generation iPhones and iPad 2 devices.

So far : Apple says Samsung's tablet infringes design patents, and Samsung says that iPhones and iPads infringe 3G patents. 

Samsung's move seemed to go against its original agreement to grant Apple samples of the tablet for study, and to restrict sales. In reprisal, the firm also gathered its army to sue Apple in order to prevent the iPhone 5 making its way to South Korea, taking its case to court on 16 September.

The seven patents that Apple allegedly infringed upon through its iDevices were for methods of data transmission, decoding, power management and mobile data management. Not only this, but Samsung demanded that Apple drop its complaint in Australian court.

These patents are what is known as 'standards-essential patents' -- in other words, 3G will not work without the technology. Samsung is required therefore to license them under reasonable, non-discriminatory and fair measures -- what are known as FRAND terms.

However, if Samsung is required to license the patents that Apple allegedly infringed, what happened to the licensing? Apple said that the terms were "not reasonable" and differed from other third-party vendors .

Up to this moment in our timeline, Apple also filed other similar claims in countries including Japan, the UK and France. 

October 2011:

The Australian ban on the Galaxy Tab continues, and the two sides continue to squabble. Reports stated that the court sided with Apple on two of the patents Samsung allegedly infringed. 

See also: All of Apple's  patent claims against Samsung  in one chart

Next: Victory for Samsung?

November 2011:

Samsung's victory against Apple is announced. An Australian federal appeals court unanimously chose to lift the preliminary sales injunction which banned the sale of the Galaxy tablet.

However, a stay was also one of the conditions, which prevented the company  from selling the product  until 2 December 2011, 4 p.m. local time. 

The physical design of the tablet also changed in order to comply with requests from Apple's legal team after the sales ban  issued by the court in Germany . 

December 2011:

Apple's legal requests to block Samsung from selling certain 4G-enabled products to consumers based in the United States fail.

March 2012:

We come back to the original agreement between Samsung and Apple concerning the handover of mobile device models for inspection. The iPhone maker accuses its South-Korean rival of "failing to comply" with the order set against them as part of the deal,  and the "partial compliance"  was due to not handing over everything that was agreed.

Only one device that allegedly infringed on Apple's patents was handed over  with its source code , rather than all of them.

The filing was submitted to a San Jose, California federal court -- where we find ourselves now. 

April 2012:

U.S. District Judge Lucy Koh, who has presided over a number of the Apple v. Samsung cases,  orders the two sides to talk . It seems cooler heads want to prevail by now, with settlement talk dates set for May 21--22 in San Francisco, with Magistrate Judge Joseph C. Spero acting as moderator.

The nature of the talks was deemed "voluntary".

Apple's chief executive Tim Cook said during Apple's Q1 earnings call:

"I would highly prefer to settle than to battle. But it's important that Apple not become the developer for the world. But the key thing is that it's very important that Apple not become the developer for the world. We need people to invent their own stuff."

Agreeable or not?  AllThingsD's  John Paczkowski had an interesting point to make:

"If Samsung is willing to concede to that, then these two days of court-ordered settlement talks ought to go quite smoothly. But that seems unlikely, which means this battle will probably roll on for a good long time."

Apple was given the go-ahead to seek a sales injunction on Samsung's Galaxy Tab 10.1, to see the product banned from U.S. stores after failing in December. The U.S. Court of Appeals for the Federal Circuit also said a sales ban should be imposed until a trial can be held.

Apple  sought the ban  because "each day that Samsung continues to sell its infringing Tab 10.1 causes additional harm to Apple through design dilution, lost sales, lost market share, and lost future sales of tag-along products," according to a court filing.

This ruling was given  just a week before  settlement talks were due to begin... 

Well, that didn't go well. Unsurprising when Apple was given permission to steam ahead with the U.S. sales ban. A  lengthy and costly trial  becomes the final option, and the trial date is set for July 30. 

Following the appeals court ruling, U.S. District Judge Lucy Koh had to reconsider the preliminary sales injunction against Samsung's Galaxy Tab 10.1.

Koh ruled that Apple's request to prevent Galaxy Tab sales in the U.S. would have to wait for court procedures to be completed. A higher appeals court was required to formally cede jurisdiction back to her before the request could be granted.

The motion  was denied . 

Kicking off in San Jose, Calif., a few miles away from Apple and Google's headquarters, the dispute between the two rival firms was estimated to take a minimum of four weeks to resolve.

10 individuals, based in Santa Clara, Calif., were  chosen for the jury  from a pool of 74. The jury included a social worker, a systems engineer, an AT&T supervisor, a store operations manager, a city worker for Gilroy, a benefits and payroll manager, and an unemployed video gamer. 

On 18 July, a U.K. judge ruled that Apple  must publicize a notice  on both its U.K. website and in British newspapers stating that Samsung did not copy the iPad's design -- and the notice has to be left on its website for six months. 

The judge  said :

"Samsung products are very thin, almost insubstantial members of that family with unusual details on the back. They do not have the same understated and extreme simplicity which is possessed by the Apple design. They are not as cool."

A week after, Apple was granted a reprieve on the adverts. A London court  offered the corporation breathing space , so Apple has time to launch an appeal in October. 

A few days before the trial began, the late co-founder Steve Jobs' commented on Android are deemed " irrelevant " in court, much to Samsung's chagrin. 

On the 22 July, the trial officially begins, marking what is now three months of hearings over the patent infringement case.

After months of directional hearings, evidence submission and exclusion, jury re-shuffling and testimony seeking, it's about to kick off.

In the meantime , Apple releases a new iPad and iPhone, and Samsung's Galaxy Tab 10.1 and Galaxy S III enter the marketplace properly.

Through the trial, an odd business triangle appears. Apple says Samsung copied its designs, but Samsung counter-claims saying that the rival firm ripped off Sony -- internal emails that may enforce this being excluded from court.

Potentially  in rebellion , some of the evidence Samsung wanted to include in the trial that was excluded is released to the press, including data on its F700 smartphone design, which predates the iPhone. Samsung said it was  following the rules . 

Reaching the end of July, Koh is reported as "livid" because of Samsung's disclosure to the media. This, naturally, made  her deaf to the pleas  of Samsung lawyer John Quinn, who threw himself to the court's mercy to try and have the evidence accepted, saying:

"In 36 years, I've never begged the court. I'm begging the court now. What's the point in having a trial?"

Apple was not best pleased, and its counsel William Lee said the company would file an " emergency motion  for sanctions" as well as "other relief that may be appropriate." 

This was  denied by Koh . The judge said:

"Some of these objections are ridiculous, they're five paragraphs long. If you're going to do that messy objection, you're going to do it in front of the jury, and the time clock is going to be ticking. I will not let any theatrics or sideshows distract us from what we're here to do, which is to fairly and timely decide this case."

Hearings got underway on the 23rd. According to the Federal Court online portal, the trial's complex nature is set to run its course in the last week of February -- a hearing scheduled for every day -- until 17 May 2013.

Next: August 2012 .. until now

August 2012 .. until now:

The second week of hearings begins. Samsung counsel Katrina Howard  accused Apple  of meeting with 3G patent experts that provided evidence to  previous court cases  in Australia, and convincing two to "change their minds".

Who said what?

A Samsung executive testified that the company has as many as 100 different smartphones available in the U.S. market  at any given moment , many of which are and look "distinctly different".

During the cross-examination of Apple marketing chief Phil Schiller, Samsung's attorney tried to get the executive to talk about a product that  hasn't been announced yet . He asked whether Apple's next iPhone model would look anything like existing versions, or if changes were in store. 

Peter Bressler -- a former president of the Industrial Designers Society and the founder and board chair of product design firm Bresslergroup -- said  numerous Samsung designs  infringed on Apple's patents, implying it is possible that consumers may confuse the two devices.  

Samsung chief strategy officer Justin Denison denies that the company is copying anything, finding the idea "offensive". 

 "At Samsung, we're very very proud of the products we produce, of all the hard work that goes into bringing those products to market. What we would like to be able to do is simply compete in the market, continue what we've been doing for the last 15 years in the market."

An  Apple expert acknowledged  that even if Samsung's products are similar enough to Apple's to confuse consumers, it doesn't stand to follow that Apple's sales are harmed. 

Apple called upon the testimony of Massachusetts Institute of Technology marketing professor John Hauser to explain survey results claiming that Samsung consumers would pay anywhere from $39 to $100 for Apple's features --  the same ones  being fought over  in court. 

The testimony of one of Samsung's key designers was scrapped by Koh. Lead designer for Samsung's F700 phone, Hyong Shin Park, was barred after an Apple request. Park had previously said that the designs were inspired by a "bowl of water" rather than copied technology. Apple argued  her testimony was irrelevant .  

Evidence points of note:

Some of Apple's entered exhibits seem to show that Samsung's phones only began looking similar to an iPhone in 2010. Other slides were submitted but had to be changed  following objections  by Samsung. 

A piece of evidence which is submitted to court is obtained by  AllThingsD , which is a translation of a report prepared by Samsung in 2010 that directly compares the iPhone to the Galaxy S. In the document, the firm compares hundreds of aspects between the two devices, noting key differences and  areas for improvement .

Following on,  one of the first iPad prototypes  is excluded as evidence in the trial, despite it having been shown to jurors. 

• In addition, another report produced by Samsung at court, contained Apple's  internal research data . It suggests that most U.S. phone shoppers bought an Android device instead of an iPhone in order to stick with their carrier.

A consumer survey Apple sponsored and completed in 2008, shown as evidence, found there was confusion about whether the Galaxy Tab was a  Samsung product or an iPad . In reprisal, Samsung used the simple function of turning different device models on -- two phones and a tablet -- to contend the idea that consumers  could become confused  looking at each model.

During the testimony of Ravin Balakrishnan, a professor in the department of computer science at the University of Toronto, Apple brought out two of Samsung's internal usability studies -- one for a smartphone and another for a tablet. Direct instructions were found within  to "mimic" Apple's software . 

An internal memo raised at court, addressed to Samsung's "UX [user experience] executives," makes it clear that designers and developers should take "lessons" from the iPhone,  but not copy it . 

See also:  Apple's  original 'copying' presentation  to Samsung

.. anything else?

A wealth of sensitive company data concerning both companies has been released, despite both firms  pleading for exclusion  from the public domain. Since the iPad launched in Q2 2010, Apple has sold 32 million iPads in the United States. In comparison, within the timeframe, Samsung sold only 1.4 million tablets.

Apple has also accused Samsung of  stealing their icons , in addition to the original patent complaint. Apple's director of patent licensing and strategy also said that the firm  approached Samsung in 2010  over patent infringement. 

In court, it was revealed that Apple  offered to license patents  to Samsung based on fees of $30 per smartphone, and $40 per tablet.

A long-running patent deal between Apple and Microsoft came to light next at the trial, which acknowledges there's no cloning of the iPhone on the Windows phone model. Specific rules  are in place to prevent  "clone" products. 

Three of Samsung's allegedly infringing phones were excluded from the trial yesterday. The Galaxy Ace, Galaxy S i9000, and Galaxy S II i9100 are now  no longer under contention .

"I want papers. I don't trust what any lawyer tells me in this courtroom. I want to see actual papers."

We may be seeing more new details appearing which include business dealings between both the rival firms and other corporations enter the public domain soon. In a court ruling  issued by Koh , taking into consideration many appeals of privacy have been ignored, the judge wrote:

"Although the Court has generally allowed royalty terms of licensing agreements to be sealed, Samsung is seeking to seal a proposed royalty rate between the two litigants. This information is important to the parties' damages calculations and therefore important for the public's understanding of this case."

So far in the high-profile battle, information has been made public that the two firms probably both regret. However, as the trial is highly unlikely to finish any time soon, these facts will not be the last we learn about the two technology giants. 

14 August : Samsung's senior designer Jeeyuen Wang  takes the stand , and attempted to quash claims that Samsung's phone and photography app iconography was a copy of Apple's. 

14 August : U.S. District Judge Lucy Koh seems to have had her fill of 'courtroom theatrics' (think back on Apple appeals and Samsung releasing information to the press). She  told the court on Tuesday  after Apple raised objections to one of Samsung's witnesses, trying to block Tim Williams, Ph.D., one of Samsung's expert witnesses from testifying:

15 August:  Koh told the CEOs of the two firms to lock themselves in a room and fight it out before the jury decides, talks in court resulted in a discussion of a low-level cellular-communications chip in Apple's iPhone , and one of Samsung's head designers says the company was working on tablet design well before the iPad's debut.

See also, just for fun : CNET's Chris Matyszczyk acts the clueless consumer in Best Buy to confuse Apple and Samsung products .

16 August:  It seems the judge's patience is wearing thin, after asking if Apple was " smoking crack " when handed a last-minute witness list -- all 75 pages of it. Hours afterwards, Koh questioned Samsung's strategy, saying it may have burned up too much of its time cross-examining Apple's witnesses -- using 14 of its 25 hours -- rather than presenting its own case. 

Samsung rested its case after putting witnesses on to the stand that said the iPhone maker may owe as much as $421.8 million in royalty payments .

17 August: Apple and Samsung today both ran through the last few hours -- or in Samsung's case, just minutes -- of their allotted 25 hours for rebuttals and clarifications. Still ahead are closing arguments in which the two companies get their last chance to convince a jury of nine that the other company is infringing on its technology. 

20 August: Samsung CEO Kwon Oh Hyun had a chat with Apple CEO Tim Cook, but failed to reach a deal . In addition, Motorola Mobility filed new patent infringement claims against Apple, and wants its range of desktop and mobile devices banned from U.S. sale .

In court, one of Apple's experts recreated a 1994 tablet prototype .

Facing disclosure to a jury that both Apple and Samsung failed to uphold document retention laws, the two companies struck a deal to keep the matter of lost emails private. However, Koh had her own problems to deal with -- believing that the jury will have trouble tallying up damages for the two rival firms.

In a separate case from the one in San Jose, Apple began arguing for an appeals court to go through with a ban on Samsung's Galaxy Nexus.

See also: Mutually Assured Destruction: Google/Motorola vs. Apple

21 August: Interested in seeing sketches from the courtroom? 

22 August:  The closing arguments are in. Apple relied on Samsung's documents to try and prove patent infringement, whereas Samsung argued that siding with the rival firm would change the " way competition works in this country".

Deliberations begin on Wednesday.

25 August: The verdict is in .

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[Case Study]-Apple vs. Samsung: A Battle of Marketing Relevancy

Table of Contents

Presently, Apple and Samsung are seen as the largest manufactures of Smartphones across the world.

Earlier, the mobile phone market was ruled by companies like Nokia and Motorola, Apple took over the market when it launched ‘iPhone’ in 2007. The product became actually popular among users, having large and multi-touch user interface.

Apple continued on dominating the Smartphone market within the years; however Samsung introducing Samsung galaxy series in 2013 brought increased competition for it. It was Samsung’s massive advertising coupled with unique Android features that the Samsung galaxy has overtaken the iPhone to become the most popular Smartphone brand in the world.

This aggressive competition between these two tech giants has resulted in endless court battles .

[thrive_testimonial name=”Steve Jobs” company=”CEO of Apple, 2010″ image=”https://dsim.in/blog/wp-content/uploads/2017/01/steve-jobs.jpg”]“I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong. I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this.”[/thrive_testimonial]

[thrive_testimonial name=”Kwon Oh-hyun” company=”Samsung Vice Chairman ” image=”https://dsim.in/blog/wp-content/uploads/2017/01/Samsung-Vice-Chairman-Kwon-Oh-hyun.png”]“Smartphones, TV’s and other key IT products are entering a slow growth phase and our rivals are changing value chains by introducing new technology and business models.”[/thrive_testimonial]

Samsung took to Social Media to troll Apple:

In 2010, Steve Job well stated that “No one is ever going to buy a big phone” – and Samsung can hardly hold its behavior.

By using this quote, in which the image also says “Guess who surprised themselves and changed their minds” . Then they promote the Galaxy Note 4 with the hashtag #MoreThanBig .

This case study here is looking at the competitive marketing strategies used by each of these names and what they need to step ahead from their rivalry position in future.

Stats & Facts

• Samsung accounted for 37% of smartphone sales and Apple 29% in May 2016.
• Samsung Galaxy S7/S7 Edge accounting for 16% of sales and the iPhone 6s/6s Plus at 14.6%.
• Apple rocked out Samsung by selling 74.8 million iPhones, leaving behind Samsung’s 73 million Smartphones sales in 2015.
• Apple doesn’t use Twitter accounts, Facebook profiles, or indeed have a blog.
• Samsung makes use of all major social media channels, celebrity endorsements, and all other good & effective marketing strategies.

[thrive_testimonial name=”Rémon Elsten” company=”Vice-President of the Swiss Contact Center Association” image=”https://dsim.in/blog/wp-content/uploads/2017/01/remon-elsten.jpg”]“Samsung is doing a lot of things to prove they are innovative and therefore, can experiment and learn from their experiences. Apple is known for innovation and don’t have to prove this by using by social media platforms. They have to make sure to keep their status as a quality leader and therefore, cannot experiment as much as Samsung. So they lay back.”[/thrive_testimonial]

Marketing Strategies

Apple is the dominating brand in the US market and Samsung holds the lead globally. There is some kind of peculiarity between the Marketing Strategies of both the brands. These are:

Innovation & Technology

Apple is broadly considered as a great innovator in the smartphone industry. It is famous for beautiful designs and new applications.

In comparison, Samsung is viewed as a follower for a long time. Since the launch of Galaxy S4, Samsung has considered Apple’s innovative design of the iPhone as “not so stunning”, and continues to be a notable competitor.

Winner: It is without a doubt that Apple leads in innovation.

Social Media Presence

Apple has a strange strategy when it comes to brand promotion . It has a minimalist presence on social media. It promotes through TVCs.

Samsung, meanwhile, is present on an array of social media channels like YouTube, Twitter, and Facebook pages for Samsung Mobile, Samsung TV, and more.

Samsung has also connected with major apps and platforms to target audience with social campaigns.

Samsung India has launched a nationwide television and digital campaign showcasing its initiative to take customer service to the doorsteps of customers in the rural area. Conceptualized by Cheil India, the campaign film is called #SamsungCares.

The advertisement called as Samsung Cares has been a hit in social media, with the YouTube video reaping more than 64 million views currently.

Winner: Needless to say, Samsung wins.

Advertising.

Apple has launched online advertisement campaigns to reach the users. The iPhone website has clean, clear and witty interface.

The iPhone advertisement of Apple is similar, always with white background, exotically alluring to the users. And, Apple is never hesitating to highlight the advantages of the products to the target audience.

Similarly, Samsung is giving importance on advertisement of Galaxy S. It promotes mobile phones- bringing a dark blue interface in contrast to the white background brought by Apple. Galaxy S is promoted as somewhat vibrant, fast and thinnest mobile phone and the advantages embraced are explained clearly.

Winner: There is a tie between Apple and Samsung.

Customer engagement.

Apple launched ‘Your Verse’ to highlight how different people use ipad to do things incredibly and in their own way. This campaign launched in 2014 became more of a story of people using ipad instead of the product itself.

Samsung launched its own campaign, ‘Incredible Art Piece’ . This campaign was expressly designed to promote Galaxy Note pen style. This campaign itself became a Guinness World Book entry with the record of maximum number of artists working on a single art work.

It highlights the basic difference in the approach of both the brands. While Apple’s epicenter lies around how people use its products to make a difference to their life, Samsung emphasizes and advertises its features.

Winner: Talking of advertising, both comes as a winner as the purpose of the strategies i.e. Customer Engagement is achieved.

Public relations and publicity.

Apple is using publicity for free and yet powerful way to interact with customers. In case of Apple, when more and more people are seen having and iPhone, other individuals get compelled to have the one; this is known as halo effect .

In contrast, Samsung is using Social Media such as Facebook to promote its products and all possible channels or marketing.

Winner: The winner is Apple as its effect is powerful that influence customer.

Viral video marketing.

It got started in 2012 when Samsung brought the campaign ‘The Next Big Thing is Already Here’ to promote their new smartphone series, Galaxy S II.

In the ad, the company poked fun at Apple customers. The ad not only teased iPhone users with lines like “Why don’t you guys just get 4G phones?” but also took the chance to feature their larger screens.

In the episode in this competition is another dig at Apple; Samsung’s Grad Pool Party ad was released in May 2013 to promote their latest smartphone, Galaxy S4.

That act helped Samsung to jump-start market share, and proved to become a viral video content powerhouse.

Samsung has increased its video efforts by over 360% in the past 5 years; on the contrary, Apple has only leveraged it by 5.8% campaigns a year, within the recent 5 years.

Winner: Samsung is winning on the pure scale of its marketing efforts.

Entertainment.

Apple may win at innovation & publicity but when it comes to marketing, Samsung prioritize complete entertainment.

Samsung believes in its value and adores the power of a celebrity.

Samsung made sure its product was front and center at the Oscars. Millions of viewers see host Ellen DeGeneres taking selfies with guest stars using a Samsung phone.

The brand partnered with famous music icon JayZ for his ‘ Magna Carta Holy Grail’ album, and teamed up with Usher for product placements in his ‘Looking for Myself’ music video.

Apple also generated the buzz among the music industry for procuring ‘Beats’ by Dr. Dre but it felt to be a little late.

Winner: Samsung for keeping effective entertainment value.

Conclusions.

Apple and Samsung keep on experimenting bringing various competitiveness strategies , such as new product launch, major innovations, mockups of the rival’s offer, product line extensions, aggressive advertising campaigns as well as lawsuits.

There are differences between these two brands as they adopt several techniques to reach the audience in their market effectively.

Apple is a leader in the innovation and Samsung is a strong competitor to it.

Samsung uses prompting strategies by lowering the prices, making it more affordable for customers.

Thus, to keep up with their existing positions and to become a declared leader, both of the brands need to have effective marketing strategies.

2 thoughts on “[Case Study]-Apple vs. Samsung: A Battle of Marketing Relevancy”

Wow, wonderful blog layout! How long have you been blogging for? you made blogging look easy. The overall look of your website is fantastic, let alone the content!

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Knowledge at Wharton Podcast

The apple-samsung case: what it means for patents — and innovation, august 29, 2012 • 35 min listen.

A California jury awarded Apple what could be a decisive victory in the smartphone wars last week by ruling that Samsung infringed on a number of patents relating to the functionality and design of the iPhone. Samsung plans to appeal, but Apple is now calling for a ban on U.S. sales of some of the devices at issue in the case. Some observers believe the verdict might open the door for additional Apple lawsuits against other smartphone makers -- including Google. Wharton professors David Hsu and Andrea Matwyshyn discuss the key players, the future of smartphone design and the U.S. patent system. (Podcast with transcript)

In what some are calling “the patent trial of the century,” a federal grand jury in California last week decided in favor of Apple in a patent infringement lawsuit against Samsung. In addition to awarding Apple more than $1 billion in damages, the jury found that Samsung violated several iPhone utility and design patents when it created phones such as the Galaxy S II and the Fascinate.

Following the verdict, Apple requested that eight Samsung phones be banned from sale in the U.S. A hearing on the matter has been scheduled for December. In the meantime, Samsung has said it will appeal the case. Many observers believe Friday’s verdict could open the door to Apple pursuing litigation against other companies — including Google, maker of the Android operating system used in Samsung phones and tablets.

To discuss the key issues of the case, Knowledge at Wharton turned to Wharton management professor David Hsu and Wharton legal studies and business ethics professor Andrea Matwyshyn .

Edited versions of both transcripts appear below.

In the first conversation, Hsu talked about the case’s impact on innovation as it relates to design and creativity.

Knowledge at Wharton: David, first of all, could you tell us some of the winners and losers as a result of the jury’s decision?

David Hsu: Apple is the clear winner here, and the device makers on the Android system are the ones that are going to be scrambling and trying to figure out in what areas they’re going to have to retrofit, or even redesign, their products. Of course, Google is kind of the company lurking in the background — it isn’t being attacked directly, but it’s getting closer [to being directly impacted]. My interpretation of why Apple leadership was so insistent on pursuing this case to the end is because they feel strongly that the design elements in conjunction with the functional elements of their products really make the user experience, and they want to protect that. As a result, the likes of Samsung, HTC, Motorola Mobility (owned by Google) and the other large handset makers on the Android platform are the ones that will be trying to figure out their next moves.

Knowledge at Wharton: Are there other winners besides Apple? I know there’s been some discussion that Microsoft, which makes the Windows mobile operating system used in Nokia devices, could get a boost from this decision because their product is so different from Apple/Android.

Hsu: I think that may be true in that this opens up the landscape of competition beyond just the functionality. Maybe it would be useful to take one step back and to analyze the patents that were under dispute here. A number of them were on the design side, so it’s not protecting the functionality of the innovation, but rather the packaging of it. And then a few of the others did not go to the core of the operating system, but were about some of the more design-oriented aspects, [such as] the [feature in which pages viewed on Apple’s iOS operating system “bounce back” into place when a user reaches the top or bottom] or the array of the icons on the grid.

I interpret it as a strengthening of design-related patents. Previously, it was the case that if you were a furniture designer and came up with an innovative design, that did not necessarily stop competitors from coming in and marketing say, an “Eames-like” chair, so long as they were clear that it was not the genuine product. [The Apple/Samsung case indicates] that there seems to be a broadening of the protection of design elements. And so this, I think, broadens the landscape for how companies — including electronics companies or fashion design companies — will seek protection of their creative efforts, their intellectual property.

For the direct competitors in the handset space, [the implications] will play out in terms of acquiring patents, as we’ve already seen over the last two years or so. There has been lots of interest in trying to acquire whole “patent portfolios” that surround smartphones. Obviously, the smartphone is going to be the Swiss Army knife of the 21st century — it already is, and is becoming more so. And as a result, there is almost a land grab for the various kinds of more elemental patents in intellectual property that undergird that platform.

So to summarize my answer, I think that this case will broaden the landscape of competition. It may open the landscape a little bit more. You mentioned Nokia and Microsoft, and clearly they have their own operating systems for the smartphone hardware, and they may be kind of waiting on the edges. But it is pretty clear that the dominant competition, at least right now, is the Android versus the Apple operating system. So this is why the case was billed “the [patent] trial of the century,” as a result of the two large manufacturers going head-to-head in this battle.

Knowledge at Wharton: So you don’t think that one impact will be Nokia and Microsoft immediately elbowing out Samsung, HTC, Google and the rest of the Android-based phones? It would be for the number one space, since Apple phones are really number two in the U.S. market.

Hsu: No, I don’t think that this is going to radically reconfigure the landscape because in this kind of platform-oriented competitive space, there tend to be tipping points. And there has to be enough of a critical mass of users, a developer community and support by the companies to really enable the critical mass because people are not necessarily just looking at today’s functionality: They’re trying to anticipate the functionality down the road as they decide to adopt one platform or another.

While I think that there’s going to have to be some redesign [as a result of this case] — not only in the smartphone market but also in the tablet market, where these operating systems naturally share a common code — what we’re going to see if anything, is perhaps more of a creative or innovative effort by the manufacturers of the Android platform to try to differentiate themselves.

But I do think that there’s a window now, a little bit of a window of opportunity for Microsoft and Nokia to take advantage of this particular event. Whether or not they’ll be able to successfully navigate that obviously remains to be seen.

Knowledge at Wharton: You just mentioned the potential that this case will encourage more innovation in smartphone design. Patents are intended to encourage innovation, but do you feel that cases like this — where some of the aspects Apple is trying claim as proprietary would seem to severely limit the design and functionality options for all of the other players in the market — can actually have the opposite effect? Have we reached a kind of inflexion point with this so-called “smartphone patent land grab” that’s been taking place?

Hsu: Let me try to lay out the arguments on both sides. On the one hand, you could certainly think about companies like Apple, which spent many years coming up with the perfect design that might appeal to the users, as just trying to protect that and trying to blockade any efforts [to copy that design]. It’s much more about the symbolic value of what Apple is doing, despite the judge urging the CEOs of Samsung and Apple to try to come to a private settlement. Apple wasn’t interested in that, of course, because they wanted to assert and send a signal to the broader market about trying to protect their efforts.

It is true, and I think the Samsung team tried to make these arguments of should it really be the case that the casing of the phone, the rounded corners on the rectangle and the spacing between icons on the grid need to be protected. And we have to keep in mind that there is this distinction between the design patents and the utility patents. The utility patents are much more about the functionality of the phone; the design patents are just about the non-functional elements. These things come together as a package to the consumer.

I think we are treading a line a bit in terms of how much protection should we as a society give to the innovators — and we should think about innovation very broadly, not just in the technical sense, but here broadened out to the design sense — balanced against a free market economy in which there is healthy competition that can observe market signals, try to build on top of what’s already been done and basically unlock more value for consumers.

As I said earlier, before now, design patents were thought to be fairly ineffective, not really enforceable. Utility patents have always been a domain where companies have really tried to be both offensive and defensive in the patent space. And so this judgment will give companies and managers a reason to start thinking about design as the basis of protection.

To your broader question of whether this is good or bad for society, I think it always has to be a balancing act. Whether or not these particular patents being enforced this way will send a chilling signal to the rest of the market remains to be seen because this is just the tip of the iceberg. This is one trial. Apple and Samsung have something like 19 or 20 trials around the world slated. Of course, this judgment will impact how Samsung will put forward their products, as well as others that use the Android system, but there remains in this case an appeal that’s looming, as well as many other jury trials that will be in different jurisdictions around the world. And so I think that this is not necessarily just the beginning, but it’s also not close to the end in terms of this patent war.

Knowledge at Wharton: I think I had read that Samsung has said they’re willing to take this case all the way to the Supreme Court if necessary.

Hsu: This will actually be an interesting test case for many creative industries, not just electronics or information technology. I alluded to design, fashion, product design, industrial design — all these things tend to be converging and increasingly are differentiated…. I think Apple has shown repeatedly that users care not just about the raw technical horsepower of the product, but also how they interact with it. And so my interpretation of this case is much more about the implications for the design community and protection of creative advances in thought very broadly, not just in the technical space.

Knowledge at Wharton: Apple is the winner in the court of law for now, at least, but what about the court of consumer perception? How do you see this affecting Apple in that space, and Samsung as well?

Hsu: That brings up a point that I should have probably mentioned earlier, which is that these product lifecycles tend to be fairly quick. We’re used to a new iPhone every year. And while [companies are] not completely abandoning some of the core design, it’s not like some other industries in which one design will rule for decades and decades. And so you wonder why Apple and Samsung took this case all the way to a final judgment … since it’s likely that the design a couple years from now will be obsolete.

In terms of public sentiment, Apple has to be a little bit careful. I think this can work both ways. On the one hand, there could be a little bit of a backlash from users saying, “Well, I actually prefer, for example, an Android platform and Apple is trying to assert these rights about how things are laid out, the physical form of the product, in ways that aren’t necessarily novel or that deserve patent protection.” And so [consumers] could be more willing to experiment with some of these other platforms, like Nokia, Microsoft, etc.

On the other hand, I could see perhaps some users acknowledging that Apple did spend quite a bit of effort and put a great deal of detail into the design, as well as the functionality, and they should be rewarded for that.

Apple has had a blockbuster set of years in terms of their performance on the stock market and the value of their company. There is this danger that maybe they’re going to be perceived as, in some sense, the next Microsoft, trying to come up with one innovation and then trying to blockade everyone, and not allowing competitors to come in and innovate. There is this double-edged sword phenomenon that could work here. Apple has to, as they’ve been doing, continue this pace of innovation, and as I said before, it is this delicate balancing act between trying to protect versus trying to innovate and allowing others to come in as well to try to push the envelope forward.

Knowledge at Wharton: Do you feel like this case represents a new strategy going forward for Apple? Apple has always been able to capitalize on this sort of cool aesthetic that’s attached to its devices. Is that put in danger if the company goes into more of a protectionist mode?

Hsu: That’s the danger of being the market leader: All of the sudden, they become the targets of all types of consumer sentiments. That was certainly true when Microsoft ruled the day. [Apple] is a company that obviously stresses industrial design, as well as functionality and obsessing over the details. I think consumers have clearly appreciated that. I’m sympathetic to this argument of, now that Apple has been so successful in the market, companies like Samsung coming in and just basically taking everything that it’s done after lot of experimentation doesn’t seem fair.

On the other hand, as these types of cases get sharper in the courts of law in terms of protectability versus not, I think what is allowable versus not will become clearer. Before now, it hasn’t been such a big, high-stakes type of enterprise. Now that landscape has shifted a bit.

But in terms of the overall corporate image, it’s clear that Apple’s brand and what it means as a brand to consumers is quite valuable. And so this litigation is an effort to try to, in accordance with its late founder, Steve Jobs, defend itself there. But as you allude to, there is this danger that if they become perceived as litigious, or if that part of the company crowds out the more innovative, creative, design-oriented side of things, then obviously it becomes problematic for Apple. They don’t want to lose what’s been at the core of their identity and what’s caused them to become the world’s most valuable company.

In a separate interview immediately following the interview with Hsu, Matwyshyn talked about the case’s implications for U.S. patent law and how patents are being employed by companies seeking to protect their inventions and technology.

Knowledge at Wharton: Andrea, I’ll start by asking you the same question we posed to David earlier: Who would you say are the key winners and losers from the court’s decision last week?

Andrea Matwyshyn: The winners and losers in this decision still remain to be determined. The commentary that’s been running in the press and in academic circles is, frankly, a little divided. On the one hand, the commentators and academics who are very supportive of patent holder rights view this as a strong win for Apple. However, of course, the decision is likely to be appealed. And so the ultimate outcome with respect to the damages award and the crafting of the decision itself may come under scrutiny at a higher level.

On the other hand, we have some commentators who are pointing to Samsung getting an indirect kind of market base win in this case with [the decision] highlighting a kind of de facto comparison of similarity between the products that Apple and Samsung are offering. Some consumers may view this in essence as a court saying, “Hey, these are functionally equivalent products.” And then the consumers look at the price point and recognize that one is significantly less expensive than the other.

However, I think the big-picture questions that are perhaps most interesting with respect to this case are the questions about the identity crisis that exists in the U.S. patent system and the conversation that we need to have as society about what it is that we’re trying to achieve in our models of innovation and in our intellectual property law. There were many different bases for Apple’s assertion that Samsung was infringing on its intellectual property rights: utility patent arguments, trade dress arguments, they really ran the gamut. And the way that these legal rights are constructed is somewhat problematic.

When we’re talking about patent reform — as we are these days in Congress and in society as a whole — this case really kind of brings to the fore and encapsulates some of these legal and policy discussions about different models of innovation and what we’re trying to achieve when we are affording certain individuals rights to enforce limited access to their creations. And, on the other hand, we have companies or individuals who are leveraging that existing knowledge — perhaps overly aggressively, but nevertheless leveraging that existing knowledge — to bring new products to market and potentially offering more choices to the consumer in the marketplace.

So this is a broader social conversation that needs to happen, and that’s the big take away here — that the law and social policy and innovation are confused. This is just the first round of this broader battle that’s going to be playing out over many years to come.

Knowledge at Wharton: Do you feel that patent law as it exists now is accomplishing what it was intended to achieve? Or has it become a hindrance to innovation?

Matwyshyn: That’s the big debate that we need to have as a society. On the one hand, certainly in some cases, affording a patent holder the right to defend their created product means that perhaps more research and development will happen in some cases because companies and individuals will be motivated by the desire for financial gain and to be able to control the creations that they’re making. However, we also know from creativity theory research that many people create not because they’re seeking financial rewards; they create for other reasons. So this bigger-picture question of what we’re trying to accomplish with our legal regimes and whether we’re accomplishing those goals, that’s what I’m really highlighting in this case.

The patent system has also evolved across time to include what some commentators view to be problematic players. For example, “patent trolls,” or people who aren’t really using the inventions for which they hold patents, but they nevertheless seek to enforce the rights that pertain in connection with their granted patents. So some commentators view these patent trolls as being part of the problem. And although they technically have the legal rights to enforce these patents, they’re not necessarily adding value to the business space because they’re not bringing new products to market; they’re not really actively using the rights that they hold to research and develop in new directions.

Knowledge at Wharton: The decision has prompted some outcry over Apple seeking to enforce patents that would seem to severely limit competitors, such as the shape of the phone or the way you move your fingers to zoom in. Do you feel like this is just another form of being a “patent troll”?

Matwyshyn: That’s the debate that I’m pointing to, that you have these different overlapping legal categories of potentially protectable interests. And it’s not clear which of these categories necessarily pertain in all cases. There’s a debate over whether the way that technology related patents are currently granted is simply not sustainable in the long term. There’s a debate over whether the types of patents that you’re pointing to, the utility and design patents, whether those should even be protectable through patent law. Maybe they’re better protectable through copyright…. It’s not clear that we have optimized the balance between giving innovators the right to defend their products and simultaneously offering the marketplace more product choice by allowing for building off of those products.

These two parties, Apple and Samsung, have approximately 50 rounds of litigation going on in various different forums throughout the world, so this battle is an epic one that spans continents, not merely the U.S. courts. Another interesting wrinkle in this particular relationship is that apart from the drama of the scope of this legal battle, there was a failed attempt to license some of these technologies that existed prior to the filing of some of the litigation.

So we have this discussion also in terms of should we be encouraging parties to collaborate more and to share their technologies? And are there ways to create incentives for licensing of technology, rather than having the result of tension in the technology space end up in the courts? It’s not always a socially or even individually efficient solution to have people going to court all the time. Lawyers are expensive. Judicial resolutions to these kinds of questions take time. Ultimately, that is time that maybe we should refocus toward more research and development, more innovation and the streamlining of the squabbles that exist between players in this space through encouraging licensing and sharing of research, rather than creating legal incentives for people to want to duke it out in courts of law.

Knowledge at Wharton: Do you feel that there is the will in the technology industry to do that? David had mentioned in our earlier conversation that the judge in this case had previously, unsuccessfully, urged Apple and Samsung to reach a private settlement.

Matwyshyn: This demonstrates the reality that when tensions run high, companies or individuals don’t necessarily see it to be in their best interest to be accommodating of each other and to want to resolve battles. Press reports indicate that Steve Jobs was very upset over the emergence of, for example, some Google [Android-based] products and viewed it as almost a personal betrayal, and that, by press accounts, he was “ready to go thermonuclear” on this situation.

When you have inventors’ emotions wrapped up in legal battles, or really in almost any business scenario, it’s not always the case that parties will act in their economic best interests. Humans are not always rational and predictable creatures. And so that has to be factored in when we are analyzing optimal regimes for incentivizing innovation.

The other moving piece in this litigation that many press accounts have highlighted, and in particular as jurors are being interviewed by the press [is that] it’s becoming evident that the jury deliberations that happened in this case — although perhaps they weren’t unusual in terms of the quality of deliberation that happens in various jury cases — were a bit rushed and that the jurors did not necessarily fully process the information at the high level of analytical specificity that certainly legal experts would have preferred.

Some of the comments that the jurors are sharing with the press indicate that perhaps there was a desire to punish Samsung rather than to obtain a redress for Apple for real economic harms that they had suffered. That, again, calls into question the broader structure of the way that we resolve intellectual property disputes, particularly in a technology context. The question of whether code, computer code, is even patentable subject matter is up for grabs right now in terms of the way the different courts are analyzing these questions. Legal commentators expect to see more action in this space, potentially resulting in the Supreme Court ultimately accepting the case for resolution.

Knowledge at Wharton: Moving away from the patent question a little, how do you think the case will affect consumer perception of the companies involved?

Matwyshyn: That’s a great question. As I mentioned in the beginning of my comments, there is some discussion of whether this legal process has highlighted the similarity between the Apple and the Samsung products, and maybe some consumers will, in fact, consider a Samsung product now when they would not have in the past.

Other consumers might perceive Apple to be acting as a bit of a bully by using courts rather than research and development labs to continue to innovate. Consumers might argue that even if there is recognition [that Apple was behind] a particularly useful mechanism, such as the pinch and zoom method, that they want to have other companies model that winning development, and to build on each other’s knowledge and bring more products into the market. So I think consumer reaction will be mixed.

Now of course, there’s a very strong “Apple fan boy” dynamic in the consumer marketplace as well, so Apple supporters will undoubtedly be very pleased with this result. I think it’s a mixed bag all around, and we will have to take a look, again, and revisit these questions in about two or three years to see how the big picture has evolved in this space.

Knowledge at Wharton: This case is just one of a number of patent-related lawsuits and moves that have taken place in the smartphone and tablet market. For example, Google’s purchase of Motorola Mobility was widely believed to be motivated by acquiring patents. What do you think this “patent land grad” means for the future of smartphone and tablet design?

Matwyshyn: There’s speculation that exists in the press, in part because of what has been reported to be personal animosity that existed between Steve Jobs and Google, that the ultimate target or goal of Apple’s aggressive litigation posture is to ultimately go after Google Android, which has been building market share very aggressively. Attacking or highlighting the manufacturers of the physical hardware upon which Android runs is a way to undercut or slow down Android adoption throughout the marketplace. So the exact outcome of that strategy and Apple’s future relationship to Google are certainly two of the most interesting moving pieces in this broader conversation.

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Apple vs. Samsung: Everything you need to know about tech’s biggest court battle

Technology giants Apple and Samsung are duking it out in a California courtroom in what may be the tech trial of the mobile revolution. Did Samsung “slavishly” copy Apple’s patented design and interface elements in products like the Galaxy S smartphones and Galaxy tablets, as Apple claims, or is Samsung merely following broader trends in the mobile industry — trends that weren’t Apple’s inventions at all? Apple might seem to have the upper hand — the case is being tried before the same judge that granted an injunction on sales of Samsung’s Galaxy Tab 10.1 — but trade dress issues are notoriously difficult to win, and patent battles can linger for years.

The trial is on break through August 10, so we thought this might be a good time to look at the major points each side has made so far — and perhaps get a sense of whether Apple or Samsung has the upper hand.

Judge reprimands Samsung

The trial got off to a very shaky start for Samsung. As soon as the jury was selected and opening statements made, Samsung managed to incur the fury of Judge Lucy Koh by leaking material to the media after she had barred it from being presented as evidence during trial. The material concerns Samsung’s F700 smartphone and includes internal email messages that allege Apple’s iPhone designs were based on Sony products. (AllThingsD quickly published the documents .) Although Samsung has repeatedly tried to introduce the material as evidence, Judge Koh has disallowed it due to late submission.

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If the jury isn’t going to be hearing that evidence anyway, what’s the big deal if Samsung takes the material public?

Two things. First — and most importantly — the Apple-Samsung jury is not sequestered. Although jurors have been instructed to avoid any mentions or press coverage of the trial, in a media-saturated culture that can be very difficult. Samsung’s statement that accompanied the release also repeatedly referred to the jury — making it clear, at least in Apple’s eyes, who the intended targets of the release were. Second, if something goes awry, and the judge is forced to declare a mistrial, the case could easily wind up in front of another jury — one that has potentially been exposed to Samsung’s inadmissible material.

Samsung maintains the release was ethical and included only information that was already in the public domain. Apple was then forced to do some damage control of its own, releasing iPhone prototype designs that predate Samsung’s F700.

Judge Koh interviewed the jurors, and only one claimed to have seen headlines about the released material. Judge Koh let the trial continue — although it’s important to note she can overrule the jury verdict if she feels they get it wrong .

Apple doesn’t get immediate judgement

Apple tried to immediately leverage Samsung’s release of rejected evidence, claiming Samsung’s actions amounted to misconduct and the correct remedy would be for the judge to grant Apple a summary judgement in the case. Basically, Apple asked the judge to say that given pre-trial evidence and Samsung’s bad behavior, no trial was necessary and Apple wins on all counts. Judge Koh — though clearly displeased with Samsung’s attorney’s — did not grant the request.

Technology press seized on Judge Koh’s rejection of summary judgement as a defeat for Apple, but in reality the whole thing was pro forma — the only thing unusual was Samsung giving Apple some extra ammunition. In virtually every intellectual property case that gets to court, the plaintiff requests a summary judgement before the trial truly gets underway. The defense does essentially the same thing, requesting the case being thrown out because the plaintiff’s case is too weak. On rare occasions — such as when a defendant fails to appear or a plaintiff fails to present relevant evidence of its own — summary judgements might be granted. But in cases with high-profile legal teams, months of pre-trial maneuvering, and and high stakes, there’s no chance for a summary judgement — even with questionable actions from the defense’s legal team. But Apple asked anyway — they had nothing to lose.

Apple prototypes & design process

In what’s got to be an extremely uncomfortable position for Apple, testimony so far has revealed some of the inner workings of Apple’s product design process — including prototype designs for the iPhone and iPad, a few of which date back nearly ten years.

At this point, it’s been well-documented that Apple actually started out working on a tablet device prior to developing the iPhone. Speaking with Walt Mossberg and Kara Swisher at the 2010 All Things D conference, Apple’s Steve Jobs admitted Apple had gotten started on tablet designs with “a multitouch display you could type on with your fingers” long before it thought of making phones. During testimony at the Samsung trial, iOS lead Scott Forstall revealed that Apple’s own dislike with the mobile phones they were carrying around at the time led them to adapt technology they’d already been working on for a tablet and apply it to a smartphone.

But the material Apple has submitted into evidence at the trial is an unprecedented disclosure for the company, which is famously secretive and keeps its product development plans very close to its vest. Testimony from Forstall confirms that the iPhone team was kept segregated from the rest of Apple for years in a cloaked environment that was unusual even by Apple’s standards. Furthermore, designer Chris Stringer — called as Apple’s first witness — revealed that Apple’s products are typically designed by groups of just 15 or 16 people, who often literally meet around a kitchen table to hash out even the tiniest details of product design. They work on sketches, then break up to produce CAD models and, if ideas look good, physical models.

“There could be 50 designs for a single button,” Stringer said. “We’re a pretty maniacal group of people.”

Samsung’s “crisis of design”

It’s no surprise that Apple sinks considerable talent and resources into designing its products — but that doesn’t necessarily have much direct bearing on Samsung’s products, unless Apple can successfully assert that Samsung knowingly copied those products. And Samsung’s legal team may have provided Apple an opening, via a slip of the tongue that has allowed Apple to introduce new material into evidence.

Apple had begun presenting its case that Samsung had mimicked the iPhone’s icon designs. During Samsung’s response, attorney John Quinn — the same lawyer responsible for releasing the F700 information to the press — mentioned a Samsung memo that referred to a “crisis of design” at Samsung. And with that, the memo came into evidence. Until that point, Samsung had managed to keep it out.

Apple is almost certain to refer to the memo as the case proceeds — because it’s a doozy ( pdf ). Written in 2010 by Samsung’s mobile chief J.K. Shin, the memo extolls the first-generation iPhone interface, describing the difference between the iPhone and Samsung’s then-current Omnia phones as the difference between “Heaven and Earth.”

“All this time we’ve been paying all our attention to Nokia,” Shin wrote in the memo. “Yet when our UX is compared to the unexpected competitor Apple’s iPhone, the difference is truly that of Heaven and Earth. It’s a crisis of design.”

Apple maintains that, in the wake of Shin’s memo, Samsung’s phone products quickly began to bear an even stronger resemblance to the iPhone.

Shin wasn’t the only person at Samsung comparing the iPhone to the company’s products. All Things D has published a copy of a 132-page document that rolls through features of the original Samsung Galaxy S phone, comparing them to the iPhone — and the Samsung device does not fare well. The report concludes that the Galaxy phone would be better if its interface and behavior were more similar to the iPhone, potentially adding considerable weight to Apple’s claims that Samsung outright copie d the iPhone. The document even says the Samsung phone gives a “strong impression that the iPhone’s icon concept was copied.”

Samsung maintains that it benchmarks its devices against competitors’ products all the time, and the memo has no particular significance.

Did Samsung’s tablets confuse consumers?

Apple has maintained that the visual similarity between Samsung’s Galaxy Tab 10.1 and the Apple iPad was confusing to consumers, with suggestions that consumers had been returning Samsung tablets to retailers because they thought they were buying an iPad. However, Samsung entered a study into evidence that purported to show that the primary reason customers were returning Samsung’s Galaxy Tab 10.1 to Best Buy stores in 2011 was — get this — that the devices just didn’t work. According to the study, 25 percent of consumers returning Samsung’s tablets cited browser freezes, poor screen sensitivity, and poor Wi-Fi connectivity as reasons for their return; another 17 percent cited screen lag, sync problems, and poor battery life. Only 9 percent were exchanges for the then-current iPad 2.

Apple pointed out that, among consumers who said they didn’t have sufficient knowledge of the products, the single greatest reason for returns was that they thought they were buying an iPad. Samsung retaliated by noting that Apple’s own experts can’t agree that any brand dilution that may have occurred means Apple’s iPad sales were harmed in any way. To win an infringement case, Apple will have to prove it’s business was harmed as a result of marketplace confusion.

But is it actually infringement?

Glancing over all the material Apple has presented at trial so far, it’s easy to assume Apple has the upper hand. After all, there is an uncanny physical and on-screen resemblance between Samsung’s Galaxy S devices and Apple’s iPhone — and the same is true for Samsung’s Galaxy Tab products and the Apple iPad. That sense can also be swayed by some of Samsung’s trial tactics: in addition to releasing material to the media, the jury will get to hear that Samsung allowed relevant evidence to be destroyed (and they may presume that evidence would have been in Apple’s favor). Samsung also managed to annoy Judge Koh by giving five witnesses a private showing of the courtroom. (Samsung attorney Christopher Stretch claimed that witnesses from the Netherlands and South Korea had never seen a U.S. District Courthouse, so he brought them by, asked court personnel to unlock the courtroom, and gave them a tour. Stretch — presumably an experienced attorney — claimed he was unaware of any rule against visiting the courtroom when court was not in session.) Judge Koh has also threatened to sanction Samsung attorney John Quinn.

But opinion doesn’t matter. Apple needs to prove Samsung’s products violate its patents, and the legal threshold for patent infringement can be notoriously squirrelly. For instance, one of Apple’s patents in the case concerns adjusting the scrolling speed on a touchscreen device in response to finger movement: move slow, the content scrolls slowly; move fast, the content scrolls faster. (The patent also covers scaling and rotation on a touchscreen display.) Apple claims Samsung violates Apple’s patent on the idea; Samsung, of course, is likely to argue the functionality is obvious and does not deserve patent protection.

High stakes

For Apple, the stakes are far higher than the $2.5 billion the company is seeking in damages. What’s really at issue is whether Apple can prevent Samsung — and potentially a myriad of other companies — from copying significant elements of its product design.

Apple has been down this road before — several times. Back in the 1980s — yes, the 1980s — Apple sued Microsoft for the obvious: copying crucial elements of the Macintosh graphical interface in Windows. The case dragged on for four years and Apple lost. (Elements lingered until the late 1990s and Steve Jobs’ return to Apple. Remember when Microsoft allegedly “saved” Apple in 1997 by buying $150 million in stock? That was the end of it.) Part of the reason Apple lost that case was that key elements came down to contract law rather than copyright law. And even though Steve Jobs wasn’t at the company’s helm at the time, it’s fair to say the company was…displeased.

Fast forward to the 2000s: everyone knows Apple revolutionized the portable media player business with the iPod, right? Yup. But they also got nailed on patents, with Creative Technology walking away with a $100 million settlement for its “Zen” patent covering organization and navigation of music tracks on a portable device.

By that point, Apple was already working on early version of the iPad and the iPhone, and the company learned its lesson. Patent everything. The patent system may be a mess, but it’s the only viable legal option companies like Apple have for protecting their intellectual property — particularly if they’re not interested in licensing their technology to other companies.

As a result, the iPhone and iPad represent Apple’s most patent-protected products to date. Apple’s claims that the iPhone “changed everything” might be a bit of hyperbole, but it’s no exaggeration that the entire mobile industry was blindsided by the impact of the iPhone. And after five years, in many ways, it still trying to respond — Apple remains in the driver’s seat.

If, after all the effort, time, and resources Apple has invested, the company cannot protect the iPhone and the iPad from imitators, it proves two things:

• The patent system offers little protection for innovations;
• Apple is effectively the research and development division for an entire industry.

The Apple-Samsung trial resumes August 10.

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If you own an Apple product — be in the iPhone, iPad, Apple Watch, or a Mac — you should update it immediately. Why? Apple has begun rolling out updates to all of its devices with fixes for a serious security vulnerability.

The security vulnerability is known as CVE-2023-32434, and it has to do with the kernel privileges of Apple devices. Per Apple's website, the vulnerability allows third-party apps to "execute arbitrary code." In other words, if a bad actor knows how to exploit this vulnerability, they could potentially gain access to your Apple device and wreck havoc.

The best kind of marketing is the one that happens in the hands of an interested person who just might be your next customer. Samsung certainly thinks that way and is trying its best, not just because it’s a sound strategy, but also owing to the fact that arch-rival Apple has mastered the art with its meticulously imagined store experience.

Samsung’s latest ploy is a web app designed for iPhones that will give you a taste of its One UI 5.1 software that runs on its Galaxy S23 series phones. Actually, scratch that. The company is welcoming you to “the other side” by letting you experience its heavily customized take on Android and find out for yourself if it can surpass iOS for you. The solution is called Try Galaxy. Try Galaxy makes your iPhone a Samsung phone

Samsung’s Galaxy S23 is here, and it's quickly become one of the best phones you can buy in 2023. For $800, you’re getting a small but mighty phone with Snapdragon 8 Gen 2 for Galaxy chipset, long-lasting battery life, and a powerful triple lens camera system with a 50-megapixel main shooter.

But how does one of the best Android phones stack up against Apple’s smallest flagship, the iPhone 14 Pro? It has just as many cameras as the Galaxy S23, a powerful 48MP main camera, and costs $200 more than Samsung's handset.

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Samsung vs. Apple: Comparing Business Models

Samsung vs. Apple's Business Model: An Overview

It is fair to say there is no love lost between Apple, Inc. ( AAPL ) and Samsung Electronics Co. Ltd. ( SSNLF ). They are in a worldwide corporate battle that started in 2010 when Samsung, then an Apple supplier, released a very iPhone-like product through its Galaxy lineup. Steve Jobs, Apple's late CEO, was furious and went on the offensive; Samsung, in turn, dug in its heels.

It made sense that Samsung would try to incorporate elements of the Apple business model , especially after the American technology giant passed Exxon Mobil Corporation as the world's most valuable company in 2011. Ask either company, however, and you are likely to hear there is too much emulation going on.

Consider the almost unprecedented legal wars taking place between Samsung and Apple, which span four continents and billions of dollars in awarded damages. Or the aggressive, political election-style marketing campaigns that are reminiscent of the Ford versus Chevy attack ads.

From a business model perspective, the two companies are constantly converging and modifying, although stark contrasts remain. Samsung has been a global force longer and has its hands in more industries. Apple's rise has been comparatively meteoric and focused.

In March 2014, someone leaked a Samsung strategy document from 2012 in which the Korean-based tech company blankly stated, "Beating Apple is #1 Priority (everything must be in the context of beating Apple)." It is a telling example of the animosity between two of the world's largest smartphone producers, who are clearly modifying their respective business strategies with each other in mind.

Key Takeaways

• Samsung and Apple are two consumer electronics giants with global reach and loyal customer bases.
• Samsung's business model has focused on vertically integrating supply chains and ramping up production volume.
• Apple has made a business strategy of focusing on design and user experience while outsourcing elements such as manufacturing.
• The two companies have found themselves engaged in legal battles over intellectual property and patent fights.

Samsung: Vertical Integration and Product Volume

Samsung operates like many other Asian producers, such as NEC Corporation or Sony Corporation, with an emphasis on vertical integration and a flood of products. Samsung is present in dozens of markets, including flat panels, sensors, LED lights, batteries, gaming systems, cameras, TVs, appliances, cellphone carriers, tablets, smartphones, and even medical electronics.

Before turning its sights to Apple, Samsung competed with, and in many cases bested, Japanese technology companies in the 1980s and 1990s. The company spends a fortune on research and development (R&D) and capital expenditures (CapEx) . This pays off in the mid- and low-end markets, but the high-end products keep running into the juggernaut that is Apple.

Samsung relies on vertical integration as a chief competitive advantage. While Apple still imports billions of dollars worth of components from its rival every year, Samsung is accountable to nobody. It is not a magical formula, Nokia was almost as integrated before being steamrolled by Apple and Samsung, but Samsung controls some logistical certainty in a way that Apple does not.

However, declining profit margins in 2014 and 2015 forced some introspective analysis within Samsung's executive team. Chair Lee Kun-hee saw his company's global share of smartphone sales drop from 35% in 2013 to 24% in the third quarter of 2015, and his son, Lee Jae-Yong, reportedly wants to respond through mergers and acquisitions (M&A) and partnerships. This would be a historic shift in focus, likely signaling a departure from self-funded R&D and into outsourced innovation, not unlike Apple.

Apple: Design, Integration, and Outsourcing

From its target marketing, research, and product design, Apple is a much more focused company than Samsung. Apple succeeds in design and integration, and no small degree of risk.

All of Apple's products include programs that work very well with each other, but not with any of its competitors' products, which makes it easy for customers to keep buying Apple and difficult to switch to someone else. Over half of Apple's revenue comes from the iPhone lineup, making the firm single product-dependent.

Able to suppress R&D costs by outsourcing hardware component production and assembly, Apple's CapEx looks radically different from Samsung's ($2.09 billion as of July 1, 2023). This inflates margins and boosts AAPL stock, and is one of the chief reasons Apple can grow at astounding clips.

Apple does not race to be first; it lets other companies spend time on R&D and early market development before swooping in and improving everything. Consider the iPod, the first breakthrough product during Jobs' second stint as CEO, which came out years after the Sony Walkman. Not content to just throw out an imitator product, Apple worked diligently with record labels and created a small, sleek-looking replacement. There are similar stories with the smartphone and tablet markets, each considered a pillar of Apple innovation but neither of which the company invented.

Apple vs. Samsung: Endless Patent Lawsuits

The two companies have been fighting over patent infringement since 2011 and took their case all the way to the Supreme Court. Lawsuits are a common strategy from Apple, which is one of the most legally aggressive firms in the world

The battle on intellectual property started in 2011 when Apple accused Samsung of “slavishly copying” the iPhone's design and software features. Samsung then countered the allegation by suing Apple for infringing Samsung’s software patents. This went on with multiple cases being filed on multiple patents and each company claiming billions of dollars in damages.

In 2012, a U.S. jury ruled In favor of Apple making Samsung pay more than $1.05 billion for copying various hardware and software of the iPhone and iPad. Although in 2013 the penalty was reduced to $600 million, the jury said that Samsung should pay Apple an additional $290 million for patent infringing.

In a different trial in 2024, a U.S. jury found both companies infringing upon each others’ patents. Apple was awarded $120 million and Samsung $160,000. By that year, both Samsung and Apple decided to drop all the patent cases outside the U.S. In 2015 Samsung agreed to pay $548 million to Apple to settle the original patent infringement from 2011. 

The case reached to Supreme Court in 2016 after Samsung challenged the lower court’s ruling that the company should pay Apple $399 million in damages for violating three of Apple's design patents on the iPhone's shape and icons (100% of the profits earned from its smartphone business). However, the Supreme Court rejected the ruling and returned the case to lower courts.

In May 2018, a U.S. jury eventually found Samsung had infringed on the majority of the patents and ordered Samsung to pay Apple $539 in damages for “copying features of the original iPhone”. Apple was awarded $533.3 million for Samsung’s violation of three design patents on the iPhone and an extra $5.3 million for infringing utility patents.

Which One Sells More, Samsung or Apple?

With the launch of the Galaxy S23 , Samsung sold the most smartphones worldwide during Q1 2023, thus reclaiming the top spot from Apple during the quarter. The company ended Q1 2023 with a 22% share of the global smartphone market, followed by Apple at 21%.

Which One Is Best, iPhone or Samsung Smartphones?

The Apple iPhone design is generally more minimalist and sleek. It's easy to use, has a good camera, and lasts a long time on a charge. Samsung's smartphones, on the other hand, have more features and customization options, and a bigger screen.

Samsung smartphones are available at various prices. while Apple iPhones are only available at one price point (usually high).

How Are Apple and Samsung's Business Models Different?

Samsung's business model focuses on vertically integrating supply chains, ramping up production volume, and diversifying product offerings (electronic devices, appliances, and services) for a global customer base.

Apple's business model focuses on design and user experience, continuous innovation, branding excellence, strategic partnerships, outsourcing, and long-term vision.

Samsung and Apple are two multinational major appliance and consumer electronics corporations with different business models and strategies. It's also worth noting that while Samsung is currently more profitable, Apple remains a much larger company overall. Samsung is valued at less than $200 billion, while Apple is the world's most valuable technology company with a market cap of nearly $500 billion.

Forbes. " Samsung vs. Apple: Inside The Brutal War For Smartphone Dominance ."

The New York Times. " Apple Is the Most Valuable Company ."

MacRumors. " Samsung's Goals for 2012: 'Beating Apple is #1 Priority' ."

Samsung Electronics Co., Ltd. " 2023 Interim Business Report, For the Quarter Ended March 31, 2023 ," Page 5.

Samsung. " About Us: Where It All Began ."

Samsung Electronics Co., Ltd. " 2023 Interim Business Report, For the Quarter Ended March 31, 2023 ," Pages 12 and 21-23.

Son, Insung and Sihyun, Kim. " Supply Chain Management Strategy and Capital Structure of Global Information and Communications Technology Companies ." Sustainability, vol. 14, no. 3, 2022.

Samsung Investor Relations. " Earnings Release Q4 2015: Samsung Electronics, January 2016 ," Page 2.

Samsung Investor Relations. " Earnings Release Q4 2013: Samsung Electronics, January 2014 ," Page 2.

U.S. Securities and Exchange Commission. " Apple Inc., Form 10-K, For the Fiscal Year Ended September 24, 2022 ," Page 21.

DiscoverCI. " Apple Inc (AAPL) Capital Expenditures (CapEx) ."

Guardian. " 20 Years of the iPod: How It Shuffled Music and Tech into a New Era ."

Indian legal Solution. " Apple V. Samsung: Case Summary ."

The Verge. " Apple and Samsung settle seven-year-long patent fight over copying the iPhone ."

Android Police. " Samsung has sold more phones than Apple so far in 2023, but the fight's not over yet ."

DeseretNews. " iPhone vs. Samsung smartphones: Which one is best? "

FourWeekMBA. " Samsung Business Model ."

WakingGiants. " Apple Inc.: Sustaining a Competitive Advantage ."

BrainStation. " Samsung Now More Profitable Than Apple, but Not Because of Smartphones ."

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Lesson Learned: Samsung vs. Apple (2011) Patent Lawsuit Case Study

Introduction

In 2011, the world watched as two technology giants, Samsung and Apple, engaged in a high-stakes legal battle over patent infringement . The dispute, which centered around similarities between Samsung's Galaxy tablets and Apple's iPad, resulted in a lengthy court battle and significant financial penalties for both companies.

The Samsung vs. Apple case study serves as a cautionary tale for businesses looking to expand into Europe. With global e-commerce on the rise and software companies seeking to expand their reach internationally, it's more important than ever to understand the complexities of global trademark laws and to protect intellectual property when operating in Europe.

In this article, we'll explore the background of the Samsung vs. Apple lawsuit, examine the trademark laws at the heart of the case, and discuss the lessons that businesses can learn from this high-profile dispute.

Background on the Samsung vs. Apple Patent Lawsuit

Facts of the case.

• The Samsung vs. Apple lawsuit began in April 2011 when Apple filed a lawsuit against Samsung, alleging that Samsung's Galaxy tablets infringed on the design of the iPad. 
• Specifically, Apple claimed that Samsung's tablets copied the look and feel of the iPad, including the device's rectangular shape, rounded edges, and minimalist design.
• Samsung countered by filing its own lawsuit, accusing Apple of infringing on several of its patents related to wireless technology.
• The legal battle played out in courts around the world, with both companies seeking injunctions against each other and pursuing damages for alleged patent infringement.
• In August 2012, a jury in the United States ruled in favor of Apple, awarding the company $1.05 billion in damages. 
• Samsung appealed the decision, and the case continued to work its way through the courts for years. 
• Ultimately, Samsung agreed to pay Apple $548 million in damages, though the two companies continued to engage in legal disputes over other patent-related issues.

The Samsung vs. Apple lawsuit was a watershed moment in the tech industry, highlighting the importance of protecting intellectual property in an increasingly global marketplace. As we'll see in the next section, the patent laws at the heart of this case are crucial for businesses looking to operate in Europe.

•   Madrid Protocol Trademark Filing Basics

Lessons learned from the Samsung vs. Apple case study

The Samsung vs. Apple patent lawsuit is a prime example of the importance of protecting intellectual property and understanding global trademark laws when doing business in Europe. The following are key lessons that businesses can learn from this case study:

Importance of conducting thorough patent searches before entering a new market 

Samsung's failure to conduct a thorough patent search before launching their Galaxy tablet in the European market resulted in the infringement of Apple's design patent. This mistake led to costly legal battles, negative publicity, and loss of revenue. To avoid similar mistakes, businesses should conduct comprehensive research on existing patents and trademarks in the countries they plan to operate in before launching their products.

Need for businesses to have a solid understanding of the intellectual property laws in the countries where they operate

Intellectual property laws vary from country to country, and businesses should be aware of the specific laws and regulations in the countries where they plan to operate. In the Samsung vs. Apple case, the dispute centered around design patents, which are unique to the US legal system. This case underscores the importance of businesses having a solid understanding of the intellectual property laws in the countries where they operate to avoid costly legal battles and protect their intellectual property. Samsung argued that their design was different from Apple's, but the court ruled in Apple's favor, highlighting the importance of understanding local intellectual property laws.

Value of proactive measures, such as patent registration, to protect intellectual property

Patent registration can offer legal protection and prevent competitors from copying a business's intellectual property. This is especially important for businesses that operate in multiple countries, where laws can vary widely. By taking proactive measures to protect their intellectual property, businesses can avoid costly legal battles and protect their reputation. In the Samsung vs. Apple case, Apple was able to successfully argue that Samsung's products infringed on their design patents because Apple had registered those patents with the US Patent and Trademark Office. This highlights the value of proactive measures to protect intellectual property.

Consequences of not protecting intellectual property, including costly legal battles and damage to a company's reputation

The Samsung vs. Apple case study is a prime example of the consequences of not protecting intellectual property. Samsung's failure to conduct a thorough patent search and to register their design led to a lengthy legal battle that damaged the company's reputation and cost them millions of dollars in legal fees and lost revenue. Businesses that fail to protect their intellectual property risk losing their competitive advantage and facing similar consequences.

Patent Laws in Europe

European patent law is regulated by the European Patent Convention (EPC), which was established in 1973. The EPC provides a unified system for the grant of patents in Europe through a centralized European Patent Office (EPO). The EPC is an international treaty ratified by its member states and governs the grant of European patents.

In Europe, patents are territorial, meaning that the protection they offer only applies in the country or countries where they have been granted. However, the European Patent Convention provides a streamlined process for granting patents that can be enforced in multiple European countries.

The process for obtaining a European patent begins with filing an application with the EPO. The application must meet specific requirements, including a detailed description of the invention and its intended use, and must be filed in one of the three official languages of the EPO: English, French, or German. The application is then examined to determine if it meets the requirements for patentability under the EPC.

If the application is successful, the EPO will grant a European patent, which provides protection in the designated European countries. Once granted, the patent owner is responsible for enforcing their patent rights in each country where protection is sought. This can involve litigation in multiple jurisdictions and requires a thorough understanding of the patent laws and procedures in each country.

• International Industrial Design Patent Portfolio
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Implications for cross-border e-commerce company owners

The lessons learned from the Samsung vs. Apple case study also have important implications for cross-border e-commerce company owners operating in Europe. Here are some key takeaways for these businesses:

Explanation of how the Samsung vs. Apple case study can apply to e-commerce businesses operating in Europe

E-commerce businesses that operate in Europe must comply with local intellectual property laws and regulations. Failure to do so can result in legal consequences and damage to the business's reputation. The Samsung vs. Apple case highlights the importance of protecting intellectual property and understanding local laws, even for businesses that primarily operate online.

Importance of understanding trademark laws and registering patents in order to protect the brand and products

Patent registration can offer legal protection and prevent competitors from using similar names or logos. E-commerce businesses should register their trademarks in all countries where they operate to prevent others from copying their brand and products.

Discussion of potential risks for businesses that fail to take these measures

E-commerce businesses that fail to protect their intellectual property risk facing legal battles, negative publicity, and loss of revenue. These consequences can have a significant impact on a business's success and growth potential. It is essential for e-commerce businesses to take proactive measures to protect their intellectual property and ensure compliance with local laws and regulations.

The Samsung vs. Apple case study provides valuable lessons for businesses operating in Europe. By conducting thorough patent searches, understanding local intellectual property laws, and taking proactive measures to protect their intellectual property, businesses can avoid costly legal battles and protect their reputation. Cross-border e-commerce businesses must also be aware of local laws and regulations and take steps to protect their trademarks and products to avoid potential risks.

Implications for software companies looking to expand internationally

As the world becomes increasingly connected and software plays an even larger role in our daily lives, software companies are looking to expand their reach beyond their domestic markets. However, expanding into new markets requires careful consideration of the intellectual property laws and regulations in the target countries. The Samsung vs. Apple case study can serve as a valuable lesson for software companies looking to expand internationally.

Secure Your Intellectual Property

Firstly, securing intellectual property rights is crucial. This includes patents, trademarks, copyrights, and trade secrets. Software companies should conduct thorough research and analysis to determine whether their intellectual property is eligible for protection in the target country, and then take the necessary steps to secure it. In some cases, companies may need to adapt their products or services to comply with local laws and regulations.

Understand the Legal Landscape

Secondly, understanding the legal landscape in the target country is equally important. Software companies should work with legal professionals who have expertise in the target country's intellectual property laws and regulations. This can help companies navigate the complexities of the legal system, avoid potential legal pitfalls, and protect their intellectual property from infringement. There are companies that specialize in patent infringement analysis , such as Flatfee.com, among others. 

Enforcing the Measures

Lastly, failing to take these measures can have serious consequences, including lawsuits and loss of market share. The Samsung vs. Apple case study illustrates the risks of not protecting intellectual property and the importance of taking proactive measures to avoid costly legal battles and reputational damage.

• What Are the Differences between Patents and Trademarks?
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Implications for Intellectual Property Managers and Heads of Legal of international businesses expanding in Europe

For Intellectual Property Managers and Heads of Legal of international businesses expanding in Europe, the Samsung vs. Apple case study highlights the importance of advising clients on the need to protect their intellectual property when entering new markets.

Work With Legal Professionals

Legal professionals should work closely with their clients to develop a comprehensive intellectual property strategy that takes into account the legal and regulatory landscape in the target country. This includes conducting thorough patent searches and patent registration to protect intellectual property from infringement.

Moreover, legal professionals should advise their clients on the potential risks of failing to protect their intellectual property, including costly legal battles and damage to their reputation. By taking proactive measures to protect their intellectual property, businesses can avoid these risks and ensure that they are well-positioned to succeed in the global marketplace.

Protect Intellectual Property

This case serves as a valuable lesson for businesses expanding into Europe. By understanding the importance of protecting their intellectual property, conducting thorough research and analysis, and working with legal professionals who have expertise in the target country's intellectual property laws and regulations, businesses can avoid costly legal battles and reputational damage and position themselves for success in the global marketplace.

Conclusion 

The Samsung vs. Apple trademark lawsuit case study highlights the importance of understanding global trademark laws and protecting intellectual property when doing business in Europe. 

By examining the background, details, and implications of the case study, businesses can learn valuable lessons about the importance of conducting thorough patent searches before entering a new market, having a solid understanding of intellectual property laws, and patent registration to protect intellectual property.

For cross-border e-commerce company owners, it is crucial to understand trademark laws and register trademarks to protect their brand and products. Failure to do so can result in legal battles and damage to a company's reputation.

Similarly, for software companies looking to expand internationally, it is essential to secure intellectual property rights and understand the legal landscape in the target country. Failure to take these measures can lead to lawsuits and loss of market share.

For Intellectual Property Managers and Heads of Legal of international businesses expanding in Europe, it is critical to advise clients on the need to protect intellectual property and the potential consequences of failing to do so.

Best practices for managing intellectual property in a global marketplace include conducting thorough patent searches, registering trademarks and patents, and understanding the legal landscape in each country where a business operates.

In conclusion, businesses must take proactive steps to protect their intellectual property when operating in Europe. The Samsung vs. Apple case study serves as a valuable lesson, emphasizing the importance of understanding global patent laws and intellectual property rights. 

By learning from this case study, businesses can take the necessary measures to protect their intellectual property and avoid costly legal battles and damage to their reputation.

• “Apple and Samsung settle seven-year-long patent fight over copying the iPhone.” https://www.theverge.com/2018/6/27/17510908/apple-samsung-settle-patent-battle-over-copying-iphone  
• “Apple Inc. v. Samsung Elecs. Co.” https://casetext.com/case/apple-inc-v-samsung-elecs-co  
• “Apple vs. Samsung: the complete timeline.” https://www.theverge.com/apple/2011/11/2/2533472/apple-vs-samsung  
• “Apple v. Samsung: The patent trial of the century.” https://www.wsj.com/articles/SB10000872396390443295404577543221814648592  
• “Intellectual property.” https://single-market-economy.ec.europa.eu/industry/strategy/intellectual-property_en  
• “The European market potential for software development services.” https://www.cbi.eu/market-information/outsourcing-itobpo/software-development-services/market-potential  
• “Software intellectual property: What it is and how to protect it.” https://cpl.thalesgroup.com/software-monetization/protecting-software-intellectual-property#:~:text=It%20gives%20the%20owner%20the,elements%20in%20the%20user%20interface . 
• “Retaining protection in the UK for EU intellectual property rights.” https://www.gov.uk/government/publications/retaining-protection-in-the-uk-for-eu-intellectual-property-rights  
• "The protection of intellectual property." by https://www.eesc.europa.eu/sites/default/files/files/factsheet_-_the_protection_of_intellectual_property_0.pdf  

Author’s Bio: Ning Zhang 

Obtained Doctor of Law (JD) at Georgetown University. Ning Zhang is an M&A and corporate attorney with 10 years of experience. She has advised clients on complex cross-border transactions in the U.S. and Hong Kong. Notable work includes advising on a licensing deal between U.S. and Chinese pharmaceutical companies. She has worked in multiple global offices, focusing on U.S.-China investments and business operations.

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Apple vs. Samsung: The $2 Billion Case

By: Oded Netzer, Rajan Sambandam

Apple Inc. sued Samsung Electronics for approximately $2 billion, contending that Samsung violated some of its patents by copying Apple's product features. Apple's expert witness team used a conjoint…

• Length: 7 page(s)
• Publication Date: Oct 20, 2014
• Discipline: Marketing
• Product #: CU137-PDF-ENG

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Apple Inc. sued Samsung Electronics for approximately $2 billion, contending that Samsung violated some of its patents by copying Apple's product features. Apple's expert witness team used a conjoint analysis in order to assign a value to the product features in question-thereby attempting to assess the magnitude of Apples' revenue loss as a result of the patent infringement. This case asks students to evaluate the design of this study as well as the pros and cons of its use in this context.

Learning Objectives

This case introduces students to an applied use of conjoint analysis in a legal battle between Apple and Samsung.

Oct 20, 2014

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United States

Industries:

Mobile devices and personal computers

Columbia Business School

CU137-PDF-ENG

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Apple vs. Samsung: The Clash of the Smartphones

This month in San Jose, Calif., the two biggest smartphone companies in the world, Apple and Samsung Electronics, entered into a head-to-head intellectual property rights lawsuit. KWHS examines corporate litigation and costly patent wars. … Read More

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This month in San Jose, Calif., the two biggest smartphone companies in the world, Apple and Samsung Electronics, entered into a head-to-head intellectual property rights lawsuit. According to a recent article by Steve Lohr of The New York Times , “Apple asserts that Samsung made ‘a deliberate decision to copy’ the iPhone and iPad.” On the other side of the legal battle, Samsung contends that Apple has infringed on Samsung’s own cell phone technology patents.

Protecting Original Ideas

Apple argues that Samsung has plagiarized Apple’s designs for the iPhone and iPad – i.e., copied them without permission and sold them as original Samsung work. You may be familiar with the term plagiarism from your own schoolwork. For example, when you write a paper for American History, you do not have to footnote the date of the Revolutionary War because that is a known fact. However, if you read that American military tactics were why the U.S. defeated Britain and if you include this argument in your paper, you need to properly cite your source because it is someone else’s idea – his or her intellectual property — and not your own. If you fail to give credit to others when you use their ideas, you are plagiarizing and will most likely fail your assignment (or worse) if caught.

Intellectual property refers to an original idea that is owned by its creator. Just like with physical property (a car or computer), theft of intellectual property is illegal. Outside of the classroom, ideas (like touch-screen technology) can be protected by patents, which are issued by the United States Patent and Trademark Office. A patent forbids anyone but the inventor from making, using, selling or importing an invention for a limited time, usually 20 years. There are three types of patents: utility patents for machines and useful processes, plant patents for the discovery and reproduction of new plant species, and design patents that protect original designs. Apple argues that Samsung has infringed on – plagiarized — many of its design patents by using elements of the iPhone and iPad in the Samsung Galaxy smartphone.

Apple is asking for $2.525 billion from Samsung for damages, while Samsung wants 2.4% of each Apple sale where its own patents have been breached by Apple. Apple’s patent war has been going on for the last two years, mainly against Google’s Android products, including the Samsung Galaxy. The Wall Street Journal suggests that this legal war is actually a proxy war for Apple vs. Google, a long-brewing tension expressed by Steve Jobs himself. Before his passing, the Apple godfather claimed he would “go thermonuclear war” over Google’s supposed iPhone “theft.”

Much of this debate stems around smartphone design. Apple claims that Samsung copied the iPhone’s rounded edges, clear flat surface and touch-screen technology in the Samsung Galaxy. Samsung, however, asserts that Apple copied the original iPhone design from Sony. If Apple wins this lawsuit, Jobs’s already dominant company will have a monopoly on smartphone and tablet production.

Although patents were meant to protect designers and promote creativity — people could not simply copy others’ work but had to design new products themselves — today’s technology patents may actually hinder innovation , some experts say. According to Kevin Werbach, professor of legal studies and business ethics at Wharton, “For a long time, major technology companies saw patents as purely defensive assets , to prevent others from suing them. They generally didn’t use patents as an offensive weapon against competitors. In recent years, companies such as Apple, as well as a new generation of patent-holding companies, have taken a more aggressive stance with their patent portfolios. Companies are now willing to use patents not just to generate licensing revenues , but to [restrict] their competitors.”

Patrick Houston, in an opinion article for InformationWeek, predicts a lose-lose outcome for this Apple/Samsung showdown. Houston believes that patents are bad for the free market overall because they grant monopolies to big companies, and younger companies are unable to compete. He points out that the sheer number of software patents — since the 1990s, 200,000 software patents have been filed — makes it nearly impossible to develop new products. Investors are hesitant to back technology startups because they want full security that new products do not infringe on existing patents. At the same time, younger companies may not have the resources to test the originality of their products, and therefore cannot gain more capital to develop and grow — a Catch-22.

A Patent Bully or Innovator ?

Also, patent litigation is an expensive endeavor. Senior lawyers for both Apple and Samsung earn upwards of $500 per hour, according to the Daily Mail. Yet both sides think this war is worth the financial cost. As Werbach notes, “Undertaking any litigation against competitors can be costly and risky. There can also be significant costs to a firm’s reputation if it’s seen as a patent bully rather than an innovator . Yahoo filed a major patent lawsuit against Facebook, for example, which provoked tremendous criticism. Yahoo settled the case when a new CEO took over and made the decision that the harm outweighed the potential benefits. Today’s patent system, however, creates very powerful opportunities to block competitors from the marketplace in certain industries. So it’s understandable why some firms decide to sue.”

This much-publicized trial will set precedent for all upcoming technology trials in the future, and if Apple wins, the company will control the smartphone and tablet market. The focus moving forward, however, will not be Samsung vs. Apple or even Google vs. Apple. Instead, such lawsuits will force us to re-examine our patent system. Werbach argues that we should not throw out patents altogether: “We need legal mechanisms to protect inventors. Unfortunately, the patent system has not kept up with the changes in the technology industry .” He stresses that technology will continue making great strides forward with or without patents. The goal will be to find a balance between protecting inventors without hindering innovation.

What is intellectual property and why is it important in the corporate world?

How might technology patents hinder innovation?

Why is the Apple-Samsung patent war so important to the future of the tech industry?

Can you think of other high-profile patent lawsuits?

Related Links

• PC Pro: Samsung vs. Apple
• PC World: 12 Things You Need to Know about the Apple vs. Samsung Patent Trial
• NYT: Apple-Samsung Trial Highlights Patent Wars
• United States Patent and Trademark Office
• Wall Street Journal: Big Stakes in Patent War

3 comments on “ Apple vs. Samsung: The Clash of the Smartphones ”

This is one of the most important topics today. Not only is Samsung and Apple neck to neck in patent fights, but also in smartphone war.

I was looking in the other direction where they are competing about the technology used in their mobile phones, such as : the Retina Display vs Super AMOLED

And also, iOS competes vigorously with Google Android

I have loved Apple technologies for years, and I have great respect for Steve Jobs.

This lesson plan seems interesting but there are no links to the mentioned articles, and is missing materials, such as the list of names of entrepreneurs.

Thanks for the feedback! I will update with the missing links and any other information.

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U.S. v. Google: As landmark 'monopoly power' trial closes, here's what to look for

The Department of Justice and a group of 35 states sued Google in 2020 for allegedly using anticompetitive tactics to monopolize online search. The trial is over and closing arguments are under way. Spencer Platt/Getty Images hide caption

The Department of Justice and a group of 35 states sued Google in 2020 for allegedly using anticompetitive tactics to monopolize online search. The trial is over and closing arguments are under way.

The landmark monopoly trial between the U.S. Justice Department and Google comes to a finale this week. After a five-month hiatus, both sides will present closing arguments starting Thursday aiming to persuade the federal judge why they should win the case.

The Justice Department has accused Google of illegally abusing its power as a monopoly to control the search engine business — leading to competitors being sidelined and customers being shortchanged by getting a lower quality experience. Google, for its part, has argued its search engine is simply the best, that's why it's the most popular — not because of its business dealings.

It's the first high-profile monopoly case to go to trial among a handful that the U.S. government has brought against tech companies in recent years. The U.S. has also sued Amazon , Apple and Facebook parent Meta over business practices it says hurts both rivals and consumers.

How the judge rules in this case could have far-reaching effects on how people use and interact with the internet.

Google Abuses Its Monopoly Power Over Search, Justice Department Says In Lawsuit

The U.S. sues Apple, saying it abuses its power to monopolize the smartphone market

During the trial last fall, the two sides battled it out in court over a 10-week period. Silicon Valley executives, including Google CEO Sundar Pichai and Microsoft CEO Satya Nadella, testified, while troves of internal documents were introduced. Arguments erupted over redacted evidence, closed-door testimony and alleged destruction of employee chat logs.

"There's this wider debate about whether the antitrust laws are up to it with the big technological world we live in now," says Sam Weinstein, a former Justice Department antitrust lawyer who's now a professor at the Cardozo School of Law. "And so, this is putting it to the test."

The Justice Department first filed its lawsuit against Google in 2020. A group of 35 states, along with Guam, Puerto Rico and the District of Columbia, filed a near identical suit at that time. Both suits were heard by Judge Amit Mehta during the trial, which wrapped up in November.

Google paid $26.3 billion in 2021 alone to be the default search engine on phones and web browsers

The Justice Department's case hinged on allegations that Google illegally orchestrated its business dealings with device makers, like Apple and Samsung, and web browser companies, like Mozilla, which runs Firefox.

During the trial, the government showed that Google paid billions of dollars every year for exclusive agreements with these companies. In 2021, it spent a total of $26.3 billion to ensure it was the default search engine on phones and web browsers, according to witness testimony. Apple, which had the most lucrative deal, was paid around $18 billion in 2021 , according to the New York Times.

"Google illegally maintained a monopoly for more than a decade," Kenneth Dintzer, the Justice Department's lead lawyer, said in the trial's opening statements. "If Google sets the rules, it will always be to their advantage."

United States takes on Google in biggest tech monopoly trial of 21st century

Google's parent company Alphabet, which is now worth more than $2 trillion, controls roughly 90% of the U.S. search engine market . For its defense, the company put together a massive legal team and brought on outside law firms to help fight its case.

Much of the company's case centers around its claims that people love Google Search and that's why they use it. And, Google argues, if people want to switch the default search engine on their devices, they can with just a few clicks.

"Users today have more search options and more ways to access information online than ever before," Google's lead lawyer John Schmidtlein said during the trial's opening statements.

Even Microsoft CEO says it couldn't compete with Google

Over the course of the trial, the Justice Department called dozens of witnesses to testify – including experts, psychologists and top executives from Apple, Microsoft and Google.

When Microsoft CEO Nadella took the stand, he said that he tried for years to get Apple to set Microsoft's Bing search engine as the default on iPhones and iPads. He added, however, that even a company as big as Microsoft couldn't compete.

Executives from other smaller search engines, like DuckDuckGo and Neeva also testified that Google's exclusive deals closed off their potential to gain market share. Gabriel Weinberg, DuckDuckGo's CEO, said his privacy-centric search engine company tried relentlessly to negotiate deals with device makers but it never panned out.

"We ultimately decided after three years of trying this that it was a quixotic exercise because of the contracts," Mr. Weinberg testified.

Google to present its star witness, the company's CEO, in landmark monopoly trial

Google's witnesses mostly included people within the company. When CEO Pichai testified, he said paying billions of dollars to ensure Google Search had default placement on devices made total sense — as it would for any business.

"We want to make it very, very seamless and easy for users to use our service," he said.

During the trial, Google requested that a lot of the testimony about its business dealings be presented behind closed doors. Eddy Cue, Apple's senior vice president of services, testified for four hours, but more than half of that was closed to the public . And, throughout the trail, Google repeatedly fought to seal documents and shutter proceedings in public court.

It became so pervasive that The New York Times and other major news organizations filed a court motion imploring the judge to ensure the case was conducted in an open courtroom.

The judge will decide if laws from 1800s apply in today's modern world

The trial was what's known as a bench trial, which means there's no jury and Judge Mehta will decide. After closing arguments, he's expected to rule within the coming months.

If Mehta sides with Google, the company's business practices will likely remain the same. If he rules in favor of the Justice Department, it's unclear how he'd sanction Google. It could be anything from fines to a restructuring of the company.

Closing arguments are expected to wrap Friday. It's possible some of the previously sealed documents will be made public, bringing forward more evidence. The Justice Department and Google are expected to reiterate their top takeaways from trial and answer the judge's questions.

In a post-trial brief , Google wrote that evidence during the trial proved "Google is the highest quality, most popular search engine." While the Justice Department and states wrote in their post-trial brief that Google "exploited its monopoly power to 'freeze the ecosystem' of what should otherwise be a vibrant and competitive industry."

Weinstein, the Cardozo law professor, says it will be interesting to see how Mehta rules and whether the antitrust laws that were created in the late 1800s can still be applied in today's modern world.

"I think there's some evidence, at least, that they're still applicable and they can still work even though we're past the smokestack age and into the digital age," he says.

Editor's note: Google, Apple and Microsoft are among NPR's financial supporters.

• Satya Nadella
• Department of Justice
• sundar pichai