In a series of lawsuits spanning 10 countries over three plus years, technology giants Apple Inc. and Samsung Group have been fighting a high stakes international patent war. The heart of this and other patent wars revolves primarily around the infringement of technology patents used in both smart phones and tablet devices.
Over the course of the heavyweight bout between Apple and Samsung, both companies have had their share of victories and defeats. Last month, for example, Samsung was found to have infringed on an Apple patent “bounce screen” technology, while Apple was found to have infringed on a Samsung patent for the auto-synching of music and files to tablet and smart phone devices.
Though many of these lawsuits may seem frivolous to the untrained eye, these companies are entrenched in a battle for market share where seemingly “little things” can make a huge difference in overall sales. What typically occurs if Company A is found to be selling a product infringing on a patent of Company B? There will be an injunction placed on Company A, barring the sale of its product.
These cases are being fought on a multitude of continents, and are having an effect on international smartphone and tablet markets.
These injunctions are limited to the country in which the case is decided. And, as these cases are being fought on a multitude of continents, they are having an effect on international smartphone and tablet markets.
For example, Germany currently has sale bans on the sale of the Samsung Galaxy 10.1 tablet and Galaxy SII smart phone; the United States currently has bans on all Apple smart phone and tablet devices prior to the iPhone 4S and iPad 2 3G. With different countries coming to different conclusions on patent infringements at different times, the worldwide market for tablet and smart phone devices is in a constant state of flux.
When a company’s products is found to have infringed on a patent, and an injunction is granted, it essentially has three options:
Assuming these companies are unwilling to give up their entire market share, discontinuing a product is not a realistic option.
If the infringing company chooses to pay a licensing fee, it has to decide between either shifting the cost to its consumers by increasing the price of its product, or absorbing the cost itself. In either situation, the infringing party is likely to take a hit on profits, since an increase in prices likely will lead to a decrease in demand, especially if competitors’ prices remain the same.
The third option—creating a new model of the product which no longer infringes—would have its own set of issues. Thus, if an infringing company chose this route, it likely would have to revamp its product quickly and get it to market, or loose potential customers to competitors. In this situation, companies like Samsung and Apple may end up with a lower quality product than consumers expect.
As a result, more lawsuits certainly are on the horizon. The outcome of these cases, and how Apple and Samsung respond to them, will affect the international market for smart phones and tablets for years to come.
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