Apple Inclusive versus Samsung Corporation Patent Infringement - Case Study Example

Introduction

As a result of stiff competition over superiority in the technological field, infringement on intellectual property is always witnessed. According to (Souare, Canada, & Canada, 2012, p. 33), any innovation needs to be protected from imitation by other parties for the benefit of the inventor so long that it meets the threshold set. Infringement of intellectual property, therefore, refers to the use someone’s idea without their rightful authorization for commercial purpose. Some firms opt to have their innovation be a secret from the public to eliminate the instances of their intellectual property being infringed. However, this might be tricky if the secret is unearthed by competitors (Smith, & Parr, 2005, p. 7).

Apple Inclusive and Samsung Corporation

Apple and Samsung are renowned firms in the technological field. Apple was founded in 1976 with its headquarters in California, United States while Samsung was founded in 1938 with its headquarters in Seoul, South Korea. The two firms implement their innovation to increase their market share, as far as, mobile technology is concerned. The growing population and demand forces the firms in the technological field to produce gadgets that are perceived superior than others. Therefore, the research and development team of an organization like Samsung and Apple need to be vibrant and creative altogether.

Apple Inclusive Versus Samsung Corporation Patent infringement

In the year 2011, Apple Inclusive filed a lawsuit in the United States District Court of the Northern District of California against its competitor Samsung on a patent infringement. To settle score Samsung also filed a case against Apple Inclusive claiming patent infringement. In their case seven patents stood as the ground for the litigation. Samsung had two infringed patents while Apple Inclusive presented five infringed patents. All these patents had being registered and protected by United States Patent and Trademark Office (USPTO) and were software related. Apple claimed that Samsung had incorporated its software for slide-unlocking, quick link, universal search, automatic word correction, and background syncing. Samsung patents touched on camera and folder organization.

The jury heard complaints from both parties and found Samsung guilty for patent infringement. Infringement of these patents was exhibited in the following Samsung handset devices: Samsung Galaxy Note, Nexus, S2, S3 and Tab2. Apple on the other hand was found guilty for infringing the patent right for Samsung and this was evidenced in the following handset devices: IPhone 4, IPhone 4S, and IPhone 5. Therefore, the two companies had infringed the right of each firm and thus the jury ordered each firm to compensate each other for the damage. Apple was ordered to compensate Samsung $ 158,400 million for the infringement. Samsung was found to have infringed more of Apples’ patent right and ordered to pay $ 548 million. However, Apple had argued that the infringement by Samsung was valued at $ 2.75 billion (http://www.cnet.com/news/apple-v-samsung-patent-trial-recap-how-it-all-turned-out-faq ). Apple argued that it would have sold many pieces of IPhone handsets; if Samsung had not infringed its patent right. However, Samsung’s infringement on Apple’s patent right stole its competitive edge thus its clients purchased Samsung products, rather than IPhone. This case is an indication on how competition between two firms can involve violation of intellectual property right for the sake of keeping-up with competitors.

Analysis of the patent infringement

The big question that might arise is how this two major companies would infringe on the patent right of each other without noticing. This will mean that either they did not do their due diligence in searching the innovation if it is patented or not. And if they did then they ignored it altogether. United States Patent and Trademark Office give firms to search for any possible infringement to avoid legal action. However, this service attracts a charge, but the cost cannot be compared to the damages each firm was ordered to compensate each other. The first case was filed in the United States before subsequent cases in other nations; this therefore meant each firm was aware of the wrongful act all along. But since Apple perceived Samsung infringement was making a boom sale it had to file a case to benefit from its patent.

The infringement was committed by both firms and each firm was able to make sale for their products using innovation from other firms, without being noticed. This is because both Apple Inclusive and Samsung operate on the interest of ensuring their clients have the best products. Thus, there is a need to emerge victor in any aspect of the product, this leads to the process of infringing the patent right of the other competitor (Vaughan, 2013, p. 152)). The fact that both Apple and Samsung were incorporated and had patented their innovation their operations were legally. No cause of alarm would have been raised since each firm could prove the grounds n which they operated. This is why the infringement of both companies patent was able to make sale without being noticed at early stage. However, close monitoring of competitors is critical in identifying any form of infringement. This is the case with Apple and Samsung who compete to be the lion in the market of mobile handset technology.

An argument can be raised on how the litigation was initiated. Apple being the first party to accuse Samsung for its five patented rights can be viewed as an act of imbalance in patent infringement. Apple had only infringed two patents of Samsung and therefore, Apple saw it was the one losing and it had to file a lawsuit to bar Samsung from using their patented innovation. Therefore, if Apple had infringed more patents from Samsung it would have not bothered to file for a patent infringement case. According to (O'Connell, 2011, p.83), technological field faces the highest number of infringement among the firms in the industry. The rate of obsolescence in the technological industry is higher than any other industry; therefore, companies are always enhancing their operations to ensure they are not driven out of the market (O'Connell, 2011, p.84). The research and development team in the technological field dissects an innovation of another firm and try to manipulate it for their advantage. However, due to close resemblance, an infringement of another firm’s patent.

Complicity surrounding patent and other intellectual property right

It should be noted that not all form of creativity a firm comes up with can be patented (Thiele, Blakeway, & Hosch, 2010, p.58). This is because the idea can be obvious or a common step to other idea development. This scenario rose by Samsung filling a case against Apple over patent no. 915, which is concerned with pinch to zoom. Samsung argued that that the ideology ought not to be patented because all mobile phone manufacturers use it and therefore, it is an idea that all firms within the mobile industry are aware of, thus no need for patent. Samsung argument can be seen as valid, because almost all mobile handset that have touch screen capability uses the same phenomenon.

Technological field is an interdependence industry, before the above discussed litigation both Samsung and Apple were involved in businesses. Samsung used to supply Apple microprocessors, and even when the case was going on to date both firms still engage in business. This is an indication that intellectual property right is a tricky aspect in the technological field, because of patent issues. (Bainbridge, 2002, p.147), argued that, If a firm has patented a given product, there is no need for another firm to struggle in developing a counter product. This is the case with Apple, it concentrated on software development for its mobile handsets, instead of producing microprocessors. He elaborated that; doing so would have also opened doors for other patent infringement to other firms, thus facing huge loss.

Both Samsung and Apple had filed a numerous cases in different nations, and it proved a looming problem within the technological field. To reduce the tension that was building-up, the two firms agreed to drop cases outside the United States. The decision was not influenced by exchange of money, but for the sake of maintaining the reputation of the two brands across the globe (http://www.bbc.com/news/business-28670561 ). During the legal proceedings, Samsung stock prices suffered a down trend due to allegations of patent infringement. This clearly indicates the degree of responsiveness among consumers on a product. On contrary, the stock prices of Apple rose after the Court’s verdict on the case. This scenario can be interpreted that shareholders feared that due to the defeat in litigation the demand for Samsung products will decline, thus a decline in returns. As a counter measure shareholders withdrew their investments. Apple was strengthened by the verdict of jury as shareholders and clients got confidence in the firm progress, thus pushing the price of the stock.

Development in technological field as a result of the patent litigation

The above discussed litigation caught global attention, and more specifically players in the technological industry learnt a lot. The need to have a patent on technological innovation has been considered as a key factor for the success of respective technological firms. According to (Partridge, & Barengolts, 2011, p.62), the closeness in similarity of technological idea makes these firms vulnerable for patent infringement. Therefore, technological firms conduct search for various patented idea before commercializing any innovation. This has reduced the instances where one has to make several legal tussles concerning patent infringement which is also costly. As a boost for the technological field, certain innovation is not patentable because they are regarded as basic idea in the industry. This has also eliminated unnecessary legal battles among technological firm, because these ideas are ground for other innovations.

Technological firms nowadays have invested heavily on research and development to stay ahead of their competitors (Merges, Menell, & Lemley, 2003, p.95). In addition to that the research and development can identify an idea patented by a competitor and build on it to develop new innovations for their advantage. Research and development in technological field plays a critical role in ensuring a firm does not infringe other firm’s patent right thus face legal battles. Firms have established a monitoring system to aid in changes in the market as well as the industry (Bainbridge, 2009, p.49). Research and development depends on this system to build their innovation which will meet the needs of the target market. Infringement of their patented right is not ignored bearing in mind the case of Apple Inclusive versus Samsung, made firms to be on high alert to protect their patented right. Therefore, the monitoring system established plays the role of monitoring infringement of a firm’s patent right and raises an alarm on any suspicion for investigation to be conducted.

Companies in the technological industry understood the closeness in their products and services. This was the primary lead to the patent litigation, thus firms nowadays contracts other firms to perform other services, which a company believes that if it engages on it then it will be vulnerable to patent infringement. For instance, Toyota Corporation contracted Nuance Communications for an in-car Voice communication technology for its automobile. It is not that Toyota Corporation was not in a position to make that technology, but the chances of its team infringing patent on that technology is high and risky.

Conclusion

It is indisputable that innovation is valuable in the economy growth and development, and thus it has to be protected. Therefore, the establishment of intellectual property right has been a great milestone in enhancing and motivating innovation. The case between Apple Inclusive and Samsung just represents other litigations that arise due to infringement of intellectual property right of different firms. Infringement of intellectual property among firms is influenced by the competition within a given industry.

Therefore, both Apple and Samsung need continuous upgrade of their product software at the same time checking the progress of their competitors (monitoring system); this will reduce instances of intellectual property infringement.