The Infringement of Patents between Apple and Samsung - Case Study Example

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Introduction

The cases of infringement of patented rights have become commonplace. According to the Oxford dictionary, product infringement is the commission of an act that is outlawed with regard to a copyrighted invention minus seeking the permission of the copyright holder. Whilst this definition is the most basic one, it has been indicated to differ with the jurisdiction. Nevertheless, the phenomenon involves the selling of a copyrighted product with the jurisdiction notwithstanding. In numerous nations, a product can only qualify to be patented if it is used for commercial purposes or it is intended for such usages. The claims of the copyrighted product influence the degree of the innovation’s patent or even the extent to which the product is protected. In other terms, the claim tells the public and other players in the industry everything that is not permitted when it comes to the usage of a product. The most famous case of the recent past mired two of the behemoths in the technological arena involves Samsung and Apple. In this paper, the two are going to form the basis of our analysis, which will include the legal aspect and the manner in which the strategies of the firms have been affected. In addition, the manner in which the dynamics of the industry and its structure operate will be discussed.

The Infringement of Patents between Apple and Samsung

There have been a series of lawsuits between Samsung and Apple Inc. with regards to the design and innovation of tablet computers and smartphones (S.Nam, C.Nam, & 2015, p. 187). Statistics reveal that the two companies are responsible for almost half of the smartphones that have been so far manufactured in the world. The first case between the two companies started in the year 2011, when Apple started petitioning Samsung regarding patent infringements. The start of these cases was the beginning of various litigations between the two companies in several countries. The two companies were involved in almost 49 lawsuits in over ten countries across the world. The most significant and seismic court case involved the US case that was won by Apple (Chang et al. 2014, p. 2997).

The genesis of the legal battles in the US began in the year 2012, a few months before the introduction of iPhone. The company filed a suite to protect four of its designs, which were covering the rudimentary shape of the phone. These patents were similarly followed by another suite covering the design patents of numerous graphical user interfaces of the phone. These filings, together with the company’s utility patents, rights regarding trade dress, and registered emblems formed the basis of Apple’s lawsuit against Samsung. The company sued Samsung, which was supplying it with components making allegations in its lawsuit that numerous of the defendant’s Android products such as Samsung Galaxy Tab, Nexus S, Galaxy S 4G, and Epic 4G had infringed upon the intellectual property rights of Apple (Lee 2013, p. 300). The rights included Apple’s style, user interface, trademarks and the design. During the proceedings, the company submitted a side-by-side comparison of two products from the respective companies in order to fortify their claim.

In this first trial, the jury reached the conclusion that Samsung had indeed infringed upon the intellectual property of Apple. The court had discovered that Samsung had used willful ways to infringe on the design and utility patents of Apple and that it had adulterated the trade dresses of Apple that was connected to the iPhone (Lim et al. 2015, p. 1). The jury concluded that Apple had indeed been aggrieved by Samsung’s infringement on its intellectual property rights. As a consequence, the company was awarded a $1.049 billion compensation that Samsung was obliged to pay. However, when Samsung tried to counter this suit, they were awarded zero compensation further reinforcing the fact that it had infringed on the patent rights of Apple by using the company’s mobile product’s features on its own products. The ruling and the confirmation of intellectual property infringements in this case has seismic effects on the dynamics and structure of the industry and the various strategies that the two companies have adopted ever since.

The Legal and Strategic Operations of the Firms

After the above-mentioned case, Apple subsequently filed more cases against numerous technological companies in various countries. According to the cases that Apple filed, it disputed the fact that these particular companies had stolen their android operating system that was originally used for the Apple iPhone. Experts in the field reveal that this legal approach from Apple was motivated from the victory that it secured in the United States courts. The particular issue that is being covered in these litigations by Apple, especially the ones that involve Samsung includes the “bounce-back effects” of its operating system known as iOS (Bajwa 2014, p. 77). The claim herein is such that companies such as Samsung that are producing products with android operating systems are infringing on Apple Inc.’s bounce-back effect copyright.

Nevertheless, the offensive strategy that Apple Inc. has adopted that involves litigations against Samsung in various jurisdictions has motivated Samsung to retaliate in the same vein. For each and every accusation of bounce-back effect infringement that Apple makes, Samsung has been countering with their own allegations that the patent held by Apple was not valid (Park 2014, p. 351). In addition, Samsung has been making counterclaims to the effect that Apple Inc. has been infringing on its patent rights regarding various aspects of the mobile telephony industry, especially the ones to do with the design and iOS of its innumerable smartphones and tablets. Therefore, Samsung has adopted a strategy that will see both companies spend a substantial amount of money in the courts, which will not be beneficial to wither one of them in the long-run given the nature of these costs.

When it comes to the strategic operations of Samsung, the company prefers the vertical integration in a manner that is similar to all East Asia companies. In addition, the Samsung Corporation prefers to produce a plethora of products into the market. Samsung has its presence in a couple of market including cellphone carriers, smartphones, medical electronics, tablets, appliances, cameras, gaming systems, sensors, flat panels and many more (Lee 2013, p. 301).

The company solely relies on its vertical integration strategy so as to overcome the competition from Apple. Indeed, this strategy is the one that offers it the competitive advantage in the market. Whilst Apple Inc. imports a lot of materials to manufacture its components from across the globe, Samsung is not indebted to anyone. While this may not be a magical formula given the manner in which Nokia was steamrolled by Apple, it has nonetheless permitted Samsung to regulate certain logistical certainty in a manner that Apple can only imagine.

In addition to the vertical integration, the company has put plans afoot to formulate mergers and acquisitions with other like-minded players in the industry so as to boost its global sales. The mergers and acquisitions together with partnerships, if actualized, will be unprecedented and of a historic nature given the history of the industry (Cusumano 2013, p. 30). By targeting to bring other companies on board, Samsung will be hoping to overtake Apple as the world’s finest smartphone market player.

Apple on the other hand has focused on outsourcing, design and integration strategies to starve off the competition from the likes of Samsung. The fact that it is the more focused company of the two is accentuated by its target research, product design and target marketing. The company excels on integration and design without a miniscule level of risk (Cusumano 2013, p. 30). All of their products entail programs that are very complimentary to themselves but not with their competitors’ gadgets. This has ensured that its clientele base will continue to purchase its products since it will be difficult for them to switch to the competitors. Statistically speaking, close to three-quarters of the company’s revenues are collected from its iPhone products. Unlike Samsung, the company is dependent on a single product.

Apple has also been indicated of using other company’s strategies to improve its products. According to literature, it does not act first. The company allows other companies such as Samsung to invest in R&D and initial market development before they can swoop in and better them (S. Nam, C. Nam, & Kim 2015, p. 187). This was the whole concept that they applied when it came to the production of their flagship technological device known as the iPod. The same case has applied to their other products. However, Apple Inc. ensures that all these productions are done within the confines of the law. The management of Apple Inc. has inculcated to its employees that all the technological innovations and revolutions that are undertaken by the company are done with cognizance with the intellectual property rights of its competitors so as to avoid damaging lawsuits.

Effect of the Case on the Subsequent Strategy of Each Firm

The high-profile case has obviously had impacts on the subsequent strategies that each firm adopted. While initially Samsung modeled its products around the ones that Apple was producing, which was the genesis of its legal woes in the United States, the company has so far shifted the manner in which it produces its smartphone products (Park 2014, p. 1). The company has taken a different approach compared to Apple. Whereas it initially used to produce single products within a certain time-period that does not apply nowadays. Samsung has been rapidly producing a variety of gadgets. This production has enabled the firm to determine the response of the company to its multifarious products, which has subsequently permitted it to kill failures and maintain success. In addition, from the moment that they were hit with the jury’s verdict, the company has moved away from offering lesser and cheaper iPhones (Chang et al. 2014, p. 3001). It has differentiated its products and itself by offering its customer bases with gadgets that possess larger screens as well as different features. Indeed, the completion of the case and the verdict that was pronounced enabled Samsung Company to change its tact.

However, the case did not make Apple change its strategy. Since the ruling was in its favor, there was enhancement of the company’s reputation amongst consumers since it was regarded as producing original products in comparison to Samsung (Lee 2013, p. 303). As such, the company maintained the design of its iPhone products and even the production schedule. Unlike Samsung, Apple still produces limited editions of its various iPhones so as to create demand amongst customers.

Impact of the Case on the Industry Structure and Dynamics

The structure and dynamics of the mobile telephony, particularly the Smartphone industry have significantly changed since the verdict on this case was made. For starters, the level of competition has intensified not only between Samsung and Apple but also amongst other players in the industry. While initially the two companies were responsible for a larger share of the smartphone industry, recent statistics reveal that their dominance is beginning to fall (Lee 2013, p. 305). Other players such as HTC, Sony, and Infinix are making inroads into the market since they have the capacity to provide different products to the consumers. However, there has been particular interest in the sense that the case has enabled Samsung to muscle in on Apple in terms of market shares. In fact, it has overtaken the Apple. Initially, Apple Inc. was the outright leader with regards to the volume of smartphone units sold. This is no longer the case as Samsung used the case’s period to eliminate its cheap Apple-ish products from the markets and produce its own innovative devices. Currently, the market shares stand at 31% and 15.6% for Samsung and Apple respectively (Cusumano 2013, p. 28).

In addition, the lawsuit was damaging to the two companies. Other players such as Motorola, HTC, Sony and so forth seized the moment to enter the smartphone markets. As a consequence of the entry of these new players, the smartphone industry is awash with products that are quite economical and affordable to the low-end consumers. Indeed, even the prices of Apple’s iPhone and Samsung’s Galaxy products have had to reduce because of the intense completion that is being offered by these new entrants. According to Cusumano (2013, p. 31), the legal battle between Apple and Samsung has opened doors for other players to swoop in and erode the market dominance of the two players. Therefore, as a consequence of the lawsuit, the market structure has been altered permanently to the detriment of the two companies.