Patent infringement or the commission of an act with respect to the patented product, without obtaining the permission of the patent holder, is an offence in most countries including India. In April 2011, the ?iPhone? company, Apple, filed a patent infringement lawsuit for seven of its patents against the South Korean smartphone giant, Samsung. Apart from patent infringement, the lawsuit complained that Samsung had made false claims of origins of its product characteristics and had enriched its features unjustly by copying Apple?s ideas and hence was liable for unfair competition. Last Saturday, the court in San Jose, California, found that Samsung had indeed infringed on six Apple patents and, as a result, 21 of Samsung?s products are now likely to be banned in the US.
The first of the six patents that the nine-member jury found violation on was the innovative ?pinch to zoom? capability of iPhones, which allows users to zoom in or out by moving two fingers farther apart or closer together while touching the display. The second contravention is in the ?tap to zoom? patent which allows iPhone users to tap on the display to zoom. A third related violation is centring capability which centres the display at the tap-point. The fourth infraction is the patent on ?bounceback and rubber band effect?. When iPhone users scroll to the end of a page, there is a bounceback effect, as if a rubber band has been stretched and is rebounding. This effect ?generates fun? for the users and is patented by Apple, which the jury deems Samsung has trespassed. The fifth infringement was the ?one-fingered scrolling? since Apple was the first company to simulate the effect of a computer mouse scrolling on a touch-screen display. The sixth encroachment is the ability to distinguish between single against multiple touches. iPhone was the first smartphone to recognise multiple touches. Till then all a smartphone could recognise was either single touches or at max gesturing. The only one claim on which the jury was not convinced was that Samsung had violated Apple?s patent on the physical designs of the iPhone and iPad, and hence Apple could not succeed on that account.
Apple engaged some of the best patent lawyers to demand $2.5 billion from its biggest smartphone competitor. As evidence, Apple submitted side-by-side image comparisons of iPhone and Samsung devices to illustrate the alleged similarities in icons for apps and in design. In early 2012, Samsung retaliated by filing a countersuit seeking $399 million in damages. Samsung, through the countersuit, claimed that Apple had infringed on three of its utility patents, like sending email and multitasking. Consequently, Samsung claimed that iPhone and iPad had utility patent infringements and therefore demanded $14.40 per Apple device sold.
During the trial, the nine-member jury held that Samsung had ?wilfully infringed? on Apple?s patents in creating a number of its devices and ordered it to pay Apple $1.05 billion in damages. It was this determination of very ?wilful infringement? that enabled Apple to snag the considerable amount as damages. Every single contention made by Samsung in its countersuit against Apple fell flat, leading to the failure of its $422 million claim for damages. The dense trial involved multitudes of different patents, over 30 allegedly infringing devices and wide-ranging claims and counter-claims on design ownership in which strong arguments were made by both sides.
The consequences of this decision will be across-the-board for Samsung products as it might very well be forced to pull out ?infringing? products from the market. This decision means bad news not only for Samsung, but also for Google, the maker of Android operating system, which powers Samsung smartphones. All competitors in the smartphone market will, from now on, be extremely wary of creating any device that even vaguely resembles an Apple product. The decision may prove to be a bane for the consumers in the short-term as competition between smartphone makers in the market will be greatly stifled by the precedent now set.
What lies in the future? Samsung has issued a statement declaring that it will seek to overturn the trial decision, by pursuing the case all the way to the Court of Appeals. Labelling the jury decision as ?a loss for the American consumer? which would stifle innovation and push up prices, it seems Samsung is not prepared to give up so soon.
The implications of this decision are wide-ranging as it sets a precedent for future patent infringement cases. It will inevitably encourage other companies to file patent infringement lawsuits if they find that their ideas have been copied. In the long run, this means good news for the consumers, even though in the short run the number of product options available would be greatly curtailed. For instance, most of the phones and tablets currently look quite similar. Since iPhone and iPad have succeeded like no other phone and tablet, all competitors have tried to design products keeping that as the benchmark and have clumsily tried to innovate with the primary aim being to avoid crossing Apple?s patent. Given this verdict, most manufactures will now try to innovate in its true sense. Eventually, this would have implications not just in the smartphone industry but in all sectors that thrive on innovation. It is a decisive win for innovators and it may spur others to think original which should be good news for consumers.
The author, formerly with JPMorgan Chase, is CEO, Quantum Phinance
