Professional Documents
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doi:10.1145/2398356.2398366
Michael A. Cusumano
Technology Strategy
and Management
The Apple-Samsung Lawsuits
In search of a middle ground in the intellectual property wars.
scenario:
The Cadillac Automobile Company, founded in 1902, is granted a set of patents in the U.S.
and then worldwide that define
the design and basic functionality of
what becomes the modern automobile: four wheels, a gasoline-powered
internal combustion engine, a closed
steel body, and a round steering wheel.
Then Henry Ford comes out with the
much less expensive Model T in 1908
and quickly gains 80% of the market.
After a brief lawsuit, a jury finds that
Ford has violated Cadillacs patents and
must cease production as well as pay extensive damages to Cadillac, now part of
the General Motors Corporation.
Two additional scenarios might
have unfolded. One could be that patent protection for Cadillac stimulates
further innovation. Competitors develop automobiles with batteries as
well as fuel cells powering electric motors, high-tech materials for convertible bodies, and joystick controls that
resemble those of modern-day video
game consoles. The intense competition spurs on advances in manufacturing methods as well, leading to
magine the following
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communicatio ns o f th e acm
As many as 250,000
patents are filed
that cover the design
and functionality
of the iPhone and
other smartphones.
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Case Study
The basic facts of the case seem
straightforward. The jury awarded Apple $1.05 billion in damages (which the
judge might triple because Samsung
was found to have willingly copied
Apple). The lawsuit covered some two
dozen older devices mostly sold outside the U.S., not the current models
Samsung is pushing.4 Apple will have
to go after the newer models and other
potential patent violations in separate
litigation, which it is doing. In fact, as
many as 250,000 patents are filed that
cover the design and functionality of
the iPhone and other smartphones,
and there are already dozens of lawsuits and countersuits between Apple
and Samsung in 10 countries.6
Samsung has already fared better overseas. A Japanese court found
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customers continue to prefer Android phones that look and feel like
the Apple iPhone. Not surprisingly,
Windows phones as of this writing
had a mere 3% of the market.1
If more court decisions come down
in favor of Apples design patents, it is
likely the iPhone will remain distinctive. But it might also remain a minority
platform at the higher end of the market, like the Macintosh in past years or
the once-revered Cadillac. Maybe this
is the best scenario for a company that
wishes to maximize its profits. But is
this the best scenario for consumers?
Maybe not.
Intellectual Property Protection
The broader issue, of course, involves
the pluses and minuses of intellectual property protectiona hotly debated topic for decades. On one side
are those who have arguedsuccessfullythat companies will not have
sufficient incentives to invest in research and product development if
they are not allowed to capture the
value generated by their investments
for some significant period of time.
On the other side are those who argue
that intellectual property protection
actually hurts innovation at a broader social level. Patents, because they
grant temporary monopolies, might
restrain the ability of other companies or individuals from making improvements or disseminating the
technology to a broader user base.a
Other research has found that patents issued in a particular area (for
example, around a specific protein
molecule in biotech research) can
have a chilling effect on further
research in this area. Patents in this
scenario can actually create disincentives for further research and development.7 In general, though, most
governments have agreed with the
former argument and that is why they
CM
MY
CY
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If more court
decisions come down
in favor of Apples
design patents, it is
likely the iPhone will
remain distinctive.
viewpoints
tant to disseminate as broadly as possible. Recall that Apple once sued Microsoft in 1988 for copying the look
and feel of the Lisa and Macintosh
graphical user interface (GUI). Apple
had engaged Microsoft in the early
1980s to create versions of Word and
Excel for the Macintosh, which came
out in 1984. From this experience, Microsoft learned how to design graphical softwaresimilar to how Samsung
learned about the details of the iPhone
and iPad by being the largest supplier
of the microprocessors to Apple.5 Microsoft had licensed some GUI design
elements for Windows 1.0, a layer it
built to sit on top of DOS. But Microsoft continued to use Apples design
elements in later releases of Windows,
which Apple challenged. Apple lost
this case at least in part because it had
licensed and copied aspects of the GUI
from Xerox, which had done the pioneering work at its research lab, Xerox
PARC. In its defense, Microsoft also
argued that a company should not be
able to protect something as vague as
a look and feel.b
So while Apple was the first to
commercialize the graphical user interface, the court did not grant Apple
a monopoly on the general design
(though it made Microsoft change its
trash can icon because this copied
the Macintosh garbage can too explicitly). Microsoft eventually made the
GUI ubiquitous by broadly licensing
Windows to many PC manufacturers,
which brought down prices. The Macintosh remained expensive (the Cadillac of PCs?) and became a niche
product, where it remains despite
a recent revival in sales. The iPhone
and the iPad have turned Apple into
the worlds most valuable company,
but Microsoft still generates remarkable profit levels (see Reflecting on
the Facebook IPO, Communications,
Oct. 2012). More importantly, thanks
mainly to Microsoft and Windows PC
manufacturers, the Macintosh-style
graphical user interface became the
dominant way to use a personal computer, elevating billions of people beb Apple Computer, Inc. v. Microsoft Corporation,
35 F.3d 1435 (9th Cir. 1994); http://bulk.resource.org/courts.gov/c/F3/35/35.F3d.1435.9316883.93-16869.93-16867.html. Also see S.
Manes and P. Andrews, Gates (Doubleday,
1993), especially pp. 357364 and 437438.
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