Ap­pleWorld

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Af­ter a par­tic­u­larly lengthy pe­riod of dis­agree­ment over the de­sign of the Sam­sung Galaxy, Ap­ple and its ri­val jointly an­nounced: "This agree­ment does not in­volve any li­cens­ing ar­range­ments, and the com­pa­nies are con­tin­u­ing to pur­sue the ex­ist­ing cases in US courts.” This means claims are be­ing aban­doned in Aus­tralia, Ja­pan, South Korea, Ger­many, Nether­lands, the UK, France and Italy.

This fol­lows years of lit­i­ga­tion between the com­pa­nies in courts in the UK, Ger­many, US, Korea, Ja­pan and be­yond.

The dis­pute between the two cor­po­ra­tions be­gan when Ap­ple found Sam­sung’s Galaxy de­vices to “slav­ishly im­i­tate” its own iOS de­vices, a point it later won in the US courts. De­spite this par­tial vic­tory, both firms have faced re­peated pres­sure from judges to find a set­tle­ment to their dis­pute, rather than nav­i­gate their dis­agree­ment through the le­gal sys­tem.

While nei­ther firm has achieved de­ci­sive vic­tory in any ju­ris­dic­tion, the long-stand­ing lit­i­ga­tion has called into ques­tion the foun­da­tion of the en­tire patent sys­tem in an era de­fined by fast-

mov­ing tech­no­log­i­cal in­no­va­tion. Ap­ple se­cured key vic­to­ries in the two Cal­i­for­nia suits, in­clud­ing a $930 mil­lion verdict in 2012 and a $120 mil­lion fine against Sam­sung this year.

Sam­sung’s at­tempt to de­fend it­self with claims that Ap­ple has used patents the Korean firm had pre­vi­ously cho­sen to make avail­able on non­par­ti­san ba­sis to all com­ers within in­dus­try stan­dard 3G patent pack­ages, has seen Sam­sung fall foul of com­pe­ti­tion reg­u­la­tors, who have de­clared that de­fence in­valid.

Ear­lier in June, Ap­ple and Sam­sung reached a deal to aban­don both firms’ ap­peals against a US In­ter­na­tional Trade Com­mis­sion de­ci­sion that im­posed an im­port ban on some older Sam­sung phones. In a re­lated move, Ap­ple and Google (de­vel­oper of the An­droid OS) agreed to aban­don on­go­ing law­suits that re­lated to the Google-owned Mo­torola Mo­bil­ity.

The dis­agree­ment between Sam­sung and Ap­ple is deep. Ap­ple has re­placed Sam­sung as its pri­mary com­po­nents and dis­play man­u­fac­turer, which has im­pacted the prof­itabil­ity of the Korean con­glom­er­ate’s pro­ces­sor-mak­ing di­vi­sion.

Looks bad on pa­per…

The var­i­ous le­gal cases have un­veiled a huge quan­tity of in­ter­nal com­pany doc­u­ments, much of which con­firm Sam­sung was in­tensely fo­cused on in­tro­duc­ing a smart­phone that matched the iPhone.

With their re­la­tion­ship on the rocks, it would be a mis­take to as­sume the de­ci­sion to leave fi­nal judg­ment of Ap­ple’s ac­cu­sa­tion that Sam­sung has copied its prod­ucts to the US means per­ma­nent peace. Speak­ing to Bloomberg, law pro­fes­sor Michael Risch warned

“Ap­ple and Sam­sung have no time to waste and it’s time to get back to work” Lee Se­ung Woo

this could mean both par­ties are sim­ply “tak­ing a breather be­fore the next skir­mish.”

The bat­tle between the two isn’t con­fined to the courts. Ap­ple’s forth­com­ing iPhone 6 is al­ready the most de­sired smart­phone among 22% of Chi­nese con­sumers, while 40% of US con­sumers plan­ning a smart­phone pur­chase said they were “some­what” or “very” likely to buy one. Sam­sung’s high-end smart­phone sales are rel­a­tively weak – sales of its top-of-the-range de­vice com­pete with those of Ap­ple’s “failed” iPhone 5C. Huawei, LG and oth­ers, mean­while, are dam­ag­ing sales of Sam­sung’s low-end de­vices.

“The whole in­dus­try paradigm is chang­ing,” IBK Se­cu­ritues an­a­lyst, Lee Se­ung Woo, told Bloomberg. “Ap­ple and Sam­sung have no time to waste and it’s time to get back to work.” Mean­while, the iPhone’s US share of smart­phone sub­scribers re­mains rel­a­tively con­sis­tent at 41.4% (comS­core) while Sam­sung re­mains near 27%, mostly buoyed by low-end de­vice sales. Ap­ple prof­its eclipse any­one else in the in­dus­try and smart­phone sales are once again flat as we await the new iPhone. Ev­ery user met­ric seems to show Sam­sung has failed to achieve the kind of cus­tomer sat­is­fac­tion rat­ings Ap­ple has on record. This means that peace between the two firms re­flects a dif­fer­ent kind of vic­tory. It’s pos­si­ble, at this stage of in­dus­try evo­lu­tion, it mat­ters less Ap­ple pre­vails in the courts than it has pre­vailed in the in­dus­try. Af­ter all, the court cases serve to il­lus­trate the lim­i­ta­tions of its com­peti­tor’s in­no­va­tion in the sec­tor. The big­gest test in the near future will be the re­cep­tion re­ceived by iPhone 6.

Im­i­ta­tion is the high­est form of flat­tery and Steve Jobs did his best to keep up.

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