February 18, 2013

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War of the Electronic World- The Beginning!

- Debolina Partap, AVP & Head Legal [ Wockhardt Group. ]
- Hiral Vimadalal, Executive Legal and IP [ Wockhardt Group. ]

Hiral Debolina

Samsung Electronics Co unveils the second generation of its popular Galaxy Note phone-cum-tablet at Europe's biggest electronics show in Berlin, as the South Korean firm comes under pressure to innovate after losing a US patent battle with Apple Inc. This is called innovation not losing out and heads on war.

The original iPhone was so revolutionary that the competition was forced to outright infringe Apple's IP in order to be remotely competitive. The real question going forward is can Apple get a blanket ban on all phones that use:

  • pinch-to-zoom
  • scroll bounce-back effect
  • icons
  • app store

After three weeks of testimony, the federal trial pitting Apple Inc. and its iPhones/iPads against Samsung Electronics and its Android phones/tablets has resulted in a big win for Apple on August 24, 2012. As a result Samsung has acquired losses of $12 billion market value, a possibility of a sales ban in the US market and a reputation for copying and cheating.

Most of Samsung’s Android smartphones, were found to be infringing upon many of Apple’s design Patents. Apple successfully proved that Samsung had copied its utility features, screen, shape, “look and feel” as also the interface and several essential features. The Samsung Galaxy Tab was found not to be infringing the Apple iPad. Apple produced a list of 20 Samsung devices, which infringed four industrial design patents, covering the look and feel of the devices, and three utility patents, which cover how the gadgets work

This lawsuit and the subsequent decision may have a negative impact on the strange relationship between Apple and Samsung. Samsung and Apple are competitors but they also have a very important business relationship. Apple is one of its biggest customers for phone components and Samsung is one of Apple’s biggest suppliers. The lawsuit happened after meetings between the two companies starting around August 2010 led nowhere. Over the past several months, Apple CEO Tim Cook has met with top Samsung executives to try to reach a settlement. The two sides were asked, by the judge in this trial, to talk once more by phone before the jury delivers its verdict. A Samsung lawyer said that the CEOs had spoken but did not come to any agreement.

A quick analysis of the case brings to light the sheer power of Patents and proves, once again, that Apple is indeed a pioneer in Software and Design Patents. Samsung, however, chose to differ (obviously) and filed a counter suit alleging that it was actually Apple, who had infringed on the design of its baseband chip, for which Samsung was eligible to be paid Royalty. Apple said Samsung would be entitled to 0.0049 for each chip based on FRAND (Fair, Reasonable and Non-Discriminatory) patent licensing terms.

This case along with all its claims and counter-claims is an eye opener for all companies that invest millions in protection of their Intellectual Property. It has also proved, once again, that the law serves those, who approach it with clean hands. This case has also reinstated the basic principle of IP Law "first to file, first to use".

IP Law deals with the mind and intellect. No one, including the best researchers and finest doctors has been able to capture the power of the mind or what goes on, up there. The law, being no exception, cannot protect the fluid ideas and thoughts which go on in our mind. Hence, for all Intellectual Property, the person who is first to apply for and use the idea in a tangent form is the original proprietor. This case has several grey areas, especially since Apple and Samsung, both faltered on proving the other’s patents invalid.

This case has been in the eye of the storm ever since both parties went to court, and the verdict is no different. The Apple supporters are of course overjoyed. However, few industry experts and insiders have claimed that this verdict is an abuse of law. In their view, few of Apple’s patents (such as colour and shape) are frivolous and should have been struck down as invalid. Apple’s patents are also being termed as monopolistic experts have stated that these patents may kill the expansion of the smart phone and tablet markets. Further, banning the sales of Samsung in USA is being termed as a foolish decision since many insiders and statistics reveal that Apple, without USA, is a weak brand.

Though many of the decisions made today are focused on the design of Samsung’s products, several of Apple’s software patents that were proven to be potent weapons, like double-tap-to-zoom, bounce scrolling and even the design of the iOS home screen are used Android-wide. This could potentially cause problems for Google and for other partners in the ecosystem. It’s definitely not a step backwards for Apple, though it is a step sideways for Samsung and perhaps even a chink in Android’s armor that Apple could potentially hammer away at.

On the other hand, Apple has been lauded for its revolutionary design and for putting in added dimensions in Smartphones. Apple’s patents have also been regarded as breakthrough and it is being said that the law is finally recognizing deeper aspects connected with Patenting software and design.This case sent out a message to all Companies across the world, FILE MORE DESIGN PATENTS and REGISTER MORE TRADE DRESSES.

These areas are relatively new and have been overlooked for sometime. However, with technological advancements at lightening speed and tough competition in the market, these modes of protection are most important. However, it is something that must be done by all companies and researchers working on products which are easy to infringe, especially in close market spaces.

Design Patents, unlike what most people feel are fairly uncomplicated since they don’t have long claims. Also, they are broad in terms of the protection they seek. It covers "an overall impression" of the look and feel of a product, according to many experts in the Apple vs. Samsung case. Due to the simple nature of the patent claim, they are easy to understand. Coming to the more important part, Design Patents and Trade Dresses make money, and lots of it! A significant fraction of Apple’s $1.05 billion damages award was for design patents and trade dresses. They protect IP that most people feel is non-existent. Apple showed its iPhone boxes and packaging as part of its trade dress. Who would have thought these little out-of-the-box-experience details could be intellectual property you could monetize?

Apple has indeed brought forth its revolutionary streak once again, by giving the world an IP judgment to swear and sending out a strong, loud and clear message to its detractors and infringers, that they will not tolerate any one, however big or small, stealing their ideas and ripping them off.

Disclaimer - This article captures the views of the authors and not of the Wockhardt Group.

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