Patent wars end with a whimper as Apple-Samsung fizzles

Apple's latest courtroom drama fizzled, with the company winning a verdict against Samsung that didn't even come close to paying its legal bills. Is it time for Apple to end its proxy war against Google's Android?
Written by Ed Bott, Senior Contributing Editor

When the definitive history of Apple is finally written, it will be filled with courtroom scenes. With and without Steve Jobs, Apple has never been afraid to haul its rivals into court and accuse them of stealing its ideas.

The most recent episode in this never-ending courtroom drama is Apple’s victory last week over Samsung. The long-running series of patent infringement suits began in 2011 and shows no sign of ending soon. In the most recent verdict, a jury saw fit to order Samsung to pay Apple $120 million for illegally copying some of Apple’s smartphone technology.

That would be a lot of money for you or me, but it's chump change for Samsung, and the verdict is a profound disappointment for Apple.

Apple-Samsung battle turned out to be a dud. Image: iStockphoto.com

It’s reminiscent of another long-running Apple legal adventure from a different era, but the outcome looks like it will be completely different this time.

More than 20 years ago, after kicking out Steve Jobs, Apple filed a copyright-infringement lawsuit against Microsoft and HP. The company alleged that Windows and HP’s New Wave desktop shell for Windows illegally copied the Mac’s look and feel.

That lawsuit, Apple Computer, Inc. v. Microsoft Corp., went on for four years and ended in a convincing defeat for Apple. In a preview of the current dispute, the court ruled, "Apple cannot get patent-like protection for the idea of a graphical user interface, or the idea of a desktop metaphor [under copyright law]..."

That defeat became part of Apple’s DNA. And when Steve Jobs returned to Apple, he made sure the company patented every page of every engineer’s notebook. At the launch of the original iPhone in 2007, Jobs famously showed off the new device’s touchscreen, ending with this pointed remark: “And boy, have we patented it.”

Those patents, and some related ones associated with the iPad, are at the heart of Apple’s case against Samsung.

But there’s one crucial difference between the acrimonious 1990s-era argument with Microsoft and the current battle with Samsung: Microsoft was willing to negotiate.

When Windows 1.0 was released, Apple complained that it was a little too much like the Mac. In response, Bill Gates and Company sat down to negotiate. In 1985, they signed a license agreement with Apple that turned out to be key in the later copyright-infringement cases. (It’s not the first time Bill Gates negotiated a deal that turned out to be even better for Microsoft in the long run than it looked at first blush.)

And in 1997, when Steve Jobs returned to a bloodied and fiscally unsound Apple, the first thing he did was cut a deal with Gates to end all the litigation. The deal put cash on Apple’s balance sheet. It came with a commitment from Microsoft to support the then-struggling Mac with its flagship Office suite. And it included a broad cross-licensing agreement between the two companies that made future lawsuits unlikely.

That deal was accompanied by a rare glimpse at a conciliatory Steve Jobs. When Bill Gates appeared on a giant video screen while Jobs was onstage at the Macworld Expo tradeshow, Jobs told the crowd: "We have to let go of a few things here. We have to let go of the notion that for Apple to win, Microsoft has to lose."

Samsung, on the other hand, pointedly turned down repeated offers to license Apple’s technology, according to an excellent recap of the Apple-Samsung conflict in the latest issue of Vanity Fair.

Samsung’s response was basically, “You want to negotiate? Great. We’ll do it in court. It’ll cost you billions and you’ll wind up losing money in the long run.”

And you know what? They’re right.

These days, lawyers are the only ones who win in patent lawsuits.

Every player in the elite levels of the technology marketplace has loaded up on patents. Some are homegrown, some are acquired. Some are purchased in bulk, like the cache of smartphone patents that Google acquired when it acquired Motorola Mobility and kept when it sold the hardware business to Lenovo last year.

Samsung has its own cache of patents. Lost in the headlines of last week's verdict is the dmall detail that the jury found Apple guilty of infringing a Samsung patent and ordered them to pay $158,000 (that's thousands, not millions) in damages.

Patents are messy and confusing and expensive to defend. Small companies are occasionally able to pull off a David and Goliath victory, like the one Eolas won against Microsoft for a patent that was eventually invalidated.

Non-practicing entities like Nathan Myrhvold’s Intellectual Ventures are also able to work the system, buying up patents and then working out licensing deals with companies that decide it’s easier to pay up than to fight. (Nest, later purchased by Google, is a famous example.) Based on that behavior, Intellectual Ventures and similar companies get branded as “patent trolls.” The characterization is, arguably, spot on.

But in the elite circles of tech — the ones inhabited by Apple and Google and Microsoft and Amazon — these suits rarely result in a knockout punch. Microsoft and IBM long ago settled on a defensive strategy for patents, one that involves broad cross-licensing agreements with their rivals aimed at specifically avoiding this sort of courtroom drama.

Indeed, many of the accusations leveled at Samsung in the latest trial should really be aimed at Google’s Android, which has freely cloned features from Apple, so far with impunity. Google even paid some of Samsung’s legal bills in the current round of trials, suggesting it’s well aware of its behind-the scenes role.

Before his death, Steve Jobs infamously told his biographer, Walter Isaacson, of his loathing for Android. In another of Apple’s many lawsuits, this one against Motorola Mobility, which had recently been purchased by Google, the judge allowed Motorola Mobility’s lawyers to use his angry words in court.

In the biography, Jobs is quoted as saying, "Google, you f***ing ripped off the iPhone, wholesale ripped us off." And he promised, "I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong. I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this."

Four years later, Apple has even more billions in the bank, but so does Google. And all-out war between the two companies isn’t likely to result in destroying Android, even if it does succeed in transferring some dollars from a bank in Cupertino to one in Mountain View.

If that lawsuit does come to pass, it will probably make for high drama, but once again the lawyers will be the only winners.

Update: For those who are curious about the amount of legal fees in the battle between Apple and Samsung, Kurt Eichenwald in his thorough piece for Vanity Fair estimates that the two sides have spent a total of more than $1 billion so far. And the war is far from over.

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