October 08 2012

Apple vs. Samsung: Can the Consumer Win?

On 24th August this year Apple won $1.05b in a lawsuit against Samsung for patent infringement. This is just one stage in an ongoing battle between the two companies over intellectual property rights. Samsung challenged the verdict and have recently retaliated by extending their counter claims to include the iPhone 5 . It appears that the war between them is likely to rage on.

Courtesy of Geek.com

What does this mean for us, the consumer? If the situation continues with a constant back and forth of claims and counter claims then we might lose interest because it doesn’t seem to have any direct effect on us. Why should we care if one mutli-billion dollar company has to pay another a billion dollars?

We should care if we want newer designs, more choice and more innovative mobile phones. Here’s why: intellectual property patents, which are the subject of such disputes, are designed to protect ideas. They protect the investments made in the generation of these ideas. New ideas lead to new innovations and as consumers we benefit from new innovations because they provide us with more choice and better products. The Apple/Samsung dispute raises the issue of whether these same intellectual property patents can sometimes stifle creativity and innovation instead of protecting them.

US Judge Richard Prosner recently claimed that the US system of patent protection can be “excessive" and many commentators have questioned the relevancy of intellectual property patents in a digital age due to the incremental nature of technological advances. Some go a step further and claim that through preventing imitation, patents prevent innovation. This is the philosophy of highly popular open source systems which are owned by no-one and freely available. According to this side of the argument patents create barriers to competition and perhaps Steve Jobs would agree having once expressed the sentiment “good artists borrow, great artists steal”.

It is a problem if patents stop acting as incentives for companies to invest in R&D and instead shelter companies from industry competition. Competition is good; it is what drives business forward. Industries develop and grow through companies learning from each other and building on each other, if they don't - or indeed can't - do this then progress is slowed and the consumer loses out. However, it has been a long time since phones just phoned and if additional functions are recognised as an industry standard they can be protected by essential patents.  These are licensed to competitors on ‘fair and reasonable terms’ in order to prevent barriers to innovation and competition.

But it is the presentation of such functions and their interaction with users that forms focus of recent disputes. Apple’s legal claims against Samsung are focused on physical design, visual design and features such as ‘scroll-down and bounce up’ or ‘tap to zoom’. This is where the other side of the argument surfaces: patents - even if excessive - force companies to invent different approaches to products in order to compete. This type of competition is arguably more valuable because it creates new ideas. Different user interfaces may introduce switching costs to consumers in terms of time spent learning to navigate a new handset and different software complicates app designing, but they do provide the consumer with a real choice between alternative products.

We need to find the best way to protect ideas, promote competition and create incentives for companies to keep producing new, exciting, cutting edge designs. Perhaps patents - at least in their current form - are not the best way to do so. The Apple vs. Samsung case is so complicated that it may never be fully resolved but spending large amounts of money, time and effort in court doesn’t seem the most efficient way to try.

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