Apple, Samsung, and The Value of Software Patents

on May 2, 2014

I tweeted shortly after the Apple vs Samsung verdict today that I didn’t believe this case was ever about money. It was about making a point. I concluded by saying the debate will now shift to whether that point was made or not. What is relevant is whether the trial, legal fees, and damages are worth it for another company to take the risk to willfully copy the patents of another company. Specifically in this case, software patents which we will come back to in a moment.

Apple has stood its ground and made their position clear — they will defend their patents vigorously. They did in this case and while the damages were relatively minimal, the point remains only a few companies in the world would and could even attempt to take the risk and willfully copy intellectual protocol.

For Samsung, it has paid off. I have no doubt in my mind the battle and damages (assuming they hold) were worth it for Samsung to leverage the copied IP to gain the market leadership position they attained. They took a risk. They also knew they had the bank account to survive any consequences. Not all companies can do this. This is why many take the route to pay a royalty fee to license technology they wish to use to the IP rights holder. As it stands now, Samsung is basically paying $6.40 per unit for the patents in which they infringed.

Benedict Evans made an interesting point in a tweet where he said:

This is a key observation and true to the extent that, by copying Nokia, Samsung gained their position as a market global market leader in feature phones. The difference with Apple was Samsung used the same tactics they did with Nokia against Apple to become a global market leader in smartphones. Seems there is a pattern.

What is interesting to me is the question of how valuable software patents are in the long run. If a precedent has been set around software patents, then we could see this situation happen more often. This was the argument for many who tried to make the point this trial was about money. If the damages were enough then, perhaps, that would be a detractor for companies who may be tempted to steal software innovations in the future. When I look at where we are still going from a big picture industry viewpoint, I believe we still have a great deal of innovation in software ahead of us. While some software patents are awarded much too easily, we should hope we have enough truly innovative software advancements ahead of us that can truly advance computing in meaningful ways. I’m curious what impact, if any, this will have on software patents and unique software innovations.

Ultimately, the point remains. While it is obvious this strategy worked for Samsung, it may not work or be worth the risk for many others. Apple has made it clear it will defend its original technology and many others will likely do the same. This was the point I believe this trial was about from Apple’s perspective. While it may not seem like it, I sense the point has been made.

What we can hope is Samsung’s pattern is unique to them. Hopefully other hardware OEMs –and future ones who don’t exist yet– will carve out their own path to become global market leaders by innovating in original ways.