Apple is on top of the world. It has enjoyed phenomenal success since the iPhone's debut in 2007. Each iteration sells better than the last — just look at the iPhone 5's 2 million in first-day pre-order sales. The company is all but printing money. And the iPhone is largely responsible.
Despite the incredible success of its mobile products, Apple insists upon entangling itself in a seemingly endless campaign of litigation, ruthlessly fighting to push patent-infringing products off store shelves and shake down competitors for licensing fees. Apple is back in court today to resume its fight with Samsung as the two sides meet in a San Jose courtroom for the first time since jurors told the Korean company to pay Apple $1.05 billion for essentially ripping off its design and user interface.
Apple certainly doesn't need the dough, but this was never about the money. And this is a war it must wage.
Apple is embroiled in dozens of patent suits with Android handset makers around the globe. Here in the United States, the company has declared war on Samsung. It has two cases against the Korean electronics giant, both claiming Samsung is infringing on multiple facets of Apple's intellectual property. To put it plainly, Apple says Samsung has blatantly copied the look and feel of the iPhone and iPad, its UI and multitouch technologies. A federal jury in San Jose ruled that 21 Samsung products infringed on Apple patents and told Samsung to pay up. The two sides will be in court today to discuss the verdict, a possible ban on Samsung products and whether the whole mess should be retried.
But wait. There's more. Apple has been bickering with Motorola Mobility, which Google purchased in May, since 2010 (one of the five suits was thrown out in November). And an ongoing IP battle with HTC also finally reached a conclusion through a confidential licensing agreement last month.
Come on. Is all this really necessary?
Yes. It is, even if the intellectual property back-and-forth sometimes seems pointless and is starting to make Apple look like a bully -- or worse, a monopolistic corporate Darth Vader akin to Microsoft in the late 1990s. To combat this, Apple must stick to fighting other major players (picking on someone its own size); being reasonable, and not vindictive, in its demands; and, most importantly, continuing to develop innovative products. That's key, because, ultimately, these lawsuits are all about innovation.
"A lot of people in the software world think patents are bad. Well, the reality is that in our country, if we don’t have the ability to protect our innovations, the future of America looks pretty grim," Christopher Marlett, CEO of intellectual property investment bank MDB Capital, said. "The last thing we have is our ability to innovate."
That was the entire point of Apple's opening statement in the epic Apple v. Samsung trial: It's easier to copy than innovate, and Samsung cannot be allowed to copy Apple's designs and inventions. Our patent system, however flawed, is supposed to protect and incentivize creative thought. If an individual, or company, can create a truly unique and useful product and someone else can simply copy it, thereby taking the inventor's heard-earned profits and recognition, there's no longer any point in innovating. That is why Apple has no choice but to sue.
"It would be a very, very bad idea for Apple not pursue legal action against competitors," Springs and Struts lead engineer and designer Colin Barrett said.
It would be difficult to overstate the scale of what's at stake here. IDC estimates 717.5 million smartphones will have shipped this year alone, and Gartner says we'll see 1.2 billion mobile device (smartphone and tablet) sold in 2013. Controlling the dominant platform has implications beyond the smartphone, which is becoming increasingly vital in today's society.
"So much of what we do in our life is done on a smartphone," Marlett said. "Whoever controls those eyeballs controls money. Longer term, these companies will want to be the dominant smartphone platform because it ripples through their business models -- in the case of Apple, it’s part of an ecosystem of laptops, tablets, and home entertainment."
The smartphone space is, unlike the software space, dominated by giants. When larger companies go after enterprising startups, it definitely comes across as predatory, like an NFL linebacker sacking a middle school quarterback. If it's just the big guys attacking one another, well, at least everyone's on fairly equal footing.
Companies like Apple, Samsung, and HTC have the boatloads of cash to finance aggressive litigation and aggressive R&D.
"Apple has enough money to fund both legal efforts and R&D, and I sincerely doubt there's any relationship between Apple's legal efforts and the quality of their products," Gartner analyst Charles Golvin told Wired.
Those legions of lawyers are indeed expensive. Each of those companies is spending tens, if not hundreds, of millions to keep competitors from incorporating even minor details into their products. Stanford University researchers estimate around $20 billion has been spent on IP litigation in the United States during the past two years. During the Apple v. Samsung trial alone, each side is estimated to have spent between $10 and $20 million.
So Apple might need to litigate to protect its software and hardware innovations, and it has the money to do that and continue developing novel products. All of this, however, overlooks one of its most valuable assets: its brand image. If the Apple continue charging down the path of litigation, it could tarnish its name in a big, big way.
"Twenty years ago, Microsoft was lambasted as the dark knight of PC world," Rob Frankel, branding expert and author of The Revenge of Brand X: How to Build a Big Time Brand on the Web or Anywhere Else, said. "Now because of Apple’s austerity, it's as if the brands are trading places in terms of brand perception. Apple becoming increasing domineering."
The company's image as a fortified walled garden isn't helping. Frankel thinks the Apple brand has been diminishing for two or three years, and the courtroom shenanigans aren't helping. "The lawsuits are just one more link in the chain," he said. "Apple's brand equity as the underdog is long, long gone."
At the least, it appears Apple is ease its litigious nature by reaching licensing agreements with Android handset makers. "I believe Apple is willing to settle — witness HTC — provided it believes that settlement reflects the value of their intellectual property," Golvin said. This is the way the patent system should function, after all.
What Apple really needs to do is demonstrate serious innovation, and soon. The iOS platform, compared to newcomers like Windows Phone, is growing stale. It is familiar, and elegant, but the navigation, its stagnant array of 5-year-old icons, and the look in general could use a major overhaul. The recent executive shakeup at Apple could indicate such a change is in the works.
Apple may have more money than many countries, and products even the pope would kill for. But with a few years of serious smartphone litigation under its belt and not all that much new to show for it, it's time to start resolving these lawsuits and move forward with what we all want: Better products.
