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Apple vs. Android: A courtroom war of attrition
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Apple’s sensible dividend
Steve Jobs »
A man walks past an iPad 2 advertisement in Shanghai February 23, 2012.
Credit: Reuters/Aly Song
By Dan Levine and Poornima Gupta
SAN FRANCISCO |
Tue Mar 20, 2012 1:47pm EDT
SAN FRANCISCO (Reuters) - Before his death, Apple Inc's Steve Jobs famously promised to go "thermonuclear" against smartphones running Google's Android software, saying they use technology ripped off from the iPhone.
The massive legal attack he launched, now in its third year, didn't destroy Android.
Instead, it's turned into a costly global war of attrition. In case after case involving dozens of patents, Apple has won small victories that force rivals into temporary retreat by requiring them to remove minor features from their devices. Apple has, in turn, lost some rounds and been forced to rework some of its products.
Two upcoming cases in the United States - one against Motorola and the other against Samsung - have the potential to strike deeper blows on either side. The trials involve the legal rights to the core technology behind smartphones and tablet computers and whoever loses could face large damages and increased costs. That could raise prices for consumers.
If Apple wins, Android manufacturers will have to come up with critical fixes or pay Apple a hefty fee to keep using its technology, according to several technology and legal analysts. Apple's foes, however, say the iPhone and iPad maker is just as vulnerable to claims it took ideas from other companies. Both Motorola and Samsung have countersued Apple.
At a January court hearing in the Motorola case, the judge suggested that, regardless of the outcome of the trial, neither side is going to achieve total victory.
"You're not going to shut down the smartphone," Chicago U.S. Circuit Judge Richard Posner told Apple's lawyer, according to a transcript. "They're not going to shut down the iPhone."
Apple declined to discuss its patent strategy and has claimed in the past that its competitors "slavishly" copy the iPhone and iPad.
The company has a larger share of the U.S. smartphone market than its rivals, thanks largely to the success of the iPhone 4S. Globally, however, Android devices outsell Apple. Android's global market share was nearly 50 percent, while Apple's iOS software, which runs its mobile devices, had about 19 percent in 2011, according to research firm IDC.
Apple began its global patent fight against Android in March 2010, when it filed complaints against handset-maker HTC Corp in federal court in Delaware and before the U.S. International Trade Commission. Litigation between Apple and Motorola broke out that October and Apple then sued Samsung in April 2011.
The week Apple sued HTC, Jobs told biographer Walter Isaacson he would "spend every penny" of Apple's then $40 billion cash pile on the Android fight.
"I'm going to destroy Android because it's a stolen product," Jobs said. "I'm willing to go thermonuclear war on this."
The company's cash has now grown to nearly $100 billion and Jobs's successor, Tim Cook, said on Monday that Apple would return some of it to investors as a dividend and buy back stock.
Google supplies Android to the smartphone makers for free, but has not been directly involved in the lawsuits because it does not make its own phone. Its pending acquisition of Motorola, though, will change that.
Among Apple's incremental victories so far is a German court injunction against Motorola over the "slide-to-unlock" feature on smartphones, a signature iPhone maneuver that allows users to access their phones without pressing too many buttons.
Motorola said it implemented a new design for the feature and that the injunction, handed down last month, would not impact the current supply or future sales.
In another example of Apple's success against competitors, Samsung changed the metal frame around the Galaxy Tab after a German court ruled for Apple last September.
Speaking broadly, Samsung spokesman Kevin Kim said in an email the company is confident the litigation will not impact its ability to provide mobile products to consumers.
Yet Apple has also had to change features on its products. Motorola won an injunction in Germany against Apple's iCloud push email function shortly after it lost on the "slide to unlock" feature.
Push email, a widely used technology, automatically informs users about new messages on phones and tablets. Apple played down the impact of the injunction in Germany, saying consumers could adjust their settings so that devices download new email at regular intervals.
When tech companies are forced to rework devices due to patent challenges, the risk is that the changes will annoy consumers and eventually cause them to switch products, said Colleen Chien, an IP professor at Santa Clara Law in Silicon Valley.
Apple's main U.S. case against Motorola, over six of its patents, goes to trial in June before Posner, a renowned federal judge with a keen interest in intellectual property. He wrote an economic analysis of IP law - one of his dozens of books.
Posner has handed Apple some early victories on how language in Apple's patents will be defined for a jury - a crucial step in patent litigation. For instance, he adopted Apple's definition of a patent covering how Skype and other streaming video applications operate on smartphones.
A win for Apple on these kinds of patents - which cover core functions on phones - would force Motorola to either attempt a difficult technical fix, or to strip out the feature entirely, said Nick Rodelli, a lawyer and adviser to institutional investors for CFRA Research in Maryland.
Apple has said in court papers that a win on core patents would mean a "substantial overhaul" of Android, costing tens if not hundreds of millions of dollars for Motorola. "That's the game they're playing to win," Rodelli said.
Motorola is asserting three of its own patents against Apple relating to how data is transmitted wirelessly. Those are set for a second trial in June, also before Posner.
"We developed and patented technology 10 years ago in areas Apple is claiming to have invented five years later," said Neill Taylor, Motorola's chief IP counsel.
Taylor added that, if his company wins, Apple has much more to lose due to the volume of iPhone sales.
At the January hearing, Posner said that to win damages, Apple and Motorola would have to show how each patented feature impacted phone sales.
FIGHTING SAMSUNG IN CALIFORNIA
In the other U.S. federal trial, Apple and Samsung are battling over the South Korean company's Galaxy line of smartphones and tablets, which also use Android.
The trial is set for July in San Jose, California, before U.S. District Judge Lucy Koh, who rejected Apple's attempt last year to get a quick shutdown of Samsung phone and tablet sales during the Christmas holiday. Apple still wants the sales ban and is appealing Koh's ruling.
Apple also has filed a barrage of new claims against Samsung in the California court, while Samsung has countersued. The two companies also have hearings scheduled before the ITC.
The July trial features Apple patents such as one that covers how touch-screen devices discriminate between one finger on the screen, or more, and respond accordingly.
This is a patent that goes to the core of how the devices operate, said David Sunshine, an IP lawyer who advises hedge funds for Cozen O'Conner, a law firm in New York. An Apple win, he said, would be costly for Samsung.
"They haven't hit the holy grail yet," Sunshine said. "But they've had some victories and they're hoping for that big victory."
(Editing by Martha Graybow, Amy Stevens and Andre Grenon)
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