[Viewpoint] Nobody wins in the case

I remember a June evening when three complete strangers separately insisted on showing me their new mobile phones. It was 2007, I was on the subway in New York, and Apple’s iPhone had just been released.

The slick design of Apple’s new device - and, in particular, its ease of use - was so compelling, these people could not help but share. Now the multibillion-dollar question confronting a jury in San Jose, California, is whether Samsung Electronics Company found those elements of the iPhone so compelling, it could not help but copy.

Apple’s position is that the chronology of events speaks for itself: It took Apple four years to design the iPhone, but Samsung needed just three months to produce devices whose overall look and icon design was, in Apple’s view, “substantially the same” as the handset that had been featured on Time magazine’s cover. The similarities were so great that no “ordinary observer” would notice the difference.

Samsung, for its part, claims that “form follows function,” and as technology advanced, its designs simply kept pace. From this perspective, Apple is infringing on Samsung’s patents and, at the same time, attempting to “stifle legitimate competition and limit consumer choice to maintain its historically exorbitant profits,” according to a Reuters report.

As seven men and two women now attempt to fill in a 700-question jury-verdict form relating to dozens of Samsung products, it’s worth considering the possible consequences of the decisions they will make.

In one view, if Apple obtains the injunctions and the more than $2 billion in damages it seeks, competition in the handset market will grind to a halt. Samsung sold about 50 million phones worldwide during the second quarter of 2012, amounting to about a third of the phone market during that quarter, while Apple sold about 26 million, or 17 percent. In the United States, Apple and Samsung together have 55 percent of the smartphone market. If Samsung has to redesign its devices, no other company will be capable of challenging Apple for the foreseeable future. Motorola Solutions, Nokia Oyj, LG Electronics and HTC are all struggling.

Another view is that an Apple victory might drive other companies to come up with truly inventive new designs, interfaces and functions. By this thinking, Apple might not actually want an outright victory; it would only spark stiffer competition. The worst outcome for consumers might be an Apple victory that leads to a settlement with Samsung: We would be left with nothing but Apple-licensed clones on the market. And Apple itself would always be able to avoid antitrust liability by claiming it still faces energetic competition.

Whoever wins, the expensive, loony unreality of software patents will not go away quickly enough. Companies seem to be bent on inventing patents rather than patenting inventions. Every device is covered by hundreds of patent claims, and because a patent is primarily a license to litigate, armies of lawyers and experts tussle over dry technical terms in front of befuddled jurors worldwide.

Apple is fighting with Samsung in at least 19 other lawsuits pending on four continents, even though Samsung supplies a substantial part of the technology used in Apple devices. Companies should be competing in the marketplace rather than in courtrooms. This week, Google’s general counsel, Kent Walker, called for a cease-fire, urging policy makers to keep “an eye on the growing anti-competitive abuse” of patents.

Federal District Judge Lucy Koh, presiding over the Apple-Samsung proceedings and herself a former intellectual property lawyer, several times urged the companies’ chief executive officers to settle their disputes before sending the case to the jury, saying, “It’s time for peace.” As the Apple-Samsung jurors were each handed a sheaf of jury instructions, Judge Koh made an awkward joke: “I’m now going to read our 84 jury instructions,” she said, adding that she would ask the jurors to stand up “periodically to make sure we’re alive.”

You can be glad for the moment that you’re not one of the jurors filling out that form in San Jose. But all of us need the destructive patent system to be redesigned.

Copyright: Project Syndicate, 2012.

* The author is a contributor to Bloomberg View and a visiting professor at the Harvard Kennedy School of Government and Harvard Law School. She is a former special assistant to President Barack Obama for science, technology and innovation policy.

by Susan P. Crawford