By: John Pletz
August 28, 2012
CHICAGO (Aug. 28, 11:30 a.m. ET) — It’s fitting that Apple Inc.’s biggest courtroom victory came in San Jose, Calif., because the repercussions of the $1 billion verdict against Samsung Electronics continue to reverberate like aftershocks.
A billion dollars is real money, though it’s not quite as big a deal to Apple, a company that’s on track to make $42 billion in profit this year. Consider it a brushback to all the makers of Android phones. Like Motorola Mobility Inc.
“If you embrace the features to which Apple has patent claims, expect them to fight,” said James Conley, a technology professor at Northwestern University’s Kellogg School of Management. “It means you’d better be careful: ‘We’ve got the weapons and we’ll use them.’ The jury’s verdict was a huge victory for Apple because it makes it much more difficult to emulate products.”
The verdict is hardly the final say, of course. The appeals could take up to two years to run their course. Seoul, South Korea-based Samsung no doubt will ask the U.S. Patent and Trademark Office to re-examine Apple’s patents.
Cupertino, Calif.-based Apple said Monday it would seek a ban on eight Samsung phones in the U.S. Even if Samsung has to pull the phones, it’s not life-threatening. The top seller of Android phones, Samsung gets 84 percent of its sales outside the U.S., according to Framingham, Mass.-based researcher International Data Corp.
So what does this mean for Motorola Mobility Inc. and its new parent, Google Inc., the maker of Android software?
Much of Apple’s court victory had to do with design patents. Of all the me-too products that followed Apple’s cellphone success, Samsung most blatantly mimicked the iPhone. Libertyville-based Motorola already is incorporating clipped corners on some phones, such as the new Photon, which presumably would steer clear of Apple’s protected designs with rounded corners and bezel.
As for the software features, such as pinch-to-zoom or the bounce-back that stops a swipe of the finger from becoming the scroll to nowhere, phone makers either can come up with their own features or license them from Apple, if Steve Jobs’ successor, Tim Cook, is willing to play that game. That means the cost of the phones go up, or you learn to live without pinch-to-zoom.
Friday’s verdict involved Samsung. Remember that Apple was rebuffed in a suit against Motorola by U.S. District Judge Richard Posner earlier this summer.
Here’s another possibility: Motorola and Apple have long cross-licensed each other’s technologies, though the relationship has been more prickly of late, given all the courtroom drama between the two companies.
Some critics argue that the Samsung verdict demonstrates the limits of Motorola’s patent portfolio. But Apple’s victory over Samsung underscores the importance of Google buying Motorola, analyst Colin Sebastian of Milwaukee-based Robert W. Baird & Co. told clients Monday.
In a world full of tough competitors and deep pockets, Google needs to have intellectual property to defend itself on many fronts. (Remember when Apple needed $150 million from Microsoft to stay afloat? It now has $110 billion in cash.)
Apple’s courtroom victory “provides further justification for the Motorola acquisition, given a rich patent portfolio and Google’s role now as a hardware manufacturer,” Sebastian wrote.
“If Samsung or other Android manufacturers ultimately suffer as a result of patent rulings, then Google has effectively hedged itself in the mobile market by owning Motorola, and building its own devices.”
The Samsung verdict also underscores that Google’s decision to buy Motorola says as much about where Google intends to go, such as Internet TV and driverless cars, Conley says. “These are all areas where Motorola has intellectual property,” he says.