Backroom bargaining could have taken bite out of Apple case

YOU’LL HAVE HEARD, no doubt, of the $1 billion that Samsung has been ordered to pay Apple for violating the company’s patents and distinctive look.

Samsung is a Korean hardware manufacturer, and there were always concerns from the Korean press that the local Silicon Valley jury would favour the home player. When the lawyers came to select the jury, they threw out one prospective juror for working for Apple, and one whose son worked for Apple (in the legal department, no less).

If Samsung worried of undue favouritism toward Apple among Silicon Valley digerati, it needn’t have worried. Many here see Samsung as the injured party – and, perhaps a little more parochially, believe the Korean company as being a proxy for Google, another local company made good.

Apple’s iPhone and Google’s Android operating system now vie neck and neck for dominance of the smartphone sector. Like Microsoft, Google licensed its software to independent hardware manufacturers such as Samsung, rather than make phones itself. But Apple has always felt that the Android software was a shoddy visual clone of Apple’s original iPhone. There’s an implication that the Samsung court case echoes Steve Jobs’ anger at what he perceived as Google’s betrayal of its relationship with Apple, and is aimed at chasing away other hardware companies from supporting Google’s Android system entirely.

Whatever Apple’s intent, the company also used, in public, weaponry to which technologists here have a very ambivalent relationship: patent and trademark law.

In particular, a third of the court case revolved around patents on software. Mapping the traditional requirements of a patent, in which an invention must be original, non-obvious, and narrowly defined, to the world of programming, has not been a happy experience for many in the IT industry.

Software patents for supposedly novel ideas that have been repeatedly and independently re-“discovered”, or which have been written to have a far broader scope than imagined, or which stymie the open standards and protocols that have fuelled much of the internet revolution, have led to a great deal of scepticism about their benefits.

That, combined with the general ambience of scepticism to other parts of IP law – especially long copyright terms – has meant that in the cradle of technical inventions, the laws designed to protect such innovation are often downplayed.

Instead, companies publicly justify their large portfolio of patents in “defensive” terms, implying that they would use them only to defend against patent lawsuits by other firms. At the levels at which giants such as Samsung, Google and Apple work, most threats of IP suits are dealt with through secret licensing arrangements, not public spats. Nokia gets an estimated $100 million a quarter from a settlement with Apple over IP infringements in the iPhone; Citigroup has claimed that Microsoft receives IP payments of about $5 for every Android phone sold by HTC.

To go public with such demands, and then demand punitive damages, risks alienating the many rank-and-file developers who see these merry-go-rounds of mutual payments as distasteful and unjust. Innovations that Apple sees as either novel, such as the subtleties of pinch-and-zoom gestures, or unique to Apple’s image, like the rounded corners of iPhone icons, seem insufficient to require a billion dollar payout to designers who work with such ideas every day.

Samsung is certainly going to appeal the case, and the other matching cases that are rumbling on in many different jurisdictions. But the long-term effects of this particular event are as emotional as they are financial.

Samsung took a hit of a $12 billion share loss on news of the judgment. The same week as the result, Google’s Motorola division announced the filing of a new complaint with the International Trade Commission for violations of patents the search engine holds in technology in the iPod Touch, iPhone 3GS, iPhone 4, iPhone 4S, the Mac Pro, iMac, Mac mini, MacBook Pro, MacBook Air, and all three iPad designs. The case seeks a ban on the import of all these devices into the US.

This public brinkmanship exposes battles that traditionally continue beneath the surface of companies that otherwise work closely together. Google co-operated with Apple to bring key applications such as Gmail to the first iPhone. Samsung’s components division supplies parts of the iPhone. Companies cross-license and negotiate, bargaining for billions, not suing for them.

If there’s outrage in the Valley business community over this decision in particular, it’s not because of the existence of patents per se. It’s more because of the unseemliness and disruption of determining them in court. These negotiations are for the backroom bargaining, not juries to decide.

Among individual coders and entrepreneurs who believe in the opportunity of being the next Google or Apple, it exposes a far greater divide, not between Apple lovers and Google fans, creators and imitators, or even between critics of software patents and defenders of stronger IP law. It demonstrates that there is, even in the heart of the technologies that Silicon Valley now sees as core, a difference between those who are big enough to make deals with their supposed competitors, and those who cannot afford to, and therefore may never compete.