The Counterintuitive Winner in the Landmark Samsung vs Apple Trial

The landmark Apple vs. Samsung intellectual property trial ended in an award for Apple totaling $1,049,343,540  in damages, while countersuing party Samsung was granted a total of $0 in damages. That’s not a typo, that’s a zero.  Apple roped in over 30 devices infringing more than a dozen patents. All this while infuriating federal judge Lucy Koh who’s been the most entertaining part of this circus:

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For reference, let’s have a look at the highest-profile offending device:

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No wait, that’s not it. Can we pull up the right image?

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Wait that’s not it either.

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That’s the one.

So Apple’s lawsuit against Samsung ended in a $1 billion award. Queue the tech press soiling their ishorts while writing up gregarious headlines like APPLE WINS BIG!

Actually, no.  This is a pretty huge win for Samsung, for the following reasons:

1. When a market leader in the premium space goes on offense, the target is immediately elevated to direct competition in the minds of the media.  It’s a classic marketing slip up where the market leader signals to the market that competitor X is a serious threat.  Don’t believe me?  Ok, when was the last time BMW sued Mazda?  Never, you say? Exactly my point.

2. Samsung rakes in 1 billion USD in just over 2.2 days.  Do the math.  This isn’t much of a penalty in absolute terms.

3. Besides, Samsung will (potentially) pay 1 billion USD to secure the #2 spot in the mobile market. That’s a bargain when you think about it in absolute terms. I bet RIM would be in far better shape today if it had infringed.  Same goes for Nokia.

4. Judge Koh orders an injunction on Samsung selling phones in the US? I highly doubt it. Putting aside the logistical nightmare, that would leave  American buyers the choice between the iPhones, Windows phones, and this piece of crap.

5. Just imagine the blowback on Apple if an (unlikely) injunction does come into force. Apple will scramble to put together a generous licensing agreement. Samsung makes chips in the iphone, so they’ll play ball.  It’s probably even money for Samsung in the long term. (Update: it seems blowback is already hitting Apple.)

6. This entire exercise likely puts Apple in the red since Google/Motorola is now suing Apple in turn.

7. Apple was forced to divulge it’s playbook into the public record because the outcome hinged on the jury’s impressions of the trial in addition to the law.  That’s a fail for normally uber-secretive Apple.

8. Oh, and let’s not forget appeals, where “overwhelming wins” more often get scaled back than not.

So don’t believe the hype.  Samsung took a risk, and it seems to have paid off.   The real loser today is Google, who’s ecosystem is under attack, which should raise doubt in the minds of smartphone buyers.  That uncertainty, timed just before the iPhone 5 release, is worth far more than any settlement.

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This entry was published on August 25, 2012 at 12:58 AM. It’s filed under Uncategorized and tagged , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

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