Apple v. Samsung: What's the worst that could happen?
(CNET) With the trial between Apple and Samsung inching toward a resolution, it's a good time to break out the crystal ball and look at the potential ramifications of the case.
Every indication suggests that the verdict won't be a clean one. There will likely be damages on both sides, and it's still unclear whether there will be clear victor. In addition, the option to appeal could drag this case on for several more years. A separate appeals case between the two regarding software elements of Android and a potential ban on the Galaxy Nexus is set to start in 2014.
Further complicating matters is this week's decision from a South Korean court that both companies infringed on each others' patents, resulting in bans and fines on both sides. The two have sued each other in multiple courts in multiple countries, potentially extending the entanglements for years.
The truth is there probably isn't going to be much of an impact in the near term because of the legal options available to both sides.
So let's a have a little fun and take this case to its logical conclusion. Let's assume that either Apple or Samsung actually wins this trial -- and the inevitable appeal. What's the worst (or best, depending on the perspective) possible scenario?
While this bit of speculation might be entertaining and even a little far-fetched, it is also an illustration of just how damaging these patent lawsuits can potentially be. Ultimately, they are bad for the companies, the industry as a whole, and for consumers who could suffer through product bans, higher prices, and fewer choices.
If Apple wins:
Get ready for legal Armageddon. If the Android community thinks Apple is a big threat now, wait until it gets a major victory over Samsung under its belt. A win would embolden Apple to redouble its efforts in the courtroom against the major Android companies, following up on existing conflicts with HTC and Motorola Mobility, and even going after some of the struggling players such as Sony and LG.
"If Apple wins, they now go and knock on every door of a company that builds a smartphone," said Roger Entner, an analyst for Recon Analytics.
Most importantly, a victory would validate the design cues that Apple argues have been copied by Android competitors. Design patents are considered weak, relative to more complex software patents, but a win would set a precedent on their strength.
It won't just be Apple; any company with a halfway "unique" design will start firing off lawsuits, using Apple as a precedent.
"All of the competitors will have to make bigger circles around certain design features," Entner said. "It gives it a lot more standing to Apple and anybody else with distinct features."
As a result, companies would go out of their way to avoid making phones that even have the hint of the iPhone's design, from the hardware to the color and number of icons on the home screen. Samsung in particular would have to redesign some of its products to further differentiate them from Apple's.
--Roger Entner, an analyst for Recon Analytics
"An Apple victory might require significant changes to the design of not only Samsung products, but those of other handsets and tablets that could be seen as similar to the iPhone and iPad," said Ross Rubin, an analyst at Reticle Research.
The other handset manufacturers may not wait for the lawsuits to hit them. Many may start lining up to strike licensing deals -- all of which would heavily favor Apple. All of a sudden Google's Android operating system wouldn't be so free anymore.
Likewise, Samsung could get roped into paying a prohibitively high licensing fee to Apple if it manages to get out of paying the damages. Apple disclosed during the trial that it offered to license its patents to Samsung for $30 per smartphone, and $40 per tablet. You could expect to a see a similar rate, if not higher due to Apple's improved bargaining position.
Taking it even further, a loss could drive a wedge between Samsung and Google. Rather than use Android, Samsung could part ways and partner with Microsoft, which already has a cross-licensing deal with Apple. Yes, it sounds a bit ludicrous for the largest Android player to all of a sudden jump ship, but it seems a bit more reasonable under the threat of a product embargo or excessively high licensing fees.
"Samsung wants the enterprise and could build something sexy enough to grab the prosumer market," said Maribel Lopez an analyst for Lopez Research. "Samsung losing would be a win for Microsoft."
HTC may be a side beneficiary to that massive shift. If Samsung jumps to Microsoft, HTC would once again be the preeminent Android vendor. That is, of course, until Apple's target shifts back to HTC.
If every Android partner is paying licensing fees to Apple, they will be less likely to innovate and aggressively throw in new specifications and features, given the already high cost to develop a phone. Even worse, consumers may end up paying more for less when it comes to new smartphones.
Apple, meanwhile, will be sitting on the backs of its defeated competitors with its iPhone still on top of the smartphone world.
If Samsung wins
Samsung would effectively turn the tables (tablets?) on Apple with a win. Samsung has argued that Apple has infringed on several of its patents, which are essential to common wireless standards. Apple has argued that those essential patents should be licensed at a reasonable rate, a concept called FRAND, or fair, reasonable, and non-discriminatory.
But if the court rules that Apple violated these standards patents, it could open the door for other companies to pile in.
It would also be the perfect opening for Google, which is still inventorying the 17,000 patents and 7,500 pending patents it acquired by scooping up Motorola Mobility earlier this year. Given Motorola's rich history in the wireless business, it will likely have more than a few essential patents to use against Apple.
It would be a significant knock on a company that has largely had a phenomenal run over the past few years, bringing out one hit product after another and capturing consumers' desires. Losing a case about innovation and patents would also dent Apple's sterling reputation with the public.
"The general public perception is very strong that Apple is an innovator," said Kevin Boully, a litigation consultant for Persuasion Strategies, a service offered by Denver-based law firm Holland & Hart. "For Samsung to get a victory would give some pause to that perception."
All of a sudden, the late Steve Jobs' quest to destroy Android through legal means would have ended up significantly harming his own company. You could almost see the shared sense of Schadenfreude making its way through the handset vendor community.
The defeat could mean even more aggressive copying of the iPhone's and iPad's looks, particularly from lesser-known companies looking to attach their products to the Apple reputation. That means more options if you want an Apple-like product but don't want to pay the premium price.
A loss against Samsung would cut the legs off of Apple's own legal endeavors. It would also give Apple CEO Tim Cook an excuse to end the lawsuits and forge settlements.
"If Apple loses this substantially, it gives them the opportunity to say, 'we tried, we failed, we move on,'" Entner said.
It's not all bad. At the very least, it could spell the end of this legal saga.
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