Comments for The smartphone patent wars: nothing really surprising…

Actually, the only thing that we can count on Lucy Koh’s move is that she succeeded in bringing together the two CEO’s (Tim Cook and Choi Gee-Sung) of the Apple and Samsung firms; otherwise, her move was washed up and ended up fruitless because the disputes between the two firms over being a patent litigators did not halt. However, I understand their concern because this feud is a matter of whether they take the vanguard and survive or hold back and let the other firm take the lead and bear the consequences of the regress that other firms suffered from, and we can take Nokia as an example when you could hardly see now any of Nokia smartphones in the field.

Invitations and simplicity are what make Samsung in the preamble and the security system and the innovations are what make Apple prefered by consumers. Nevertheless, the millennial generation is more eagerly searching for innovations and updated smartphones and that the key that these two big firms exploit to be always in the top and the prelude. I believe that this feud will never end and these disputes are what make these two big firms always looking for new ideas and innovations to add to their smartphones and that what motivate consumers to buy the new smartphones that include new features that their old ones lack.

It’s hard to see if the move of Lucy Koh’s has been effective.As it’s said in the article ,smartphones combine two aspect of cumulative innovation and as we can see nowadays, most of the phones of the most famous brands are look alike . It is due to the run of novelty that these two has engaged in order to win market part from others. When a novelty come (technological) Apple and Samsung add the novelty for his new flagship product the next year following. Moreover knowing the composition on a iphone we can also imagine that this war of pattent is just a way to reduce the image of Samsung for Apple.

The capitalism has authorised this « monopoly » of these two brand, theirs anchorage in the society make them be the biggest influencer in their market(1). It’ is obvious when we see the wait of the differents keynotes they have made every years and the wait of people when the brand new phones is about to be sold. Apple can be considerated as one of the most powerful firm in the world. Despite the important number of lawsuits that the brand has suffered, Apple still going on and show the useless of the law for this type of compagny or the bigness of this big firm ?

It will be hard for competition law to make a truce in the smartphone patent war. One of this reason is primary that, the two subject are monster of our economy,they detain less than the half of the smartphone market (2) , this two brand are too powerful, more rich than some coutries. A simple rule of law won’t make things change . These two entities could even if they are big , avoid new rules who could restrain their power. ( like in the article (3) where Samsung change some caracteristics of his product in order to be able to sell his tablet in USA avoiding the restriction of a patent ). Moreover it’s hard to speak about competition law and more precisly concurrency when we know that for the sell of the new Iphone X , 13 % goes to Samsung because of the screen of the Iphone made by the Korean brand (5). A lot of accesories being made by Samsung are for destinate to Iphone. These two elements and the fact that Apple had for provider Samsung for their Iphone 6 push us to ask if Apple « and » Samsung had made a Isung rather than an Iphone.

To be more effective and have a useful rôle in the smartphone patent war, I think that competition law must attack a heavy part of the technologie that is omnipresent in our society and in our techonological product, the programmed obsolescence(4). In deed this fact is very common, phones now aren’t product with the same materials than before. The new materials are more fragile and wears out faster. The reason of the use of programmed obsolescence in due to, in one hand to reduce the cost of production and in a other hand to make phones last less longer but the primordial fact is that programmed osbsolence is hard to prove and when it is (for example the case with Iphone that reducing their batteries for the performances (3)) these big firms has the tools to deviate the fact of obsolescence.

Sources
(1) https://www.usinenouvelle.com/article/le-poids-de-l-iphone-en-six-chiffres-cles.N585163

(2)https://www.numerama.com/tech/174972-apple-samsung-et-les-autres-evolution-du-marche-des-smartphones.html
(3) https://www.latribune.fr/technos-medias/electronique/20120627trib000706004/brevets-la-tablette-galaxy-de-samsung-interdite-a-la-vente-aux-etats-unis.html

(5)https://www.igen.fr/iphone/2017/12/iphone-apple-sexplique-sur-les-performances-reduites-avec-des-batteries-anciennes

(4)https://fr.wikipedia.org/wiki/Obsolescence_programm%C3%A9e

(6)https://www.lesechos.fr/14/09/2017/lesechos.fr/030562841177_comment-samsung-va-empocher-pres-de-15–des-ventes-de-l-iphone-x.htm

Dans cette guerre entre la firme coréenne Samsung et la firme Apple, qui sont les deux leaders sur le marché du smartphone, des contentieux en matière de brevets existent et existeront toujours.
En effet, comme dit dans l’article ci-dessus un smartphone est le reflet d’une innovation cumulative c’est-à-dire que pour avoir un produit toujours plus puissant et qui répond toujours plus à la demande des consommateurs il faut quelquefois se servir de l’invention antérieur d’un autre (par exemple le premier à avoir eu l’idée d’insérer la synchronisation de la boite mail sur smartphone étant Blackberry aujourd’hui “disparu” sur le marché).
On peut voir (dans les différents articles de la bibliographie) que les appareils Samsung et Apple sont très similaires quant à leurs utilisations quotidiennes c’est-à-dire que les mêmes mouvements entraînent souvent les mêmes actions ( exemple du “pincer pour zoomer”,..) ce qui crée évidemment des litiges au niveau des brevets.
Lucy Koh, juge fédérale des Etats Unis connue pour avoir fait pliés des sociétés anonymes tels que Google ou Facebook, a été désigné pour prendre part au procès entre Samsung et Apple. Dans ce procès Apple réclamait à Samsung le règlement d’une indemnité de 399 millions de dollars pour avoir copié le design de ses appareils. Cette juge a jugé au renouvellement du procès car “ les instructions données aux jurés ne reflétait pas la loi avec précision “ .
Cependant malgré les multiples procès entre les deux firmes leaders sur le marché du smartphone n’empêchent pas ces derniers a coopéré lorsque les intérêts sont communs.
On peut le voir aujourd’hui avec la mise en vente de l’Iphone X (tout dernier produit d’Apple) qui devrait rapporter 14 milliards de dollars à.. Samsung. En effet, les principales composantes technologiques de l’Iphone X sont construit et brevetés par Samsung. Le résultat étant que pour chaque Iphone X vendue 10% du prix de vente est reversé à Samsung pour ces droits de propriété.
Selon moi le mouvement de Lucy Koh ne pouvait pas être efficace car ces procès visent surtout à baisser l’image de marque de leurs concurrents afin de pouvoir récupérer des clients potentiels.
Pour finir et toujours selon moi la guerre qui fait rage en ce moment est plus lié au fait que la société Apple est en train de perdre sa place de numéro 1 sur le marché des smartphones au profit de Samsung.

Sources :

https://www.capital.fr/entreprises-marches/nouveau-proces-ordonne-entre-apple-et-samsung-autour-de-liphone-1251501
http://bfmbusiness.bfmtv.com/mediaplayer/video/anthony-morel-l-iphone-x-va-rapporter-des-milliards-a-samsung-0510-988507.html
http://www.numerama.com/tech/148971-contre-samsung-apple-perd-un-proces-et-des-brevets.html

Depuis 2010 la guerre des Smartphones fait rage et ceux dans le monde entier. L’idée d’un compromis entre Samsung et Apple en 2012 grâce à la juge Lucy Kho était un bon début et ce fut un acte intéressant car on a pu voir par la suite que le conflit des brevets des Smartphones s’étendaient au niveau politique, sociale…. L’exemple typique est celui avec le droit de veto posé par Barack Obama suite à un désaccord entre Apple et Samsung, une première depuis la Présidence Reagan en 1987. Le but fut d’annuler une décision de l’international trade commission contraire aux intérêts d’Apple. Ceci est une parfaite illustration de l’ampleur que prend ce qu’il est aujourd’hui de coutume d’appeler la guerre des brevets.

Cependant comme on a pu le constater ces dernières années le nombre de jugement pour départager les différentes entreprises de téléphonies ont cessé d’augmenter du fait des multiplications de brevets (4952 pour Samsung et 2003 pour Apple en 2014 aux Etats-Unis). Par conséquent, le nombre de litiges ou de procès entre ces deux géants ont perdurés et on se demande même si au final le brevet n’est pas seulement un outil qui permet de garder sa recette mais plutôt un moyen qui a pour objectif de contrer ces concurrents.

On peut donc conclure que ce déménagement de Lucy de Kho n’as pas été si efficace et que ces deux entreprises ce sont vengées a contrario d’une trêve. On imagine ainsi que de « tricher » et de « voler » certaine idées à ses rivaux au détriment de sanctions financières très lourdes serait bénéfique à l’entreprise en question afin qu’elles puissent garder et agrandir ces parts de marchés. Il existe peut être une solution pour éviter tous ces procès et l’émergence de la multiplication de ces brevets. Il suffirait d’être plus exigent dans la formation d’un brevet. L’autorité publique devrait avoir un rôle plus important dans la validité de l’existence d’un brevet pour éviter l’abondance de ces derniers qui entrainent autant de conflits.

« L’intérêt pour les brevets relatifs au design s’est envolé depuis le jugement de 2012 ». Cette citation de Monsieur Love montre l’un des impacts essentiels du « Smartphone Patent Wars », les patent trolls. Dans ce commentaire, nous étudierons dans un premier paragraphe, le contexte initiale de la guerre entre Apple et Samsung. Dans un deuxième paragraphe, nous analyserons l’initiative du juge de la Cour de District des Etats-Unis, Lucy Koh, à travers l’évolution du « Smartphone Patent Wars ». Et enfin, dans un troisième paragraphe, j’indiquerai mon avis à propos de cette affaire.

Avant de pouvoir répondre à la première question de cet article, il est nécessaire de rappeler le contexte de cette affaire. Tout débute en 2011 lorsque la firme Apple attaque en justice la firme Samsung. En effet, Apple accuse son principal concurrent de lui avoir volé de nombreux brevets. Ces brevets concernés les éléments de design tel que le boîtier rectangulaire avec les coins arrondis et la grille d’applications. En 2012, Samsung a été condamné à verser 1,05 milliard de dollars à Apple. Cette première décision a été invalidée en 2013. Cette invalidation a eu pour conséquences de réduire l’amende de moitié (600 millions de dollars).

Maintenant que nous avons remis le contexte en place, nous pouvons répondre à la question. Selon moi, l’initiative de Lucy Koh n’a pas était efficace. En effet, le fait qu’elle ait voulu mettre en place un processus de rétablissement de paix entre les deux firmes (afin de sauver l’industrie d’un potentiel suicide collectif) était une bonne idée. Mais si cette initiative avait aboutit, il n’y aurait pas eu tous les rebondissements qui ont suivit les années postérieures à 2012. Après le jugement de 2013, un nouveau procès a débuté. Ce dernier a enclenché un grand feuilleton judiciaire. Les deux firmes se sont affrontés dans les tribunaux du monde entier. Samsung a commencé à se venger en attaquant Apple à propos de sa technologie de transmission des données. La firme sud-coréenne accuse l’américaine de lui avoir volé. Cette accusation a était rejetée par les juges. Samsung a également démontré que plus de 250 000 brevets sont utilisés pour la conception de leurs appareils. La firme avance donc que les brevets dénoncés par Apple ont un rôle minime dans la décision d’achat des consommateurs. Bien entendu, Apple a défendu le contraire en affirmant que les ventes de Samsung étaient reliés au design de leurs produits (copié sur eux). Dans ce cas, Samsung a obtenu gain de cause. Les juges ont déclaré qu’Apple ne devait pas récupérer tous les profits car le design breveté ne porte pas sur toutes les composantes du produit. Le succès de Samsung ne s’arrête pas la. En 2016, les tribunaux compétents ont jugé que Samsung n’a pas volé les brevets du groupe américain car deux des trois brevets n’auraient pas dû être validés (pour manque d’ingéniosité). Le plus marquant des deux est le mécanisme de déverrouillage du smartphone. Cependant, aucune formalités n’a été indiquée en ce qui concerne les modalités de remboursement. A moins qu’il y ait enfin un accord amiable entre les deux groupes, un nouveau procès va avoir lieu pour déterminer la somme qu’Apple devra rembourser à Samsung. Ce procès pourrait permettre à Samsung de récupérer jusqu’à 399 millions de dollars. Cette affaire risque donc de durer encore plusieurs années.

A présent, je vais donner mon avis à propos de ce contentieux. Si l’on tient compte des bénéfices réalisés par les deux firmes chaque année (en 2015, 44 milliards d’euros pour Apple et 42 milliards d’euros pour Samsung), je pense que l’enjeu est plus symbolique que financier. Même si Apple devra rembourser Samsung dans les années à venir, les deux groupes seront toujours gagnants. C’est pour cela que je pense qu’un accord à l’amiable n’est pas envisageable car le groupe Samsung peut s’estimer heureux de la forte baisse de son amende et le groupe Apple récupérera quand même une certaine somme. Cependant, un accord entre les deux groupes n’est pas exclure car en 2014, les deux firmes se sont mises d’accord pour abandonner toutes les poursuites engagées en dehors des Etats-Unis. Je pense tout de même qu’il faudra attendre la décision officielle du montant du remboursement pour mettre fin à ce feuilleton. Enfin pour terminer, je peux également souligner que les décisions judiciaires en faveur de Samsung, ces derniers mois, ne sont pas anodines. Il est très fortement probable que cela soit lié au soutient de Google, Facebook et de plusieurs autres sociétés de la Silicon Valley. Ces firmes ont envoyé un document à la Cour suprême stipulant qu’une décision favorable à Apple aurait des conséquences graves comme notamment la multiplication des patents trolls. Les patents trolls (ou troll des brevets) sont des sociétés ou personnes physiques qui utilisent la concession de licence et le litige de brevets comme principale activité économique. Ils multiplient ainsi les actions en justice. Cela a pour conséquence directe de décourager l’échange de brevets et la valorisation des efforts en recherche et développement. Pour éviter cela, il est nécessaire d’empêcher la délivrance de mauvais brevets comme cela à était le cas pour Apple avec le mécanisme de déverrouillage. J’entends par mauvais brevets, des brevets larges et à revendications floues ( ce qui est très avantageux pour les trolls). Il faut également réduire les leviers qu’offre le système judiciaire car les trolls utilisent la menace d’action en justice comme moyen de pression.

SOURCES :

http://www.lemonde.fr/economie/article/2016/12/07/samsung-remporte-un-round-face-a-apple-dans-la-guerre-des-brevets_5044845_3234.html
https://www.challenges.fr/high-tech/apple-contre-samsung-la-guerre-a-coups-de-brevets_441898
https://www.nextinpact.com/news/97093-apple-a-realise-53-milliards-dollars-benefices-nets-cette-annee.htm
https://www.nextinpact.com/news/102769-samsung-prevoit-benefices-en-forte-hausse-grace-au-galaxy-s7.htm
https://fr.wikipedia.org/wiki/Patent_troll

To answer the first question, i’d say that Lucy Koh’s efforts fell flat. The need for both companies to counteract the opponent’s move are too strong and they won’t back up anytime soon. By that I mean that, though dragging the opponent to court is costly and time consuming, both companies fight to prove that the opponent is copying them as a way of saying “look, I was the innovative one, he’s just been copying me all along”. For instance, apple sued Samsung for allegedly copying his patented phone and home screen designs, the case is yet to be battled in court.
Now I can understand Lucy Koh’s point of view, those patent wars are a waste of money and energy for both companies. Instead of focusing on innovation, they constantly drag each other to court and end up losing a lot of money.
Both companies are constantly striking each other back. As for now, the five year war is still going strong. I strongly doubt it is ever going to come to an end. It’s not about claiming its patent anymore, it’s more vicious than that, it’s about pointing the finger at the rival’s attempt to copy your ideas as a way to try and convince more consumers to buy your phone instead of the opponent’s phone. Winning a case is not about gaining money anymore or recovering its full right on a patent, it’s also a huge publicity stunt for the brand.

Sources:

http://www.inc.com/kevin-j-ryan/apple-samsung-supreme-court-ruling-patent-infringement.html
http://fortune.com/2016/02/26/apple-samsung-patent-appeal/
https://www.cnet.com/news/apple-vs-samsung-patents-lawsuit-legal-battle-district-court/

Lucy Koh’s move started from a good intention but doesn’t worked.
In fact, patent wars are now not just between Apple and Samsung but also between other firms of the industry like Nokia or LG but also companies such as Amazon,…
The litigation began in 2011 when Apple sued Samsung for copying design of the Iphone and using it to produce a competing phone.
The battle is not over yet but different payments have already been made.
In 2012, the jury sided with Apple saying that the Korean company did copy the design and didn’t respect patents of Apple. Samsung was condemned, as written in the patent law, to pay “the total profit” to the American firm.
This term is confusing because it can mean that even if the patented features contributed to a small value of Samsung’s phones, Apple gets all Samsung’s profits. The law is not effective because currently the patent holder can claim all the profit of the infringer which gives an incentive to continue the patent war and may even lead to patent trolling. According to Charles Duan, director of Public Knowledge’s Patent Reform Project : “If it stands, the total damages awarded to Apple in the case could lead to a new wave of patent trolling focused on design elements because makers of multi-component technology may end up on the hook for all their profits due to one minor infringing feature. When you have a big disconnect between the value of a patent and the amount of money that can be awarded for the infringement of a patent, you end up with really bad incentives.”
Samsung said that a smartphone contains thousands of components and it is not fair that it has to pay all its phone’s profits just for a design patent.
Apple counters that the whole design sells the phone and strong patents on design is necessary to spur innovation which implies strong punishment against those who stole the ideas.

Since 2011, the two companies are constantly fighting. They are suing each other, trying to block sales in different countries through patent violation. This may finally end in 2017 in the Supreme Court but I don’t think that it will end the patent wars problem between them. Even after this they will probably continue to revenge, attacking through others patents.
This may lead to a situation where companies are paying more on patent wars than on R&D and it is evident that consumers will be hurt (for example higher prices).

The patent problem is directly influenced by the phone industry that is complementary and sequentially : The knowledge is building up and it can be really difficult to respect all the patents. The incentives to not enter the market can thus be bigger, a start-up may fear the financial consequences of breaking a patent which is even more plausible with patent trolling.
This patent war is clearly not benefitting the welfare and can be illustrated by the tragedy of anticommons : strong property rights accorded to separate right-holders who prevent others to use it implies a non-socially desirable outcome due to an underusing of the resource. The social outcome would probably be better if the right-holders were cooperating with each other on the concern of patent rather than doing the best they can to prevent others to use the resource.

In conclusion, there is a need to change the patent law because currently there is a situation of uninterrupted patent wars which lead to non-optimal social outcome. Lucy Koh’s move started from a good intention but this cannot simply be arranged by sitting together and making peace with words. In fact, the attempt of truce goes back to 2012 and no amelioration took place.

Sources :
http://www.digitaltrends.com/mobile/apple-vs-samsung-supreme-court/
https://www.washingtonpost.com/news/the-switch/wp/2016/03/21/the-smartphone-patent-war-between-apple-and-samsung-is-headed-to-the-supreme-court/
https://www.ipdigit.eu/2014/10/a-primer-on-cumulative-innovations/
http://wealthofthecommons.org/essay/tragedy-anticommons

The hostilities between Apple and Samsung began in 2011. The evolution of these conflicts and of the potential negative impact that it could have on innovation, led Lucy Koh’s to made an attempt about a truce between these two parts. In July 2012, the two were still embedded in more than 50 lawsuits all around the world (1) involving billions of dollars in damages claimed between them. It is only in 2014 that the two groups agreed to end proceedings between them directly. This truce was effective all around the globe except in the United States. (2) So we see that while the request by Lucy Koh’s was not heard directly, it has an impact two years later, not without reason. Indeed, firstly we wanted to emphasize the importance of such a decision knowing that it can prevent the “potential collective suicide” of the smartphone sector. It seems important in this sector with perpetual changes to not set barriers infringement of shares that it must overcome to bring its product or service to market. Leaving these two groups wasting their resources in complex and continuous fighting causes a loss of resources in engaging in innovation. Warn the fighting group about the waste of capacity in these trials could help to maintain longer-term truce. Furthermore, given the complexity of these new situations, it seems that the laws of competitiveness are not adapted to such a “thicket”. Lucy Koh’s move is therefore a need to find a solution other than through competitive law which could play a counterproductive role. In these complex situations, following the attempt done by Lucy Koh the authorities could play mediator role by identifying the adverse consequences that such conflicts could have on the welfare of final consumers. Replace the welfare of consumers at the center of decisions would avoid unnecessary wastage of resources in conflict seeming sometimes be an “egos story” (Steve Jobs situation) (3)

(1)http://fs01.androidpit.info/userfiles/67101/image/AndroidPIT_EN_Patent_War_960_wide.jpg
(2) http://www.lefigaro.fr/flash-eco/2014/05/17/97002-20140517FILWWW00023-brevets-apple-et-google-font-une-treve.php
(3) http://www.wipo.int/wipo_magazine/fr/2013/01/article_0002.html

I don’t think that Lucy Koh’s move was effective to stop the patent war between Apple and Samsung. Sitting at the same table and speaking of the problems can work for two people involved in an argument, but I don’t believe it’s the solution to the patent war between Apple and Samsung. Indeed, the main reason of this fight is to control the market. Apple sues Samsung in a country to try to avoid the company to sell smartphones in this country, or actually to reduce its sales, in order to have a bigger market share in this land. And Samsung is doing just the same thing in another country, or even in the same.

So just talking about this will not fix the situation. I think that concrete actions such as countries regulations, could end, or at least reduce, this patent war, but these actions must apply to short term because the smartphones technologies usually don’t last 5 years without being changed. Competition laws may also help to peace out this patent war.

But this patent war could also end “without doing anything”, or at least without forcing it with laws or regulations. Indeed, big firms have patents, so they have leverage on other firms. But these other big firms often have patents on almost the same technology, so also have enough to compete with the first firm. And because each companies have means to “annoy” the other, none of the firms would want to sue the other, because it could sue it back at the same time. That is quite the case with Google, Samsung and Apple, all of them having patents on the “same” technology. Thus we could imagine that each company would focus on its own businesses and products, and may be try to invest more in R&D than spending money to sue other firms. They could also sell licenses to companies willing to use their technologies.

But nowadays, I don’t believe that the ‘Smartphone Patent Wars’ have calmed down, as we can see in the actuality. In 2014 for example, Samsung was order to pay Apple 120 million dollar for patent infringements.
And just a few month after Apple and Samsung found an agreement to end the patent war outside the US, Ericsson sued Apple to prevent them from selling Iphones.

We can take another example to show that the patent war is far from being totally over with the Google-Motorola case. In 2011, Google bought Motorola for one big reason: being in possession of Motorola’s 17.000 patents in order to protect its Android smartphones. Because before having the right to sell smartphones provided by the patents, Google didn’t own patents on these technologies. With this purchase, Google is both protected from other companies’ trials (such as Microsoft) and owned leverages to sue other companies copying its newly acquired technologies. So if Google has started to sell smartphones before owning these patents, Apple and Samsung could have sued the search engine company, which hadn’t any defense, and forcing it to pay. But with the purchase, they were protected, and had means to sue other firms.

To conclude, I think that Lucy Koh’s try was not the right way to stop the patent war between Apple and Samsung and that nowadays the patent war is not over. But there surely exist ways to decrease or end this war and it could be benefit for both firms and consumers.

Sources:

– https://www.quora.com/Why-did-Google-buy-Motorola-for-12-5-billion-and-sell-it-off-for-2-91-billion

– http://www.forbes.com/sites/timworstall/2013/04/29/why-google-did-buy-motorola/

– http://www.theguardian.com/technology/smartphone-patent-wars

– http://www.theguardian.com/technology/2014/aug/06/apple-samsung-drop-patent-lawsuits-outside-usa

– http://www.theguardian.com/technology/2015/feb/27/ericsson-sues-apple-block-iphone-ipad-sales-us-over-patents

– http://uk.businessinsider.com/the-smartphone-patent-wars-are-finally-coming-to-an-end-2014-12?r=US&IR=T

In order to assess if competition law could play a useful role in achieving a truce in the smartphone patent war, and to give my opinion on the topic, I will start with the examination of a historical example of patent warfare and compare it to the current smartphone wars, then I will focus on the differences that exist regarding patent trial systems across the word. Finally, I will highlight possible solutions for achieving a truce in the smartphone patent war.

As explained by Lea Shaver in her article “Illuminating Innovation: From Patent Racing to Patent War”, patent wars aren’t new. In fact, patent wars find their roots in one of the most famous inventions: the light bulb. Although Edison is most famous for this invention, many forget that he “would be better understood as an early Bill Gates [as] his business success [was] built on a keen appreciation of the power of aggressive intellectual property strategy and the frailty of antitrust law” (Shaver, 2012, p. 1894). Indeed, the light bulb doesn’t correspond to a single patent but to more than 100 patents on its technical components filed by Thomas Edison himself. When he introduced the incandescent lamp in 1878, its market potential was widely recognized. Many companies then joined the market, enrolling in tough competition. By 1890, Edison’s market share had fallen drastically. Thanks to patent warfare, he was able to reverse the situation.

Shaver compares patent warfare to the game board Risk(*) . Like in this game, industrial players can spend years gathering an important patent portfolio that might eventually fund their litigation “war chest”.

Edison’s patent portfolio constituted a great competitive advantage as it enabled him to successfully litigate it. By 1910, General Electric (Edison’s Electric companies’ successor) controlled 97% of the light bulb sales in the USA. Amongst Edison’s various cases, the Swayer-Man infringement case spread the light on the importance that a single patent can have. Among Edison’s many patents, one in particular – the ’898 patent – although it didn’t appear to be central, was interpreted in a new way by a Pennsylvania court, making it possible for Edison to win the “battle”. After this, US producers were to purchase General Electric licenses or to merge with the firm. In 1897, GE was the market leader with only one serious rival. These two firms then agreed “to a truce in the form of patent cross-licensing and product pricing agreements. Smaller competitors were invited to join the Incandescent Lamp Manufacturers Association, organized by General Electric. These members agreed to divide up the markets and avoid price competition.” (Shaver, 2012, p. 1930)

With the Smartphone patent war, history thus seems to be repeating itself in some manner. Indeed, although the innovation isn’t the same, a very similar pattern appears in these different industries. Even though patent wars enabled the electrical industry to monopoly, nothing guarantees that this will be the same for the smartphone industry. Smartphone patents wars haven’t reached an end yet, there is no clear “winner” that has been able to “dominate the world” such as in the Risk game. Nevertheless, I believe that this is well their ultimate goal. By suing each other, smartphone firms intend to weaken their rivals and hopefully strike them out of the competition – or at least to enjoy potential short-term sales boosts and improve their position in case of a settlement.

According to me, competition law foster patent warfare more than it inhibits it. In the light bulb case the truce occurred outside of court grounds. The truce Lucy Koh called in for between Samsung and Apple in 2012 didn’t prove to be effective. Both firms did eventually agree to end all patent lawsuits between themselves in 2014, but this truce was only valid outside the US and wasn’t linked to Koh’s call.

By analysing how the patent trial systems vary across the world, this “limited” truce as well as the different outcomes of trials in different countries can easily be understood:

As explained by Sanjeev Bajwa, in Japan, the Intellectual Property High Court of Japan handles issues with the help of patent judges, assisted by former patent examiners. Helped out by former patent examiners and technical experts, IP High Court judges are able to make quality decisions that are accurate and consistent. South Korea, also has a specialized Intellectual Property Tribunal but it only covers intellectual property rights and the granting of intellectual property rights. The general courts formed by a three-judge panel, which decides both legal and factual issues, hear infringement cases. In the United Kingdom, the loser must pay the winner’s litigation fees and expenses. All trials are held before judges, not juries. Finally, the German patent system, commonly referred to as a dual system as different courts handle infringement and validity matters, the first matter (infringement) with a three-judge panel, the second (validity) by a panel of five judges, composed of three technical judges and two legal judges.

In the USA however, patent infringements are mostly judged in front of lay jurors. As “a typical jury panel is composed of citizen with limited education and understanding of science and technology of legal principles” (Bajwa, 2014, p. 78), in complex cases such as patent infringement, jurors can be influenced by brand loyalty and tend to evaluate facts based on their own experiences, values, emotions and prejudices. In the Apple vs Samsung case, it appears that only one member of the jury had previous experience with patents. The other jury members apparently leaned on his opinion as “he had experience”. Furthermore, it seems that the jury even decided to “skip the prior art questions and move on to the infringement questions, enhancing the idea that Apple’s plea of “it was my idea” was easier to go along with than Samsung’s defence of invalid patents. (Bajwa, 2014)
As mentioned in the Sanjeev Bajwa’s article, Judge Posner once said: “patent plaintiffs tend to request trial by jury because they believe that jurors tend to favour patentees, believing that they must be worthy inventors defending the fruits of their invention against copycats.” This appears to especially be the case in countries like the USA, where the patent trial system is composed of trial judges and juries that lack technological background such as that the outcome of the case isn’t based on strictly objective evaluations.

As mentioned above, in my opinion, competition law fosters patent warfare more than it inhibits it. However, I believe that improvement in the patent trail systems could enable consumers to benefit more of inventions than patent litigators. Such improvements, as suggested by Bajwa, could lay in the implementation of specialist courts, removing juries and replacing them with specialist judges aided by technical advisors and already exist in certain countries. This would enable more consistent rulings around the world.

Finally, in some cases, Judges could “simply” dismiss the suits without granting a jury trial when they believe that there is insufficient damage evidence and that an injunction would be counter to public interest, just as Judge Posner did in 2012 (Apple vs Motorola case), regardless to the possibility of invalid or infringed patents.

(*) “In this game, the board resembles a map of the world, with varying territories. In the early stages of the game, players amass tokens representing armies and position them strategically on the board to fortify their positions. Eventually, the game shifts into attack mode, as players vie to conquer each other’s territories. Ultimately, one party pushes out all the competitors and achieves the goal of the game: world domination.” (Shaver, 2012, p. 1892)

REFERENCES:

Bajwa, S. (2014, January). Apple v. Samsung: is it time to Change our Patent Trial System? . Global Business & Development Law Journal , 27 (1), pp. 77-106.

Shaver, L. (2012, July 21). Illuminating innovation: From Patent racing to Patent War. 69, pp. 1891-1947.

The patent wars may not be over yet, but this is probably the beginning of the end. It was correctly expected that as the number of features and suppliers get added, the probability of patent infringement increases, ultimately affecting the consumers. The worst case scenario is when essential features, necessary to market products, become a part of the patent wars and result in abuse of dominant position. Lengthy court proceeedings add to cost as well as time for smartphone makers, resulting in a huge loss to the society.
However, certain laws can help achieve an end to these wars. One certain way is to prevent formation of patent holding companies which are otherwise not in the same business. Such companies charge unfairly for patents, or auction them at high prices which are ultimately paid for by the customer. An inspection of these patent holding companies combined with fair standards of sale or auction of these patents can largely reduce the transaction costs.
Another role of competition law could be to prevent combined entities of different players in this industry from colluding to get patents. An example is a group of companies including Apple, BlackBerry, Ericsson, Microsoft, and Sony outbid Google for a bunch of patents related to mobile technology.
Related to this is also the task of competition law to prevent abuse of dominant position by incumbents. The first step is to identify essential patents and ensure transaction mechanisms for transfer of such patents. The EU competition commission recently took a step in this direction, directing Patent holders of Standard Essential Patents to act reasonably towards competitors or other third parties that want to have access to standardized technology. Fair renumeration methods as determined in contracts must exist and any deliberate cases againt these must be treated as abuse of dominant position.

References:

http://www.ipwatchdog.com/2012/11/28/the-beginning-of-the-end-for-the-smart-phone-patent-wars/id=30479/

http://www.reuters.com/article/2014/04/29/us-eu-competition-motorola-idUSBREA3S09220140429

The Smartphone patent war is an ongoing business battle by smartphone manufacturers including Sony, Google, Apple Inc., Samsung, Microsoft, Nokia, Motorola, HUWAEI, and HTC, among others, in patent litigation. The conflict is part of the wider « patent wars » between multinational technology and software corporations. [1]

In order to protect and to raise their market share, firms who developed a patent can sue to prevent opponents from using the methods the patent covers. Since 2010, the number of lawsuits, counter-suits, and trade complaints based on patent and designs in the market for smartphones, and smartphones’ devices (ANdroid and iOS), has increased significantly. [1]

Indeed, this phenomenon is not surprising as we know that the smartphone industry is based on cumulative innovations : « complementarity » and « sequentiality ». Let’s illustrate this world war through two famous examples and discuss its damaging effects.

In the first instance, let’s focus on the concerns about Google and its “essential” patents. Why are we talking about “essential” patents ? Mainly because those patents cover fundamental devices on which the entire mobile industry is dependent (H.264 for videos to be viewed on different terminals and Wi-Fi standard). [2] As those standards obviously need to be incorporated into all smartphones, it opens the doors to Google to sue any mobile company who (mis)uses those technologies.

Secondly, we can not talk about smartphone patent war without mentioning the fight between two current leaders in this industry: Apple and Samsung. Both companies are fighting in courts for years over patent infringement involving standard features for i.e. double-tap or pinch to zoom. Those conflicts brought both firms to waste both time and resources. Since 2014 Apple sued Samsung for $2bn and a coalition was formed in the Silicon Valley. Indeed, Google, Facebook, Dell, HP, eBay and a collection of other large Silicon companies have sided with Samsung in its battle over patents with Apple. [3] Why a sudden coalition? It is all about personal interests. For i.e. Google has a direct interest in the case as it is the developer of Android on which the infringing Samsung smartphones and tablets ran.

This recent coalition gives rise to some damaging effects of this endless battle that includes and affects more and more actors. The coalition argues that “the design patents covered only minor features and that should the court uphold the judgment and force Samsung to pay Apple damages over patent infringements it would be detrimental to the development of the industry and consumer choice”. [3] In my opinion, the two consequences they mentioned at the end of this statement can be heard for any patent war. The risk is that companies will be forced to retreat into their own proprietary ecosystem, each increasingly walled-off from the others.

Another risk is that those kind of lawsuits lead to pay huge compensation as a consequence of the patent infringement. According to me, those decisions will have a devastating impact on companies who spend billions of dollars annually on research and development for complex technologies and their components. Indeed, it can be seen as a useless waste of time and money that leads therefore to a significant reduction of the innovation itself. Attempting to start such a fight and especially the ones with such consequences may discourage companies.

As far as the competition authorities are concerned, the question is: can they do something to stop this war? Unfortunately I am convinced that the actions they undertake are not sufficient. Competition authorities have neither the means nor the mandate to regulate the creation of standards and access to essential patents ex ante. If Google, Samsung, Apple and their colleagues persist in their current approach, the sanctions those authorities would be able to take will not be adequate to address the fundamental problem. Instead, it will be for the mobile industry itself to put out the fire, by finding some viable means of preserving their common standards. [2]

In my opinion the best solution to end this “lose lose battle” is for those multinationals to find an agreement. And it seems that some of them have that already understood: Last year, Apple and Samsung agreed to end all patent lawsuits outside the US, leaving America the final battleground. We thus can see that when companies want, they can make the right choice and move in the right direction. But even this example give us the hope of a better world in which everyone could find happiness, there are still a lot of efforts to make. Because smartphone patent war is far from over…

REFERENCES
[1] https://en.wikipedia.org/wiki/Smartphone_patent_wars
[2] https://www.ipdigit.eu/2012/03/mobile-industry-in-googles-cross-hairs/
[3] http://www.theguardian.com/technology/2015/jul/21/facebook-google-dell-hp-ebay-samsung-apple

This article of November 2013 lays the foundations of what happens in Smartphone industry. Apple and Samsung, the two biggest competitors, are willing to defend their interests by protecting their innovations. They use to patent every single new feature of their smartphones so that they can attack the others when infringing it. Taking into account that innovative smartphones’ features are current in this domain, the war is not likely to reach the end.

Moreover due to sequentiality of certain smartphones’ innovation, there are incentives that push new innovators to break through. Indeed, by taking advantage of previous innovations, some companies don’t hesitate to make a further step and patent their progress. Besides that, they sometimes simply redefine a patent that was not precise enough. That irremediably enforces the competition within the sector.

On another hand, there exist some complementarity in the innovations that leads to higher prices and less welfare for the consumer. He is paying the price of a superior competition between companies: the use of patent encounters royalties and licenses that increase final price for consumers.

My opinion on judge Koh’s effort to make patent war slowdown is that it is a honourable action. Despite the fact that it was not really effective, Koh has tried to defend both interests by curbing the assaults of both companies. Furthermore, Koh’s actions are obviously intending to defend consumer interests and reallocate global welfare, which is more in companies’ hands than in consumers’ ones. Maybe it should be opportune for both companies to make agreements on the use of other’s patent. It is obvious that both have been developing technologies that are profitable for each other. The problem is that there is so much money in game that these practices are not tending to stop.
The most handicapped player of this patent war is the consumer.

In a recent article of September 2015 (1), it appears that both Apple and Samsung are still tackling each other in patent infringement. Next trial between the two biggest Smartphone companies will take place in March 2016. But what changed is that Koh has ordered to not add any discovery. It says: “The Court will not permit the parties to expand the scope of the damages retrial and will not allow the parties to rely on new sales data, new products, new methodologies, or new theories.”
One thing is sure we have not finished talking about it.

References:

(1) http://arstechnica.com/tech-policy/2015/09/apple-v-samsung-is-headed-toward-an-incredible-fourth-jury-trial/
(2) http://www.therecorder.com/id=1202736013875/Koh-Says-Enough-Already-to-AppleSamsung-Gang?slreturn=20151025082535
(3) https://www.ipdigit.eu/2012/03/mobile-industry-in-googles-cross-hairs/
(4) http://www.nytimes.com/2011/08/17/technology/a-bull-market-in-tech-patents.html?pagewanted=all&_r=0

As the smartphone market evolves in a rapid way with lot of new innovations, it’s clear that patents are usefull to keep a strategical position in that market. The first goal of patents is accomplished, thanks to this fast evolving market : innovation is promoted.
But as there is a very large number of patents, innovation is somehow restricted and sometimes IP rights are infringed. Therefore, these war seems inevitable.

I think that Lucy Koh’s move is at first sight inneffective. We can notice that, today, the war still continues and that almost all the different players were involved in on of another lawsuit. (1) (2)
But there are been also some improvements if we look closely. Some even thought that this war was definitively over. (3)
Indeed, a consortium had been established between some actors of the smartphone industry, like Apple or Microsoft. This consortium, called “Rockstar”, had as goal to cool of the patent war by acquiring patents they could use between the members of it. Some says it was also formed to face Google with more strenght. However, this consortium has sold its last patents about a year ago.
Another important improvement is that Apple and Samsung have agreed to call off their international disputes and “only” fight in the US. (4) (5)

To conclude, i would just say that even if the war seems to continue, Lucy Koh’s move may have opened the major players’ eyes about this situation, and how ridiculous it became. We can hope there will be another big consortium so that every actors of the smartphone market can benefit from the innovation, otherwise some laws may be a solution to clear the situation.

Sources:
(1) http://www.cnet.com/news/apple-samsung-to-return-to-court-in-2016-for-next-round-of-patent-war/
(2) http://www.theguardian.com/technology/2015/jul/21/facebook-google-dell-hp-ebay-samsung-apple
(3) http://uk.businessinsider.com/the-smartphone-patent-wars-are-finally-coming-to-an-end-2014-12?r=US&IR=T
(4) http://www.theverge.com/2014/12/23/7443483/rockstar-group-backed-by-apple-microsoft-sells-remaining-patents
(5) http://www.itespresso.fr/brevets-missions-accomplie-consortium-rockstar-85631.html

As seen in this article, the efficiency loss of this battle for patent is a tremendous for the consumers. Even if IP remains one of the most effective way to promote innovation, it has unfortunately boundaries and the smartphone market is a relevant example. This is a sector of fast technologies advancement but also a perfect example of concentrated market (with only a few players in world which have high market shares). In my opinion, the problem in this situation where “the patent race “is not enough controlled, the players will do everything to be the best or in this case, to slash the other competitors in an “unhealthy suiting game”. Lucy Koh was responding to a need to better regulate this race. This will allow a more “ethic” innovation with more profit for customers and not only firms. Moreover, there is a huge waste of money and time on these suit which must be avoided

I will try to answer for the second question. Personally, I think that an important way to face this problem is to make it through the regulators (new laws).
A good option of legislation is to make pay the firm who launch a useless lawsuit with legal fines. ; An example is the “Shield act” launched in US. It consists in the fact that if the patent troll loses in court, then he pays the other side’s cost and legal fees. (1) & (2).
Another solution that a State can implement is to raise the fees that patent owners must pay for each patent they have. A positive implication can be to give more money to the state but also it will imply that a firm must think very carefully which patent he wants to keep or protect.

Moreover, I strongly think that the competition law will never solve the problem of “excessive suitcases” and there are strong evidence to prove it. In the US, the first patent litigation date back from 1794 in the Cotton industry (3): it confirms the fact that this issue has always existed since the beginning of patents. Another main argument is the fact that there are a lot of money in game because if one of these patents is lost by the firm, he can potentially lose a larger amount of money than a simple suitcase.

(1) https://www.eff.org/fr/issues/current-legislative-proposals-patent-reform#shield
(2) http://www.popularmechanics.com/technology/a7994/could-new-laws-end-the-tech-worlds-patent-wars-11711611/)
(3) http://inventors.about.com/cs/inventorsalphabet/a/cotton_gin_2.htm

In this comment, I would like to derive from the comment submitted by Sophie Delcoigne who answered the first question over the decision of Lucy Koh. I would particularly discuss the effectiveness of such decisions: not if the one taken in 2012 was actually effective but if this kind of move can prevent the “potential collective suicide” on this specific market. The market in which those firms are evolving is indeed extremely important since smartphones keep changing. A new product released on this market has a determined lifespan (e.g. one year for the iPhone). The following year, a new product is launched with another feature added.

This pace forces the competitors to launch another version of their smartphone in order to remain competitive and innovative in the eyes of the consumers. One cannot simply decide to stop this rhythm and keep the same product for a much longer time. Therefore asking the two giants to sit around a table and make decisions for the future is meaningless in this constantly evolving market. You cannot just order companies to come to an agreement in terms of patents like the teacher might ask two disruptive kids to share candies.

There is a noticeable shift in the kind of innovations that are developed on this market. We come from more disruptive innovations, with new elements and a true added value, to small incremental innovations. This is symptomatic of the cumulative innovations to which the smartphone industry belongs. For example, Apple, in 2012, patented the “’rounded corner’ design of the iPad”, this way it ensures rights on the shape of tablets (Kovach S., http://www.businessinsider.com/why-apples-rounded-corners-ipad-patent-isnt-as-absurd-as-it-sounds-2012-11?IR=T). Those patents might seem trivial and without any added value for the final consumer, however they play a role in the coopetition between manufacturers. Companies ensure rights on small features that, seen one by one, are useless but this process taken as a whole has an aim.

It creates a bunch of patents owned by the different actors for insignificant elements of the product. But besides it creates a way for a company to, on the one hand, establish its power on a market by putting a spoke in competitors’ wheels. On the other hand, it is a way to put pressure on competitors. For instance, Samsung might use a feature patented by Apple, which on its side, use one owned by Samsung. (Eichenwald K., http://www.vanityfair.com/news/business/2014/06/apple-samsung-smartphone-patent-war) They can, this way, keep some kind of equilibrium where they both use the patent of the other, creating, in a way, a network of informal barter. In this situation, no firm has interest in suing its rival as it also infringes a patent of this very rival. Apple would not sue Samsung for using a rectangle with rounded corners but can negotiate the utilization of a patent owned by Samsung.

In a nutshell, I think that the Smartphone Patent War, despite its negative effects, can have positive impacts for consumers. If the patent is seen as a mean to negotiate another patent owned by a rival, it can lead to an innovation race. However I concede that competition laws have to be adapted to the new industry within companies are now evolving. It has to be done in order to prevent companies to enter in the tragedy of the anticommons that would cause an increase in the price of goods or, worst, a recession in the pace of innovation. (Williamson P. and Yin E., http://iveybusinessjournal.com/publication/rethinking-innovation-for-a-recovery/)

In order to complete my previous comment (see https://www.ipdigit.eu/2013/11/the-smartphone-patent-wars-nothing-really-surprising/#comment-25920) where I said that :

“In my opinion, I feel comfortable with Thomas Piketty’s vision which says that we need to stop wasteful patent trolling and unleash innovation! (…)”

One solution to stop wasteful patent trolling could be to separate trollish behavior from “legitimate” patent claims. As mentioned in a recent article of Jeff Clarck in the Data Center Journal (http://www.datacenterjournal.com/it/patent-trolls-stopped-systemic-reform/) : “it requires shaky definitions that classify some patents as “overly-obscure, general or vague” even though the issuer (USPTO) grants them without little checkboxes for “obscure,” “general,” “vague” or otherwise. Legislation averting this problem would necessarily be complex, likely creating more problems than it solves.”

To conclude, we can figure out that there is no perfect solution for IP rights, especially for the smartphone industry. Can open source sufficient motivating ? Which way will follow legislators to prevent patent trolling ? We will have to wait and see…

Thinking over the present situation – smartphone patent war in recent years was given increasing attention – I must say that I agree with Yann Ménière in terms of the limited authorities’ abilities. I think it is not impossible for them to controll the ‘war’ in the future, but they really need some time to do it. Since there is no examination of the relevant market or the specific characteristics of the industry, the finding of abuse lacks support. On my opinion it is more important to see the bigger picture in order to examine that the competition law infringe procedure is not being abused by undertakings wanting to slow down more efficient competitors. Because all wanted a fair share of the market that is why in the fierce competition patents are increasingly being used offensively as a weapon against competitors.
The above mentioned issue has been particularly difficult to handle, not only because of the complex nature of the legal and economic questions it raises, but also because of the significant business issues at stake. Hundreds of millions of dollars may be at stake in licensing negotiations. Besides the complexity of the legal and economic questions, and the large amounts of money, at stake, one of the difficulties is that companies involved in licensing negotiations may have opposed interests.
Patent pools seem to be an efficient solution if it will be further developed somehow, because besides the advantages patent pools have some weak points, as well. They can have significant procompetitive effects and may improve a business’ ability to survive this era of rapid technological innovation in a global economy. Their benefits are: the elimination of problems caused by “blocking” patents or “stacking” licenses, having the potential to significantly reduce several aspects of licensing transaction costs. They can reduce or eliminate the need for litigation over patent rights because such disputes can be easily settled, or avoided, through the creation of a patent pool. A reduction in patent litigation would save businesses time and money, and also avoid the uncertainty of patent rights caused by litigation. A patent pool provides a mechanism for free sharing of technical information related to patented technology among its contributing members and its licensees. By fostering lines of communication between the members, trade secrets would become less prevalent.
The main criticism are that patent pools inflate the costs of competitively priced goods, shield invalid patents and eliminate competition by encouraging collusion and price fixing.
So the keypoint of my comment should be that the necessary act of balancing competition law concerns with intellectual property rights while respecting the freedom to conduct business and the right to property is a long walk on a thin line.
Sources:
Journal of intellectual property law & practice, 2014 vol. 9 No. 2; Oxford University Press
http://www.uspto.gov/web/offices/pac/dapp/opla/patentpool.pdf

I believe that as patent wars last for quite a long time and therefore awareness of the problem rises, the number of attempts to finish them, such as this of Lucy Koh, will grow. I think that competition law can help as it shows the example of EU’s Competition Commissioner Joaquin Almunia. He made efforts to stop communications companies filling aggressive patent lawsuits against competitors. His actions were aimed against biggest companies in this sector, including Motorola and Samsung. He explicitly stated that “The so-called smartphone patent wars should not occur at the expense of consumers”. Motorola Company was ordered to resolve its dispute with Apple in Europe at the negotiations, not in court.

On Wall Street Journal’s Blog webpage we can find an article titled “Google Settlement Shows Smartphone Patent Wars Dying Down “. Article gives an example of settlement between The Rockstar Consortium (owned by Apple, Blackberry, Microsoft, Ericsson and Sony) and the sued companies Google and Cisco. It was reported that Cisco paid 188 million $, but the amount paid by Google is undisclosed. Apple and Samsung over this year decided to drop all lawsuits against each other, but they are still fighting in California’s court, where Apple already won two lawsuits.

I think that the governments will work out solutions to discourage big corporations from getting involved in patent wars. It seems that even the companies themselves start to realize that it is pointless to take part in law battles instead of focusing on their core businesses. I believe that a reasonable solution can be worked out to get the process of innovation back on its track. It should result in more dynamic growth of innovations, which are a benefit for the whole society.

Sources:

http://www.reuters.com/article/2014/04/29/us-eu-competition-motorola-idUSBREA3S09220140429
http://blogs.wsj.com/digits/2014/11/20/google-settlement-shows-smartphone-patent-wars-dying-down/

In this comment, I will try to answer the first question: “Was Lucy Koh’s move effective? Did the “Smartphone Patent Wars” calm down over the last months or did they go on with a
vengeance?”.

In fact, I consider that Lucy Koh’s intervention didn’t worked as expected due to the fact that it is not very simple to stop this problem with a mutual private agreement. Despite her move had good intentions, it didn’t worked as planned because of the particularities of the smartphone industry.
As we know, the smartphone industry is very complex as the products have a short life cycle so there is the need to innovate constantly. Besides that, smartphones are a cumulative innovation because they require the combination of several previous innovations – complementarity – and they are created as a consequence of other first-generation innovations – sequentialy. We can assume that, in this industry, companies must develop in a fast way in order to achieve a competitive advantage. According to this point of view, patents wars are strictly necessary to this industry so that firms can fight for a competitive advantage that will be traduced in more profit. In my opinion, without this war, there will be a decrease in the incentives to innovate.

To sum up, according to different recent news, in the last few months several companies reached a private agreement concerning lawsuits, like the sources state. In other words, firms can decrease their costs in lawsuits and bureaucracies and invest more in R&D in order to innovate in a more efficient way.

Sources:
http://english.alarabiya.net/en/business/technology/2014/05/17/Apple-Google-settle-smartphone-patent-war.html
http://www.theguardian.com/technology/2014/aug/06/apple-samsung-drop-patent-lawsuits-outside-usa

The patent war in the smartphone industry reached a peak in 2012 with the case of San Jose. Apple and Samsung were suing each others on patent infrigement all around the world. The amount at stake was in milliard $ so we can understand the fierce of this battle.
But all those successions of trials made the situation very unproductive and unviable. To such an extent that judge Lucy Koh asked for a truce to Apple and Samsung.
Has it been adopted thereafter?

To begin, we need to identify what are the main stakeholders in this war to understand it. We find the operating companies which invent and patent innovation. Then the patent trolls wich purchase patents from operating company to sue big companies in the aim to make money. There is another variant of troll which is called the patent privateers. In this case, they buy patents and go in war but share the benefits to the initial holder. At the end, the sponsors which have an interest in the judicial proceeding. Sponsors give the privateers some support to protect their interest.

What we could observe is that Apple and Samsung have kept going to sue each others. Altough HTC gave up and preferred make a deal with Appel by being under license and paying royalties. As we can see in the animated graph from the Financial Time, the number of judicial proceedings and the number of implicated firms have increased.

In may 2014, Google and Appel anounced a truce for the direct complaints that opposed them. But no truce for the users of Android ( privateers such as Samsung).

On the other hand we could read in the news that Google offered to Samsung to pay for some patents infrigement if they loose their war against Appel. Indeed, Samsung is biggest android consumer and has a marketshare of 30%. So Google couldn’t take the risk to see such a consumer diminishing its sales.

in August 2014, Truce between Samsung and Apple is finally declared. They stop the suing all around the world except in the US. It ‘s due to common decreasing sales caused by the entry of new competitors from France, Russia, India and China. In fact, the chinese smartphone manufacturer Xiaomi is become the 4th bigger seller in the world.

As conclusion, the Lucy Koh’s move was an awareness of this critical situation. Some like HTC gave-up others reinforce their commitment in the patent war. But this war has been raised by attacks between supporters (Apple vs Google) via the privateers and patent trolls ( Samsung, Motorola vs Apple) which was influenced by the sequentiality and complementarity of the innovations.
So we can’t say that Lucy Koh calmed down this fierce feud. The only reason, Apple and Google and obviously Samsung sat down around a table was the fear of new increasingly growing and worrying competitors.

references:

http://affaires.lapresse.ca/economie/technologie/201405/16/01-4767504-guerre-des-brevets-apple-et-google-decident-dune-treve.php

http://fr.euronews.com/2014/08/06/treve-entre-apple-et-samsung-sur-fond-de-baisse-des-ventes/

https://www.ipdigit.eu/2013/06/beware-privateers-patrol-these-patent-waters/

Both Samsung and Apple have been suing each other since 2011. Apple sues Samsung for 4 patent infringements whereas Samsung has sued Apple for 5 infringements. It should also be noted that Samsung acts as a supplier for Apple. It designs high quality System-On-Chip (SoC) which are invariably used in almost all smartphones. Imagine one day when Samsung refuses to supply chips to Apple. Apple having all its patents would face a tough situation changing to a different supplier. Results have shown that Samsung has an advantage over other chip manufacturers.

While it is intriguing to see so many patent claims, it brings us to the old question, “Did the chicken come first or the egg?”. Apple claims that it first patented the design and color of the i-phone and Samsung blatantly copied it. It also brings in the communication by Google to Samsung which warned of too much similarity. On the counter part, Samsung alleges that it began designing the smartphone well before the launch of i-phone.

It is hard to say if the number of claims has fallen since the April 2012 ruling. There are several international litigations with each firm winning in some other geography.

Even competition law would not help much. These laws are enforced when firm play with market competition to rig it and devoid the public of its welfare. Acts could include predatory pricing, colluding, refusal to deal etc. In case of Apple vs Samsung, it doesn’t seem to be the case. Even an out of court settlement is unlikely. This can be analysed from a game theoretical perspective as well. Each firm has the incentive to deviate from the settlement and gain market share by producing more. There is no Nash equilibrium that can be observed. If both firms have a situation where deviating would bring in more loss, then there would be no reason to deviate. Example could be high penalty if they deviate from agreement and sue each other subsequently.

A plausible solution that seems to benefit the entire smartphone making industry is to have more collaboration than competition. Industry associations representing a large number of firms, including buyers and suppliers to devise a framework would help a long way. Things such as geometry and color are vague. Maybe the patent regime for the smartphone industry needs to be rechecked. Patent should be awarded only if there was something innovative and not known to the society in general beforehand. Also it brings us to the last question, “what would Samsung do as a supplier of Apple if it were found guilty of infringement and would Apple go all the way to risk a major supplier for its products?”

Many economists have analyzed and comment the evolution of the patent war on the Smartphone market. I will discuss here a move from judge Lucy Koh. This American judge from a US District Court tried to force a truce between two giants firms on the smart phone market. Indeed, he though that this was going for to long and force the two CEO’s to work something out about this patent war.

We can see that this move was not really effective in the first time. Indeed, since this request from the judge, we didn’t saw any slow down coming from one of the two firm’s. But instead, it appears that they were answering to a lawsuit by another lawsuit. The two companies were suing each other on a lot of different market all around the world. Indeed many websites and trustful sources are showing that this war is not going to be over soon. (1).

The market of Smartphone is submerged with patents war. In this kind of wars, the firms have too much to win or to loose. They will do anything to secure their dominant position and to keep a comparative advantage over their competitors. Indeed, the Smartphone’s companies are investing billion and billion in these new technologies and they want the guarantee that these huge amounts of money that they are spending will lead to some useful patents. These patents will protect their investments by ensuring that their rights will be respected in the future. As many people says, suing another firm can be a strategy to slow the growth of a competitor or to try to boost your own sales by temporarily blocking a competitor’s product.

Furthermore some companies don’t even check if they are violating other patents. As an example, here is what a former Samsung’s lawyer – Sam Baxter- has said: “They never met a patent they didn’t think they might like to use, no matter who it belongs to (2)”.
It seems thus to appear that big companies don’t even care about competitor’s property rights and that they are just using their invention to try to gain market power and new customers.
I think that the big brands are making so much profit that they don’t even care about some lawsuits. Indeed, if by using the technologies developed by competitors they can win new customers or reach new sector or different market and thus win huge amounts of money; they don’t even care about paying some fines.

Besides, some European Commissioner have stepped up and forced some big companies to stop their aggressive behaviour on the Smartphone market. One of the EU commission’s goal is to enhance the competition on the Smartphone market by preventing big firms to adopt abusive “patents war behaviour against their rivals. (3)

To conclude, I think that this move from the judge could have set something in motion. Indeed, as the Guardian says (4), the two giants companies have agreed to drop all patent lawsuits outside of the US. I think it’s a good start and that this decision may arise from Lucy Koh’s first move as it forced the two actors to come together and try to work on this war issue.
Even if the war between Samsung and Apple seems to calm down this last few weeks due to this intention to drop lawsuit outside of the US, it is surely not the case on the whole Smartphone’s market. We can observe that a lot of firms are seeking revenge when they are suited. It seems that company that are suited often reply by suing the other company.
The proverb: An eye for an eye, a tooth for a tooth is a good example to illustrate what appears to be the mentality of the majors firms present on this market.

(1) http://www.digitaltrends.com/mobile/apple-vs-samsung-patent-war-timeline/#!C4hKQ
(2) http://www.vanityfair.com/business/2014/06/apple-samsung-smartphone-patent-war
(3) http://www.reuters.com/article/2014/04/29/us-eu-competition-motorola-idUSBREA3S09220140429
(4) http://www.theguardian.com/technology/2014/aug/06/apple-samsung-drop-patent-lawsuits-outside-usa

The smartphone market has become simply too big for this patent war to stop. The litigations are now used as a tool to grab market share in this increasingly short product cycle industry. The potential upside of ban on sale of competitor, however improbable, is too attractive and the costs associated are trivial for firms of Apple and Samsung’s size. Moreover, due to different patent laws in different countries, this war is being fought on multiple fronts.

I believe that Competition law would play an important role in stopping patent war. An investigation into companies to determine if they are using litigations to grab eyeballs or just to prevent the entry of competitors would discourage companies from using this strategy. This investigation should be done on a global scale, since the players and the market are all global. Convergence of global patent laws (or at least patent laws of key smartphone markets) would also assist in preventing companies from simply filing a case in a different country.

I think that the patent wars between apple and samsung are mainly about the design; and a bit with the software.
Indeed, Samsung is the main provider of electronic components to apple.
About the move, If you look for tech news on the internet, you could easily find a lot of articles talking about smartphones.
This war is growing and not only between Samsung and Apple. There are a lot of new companies that emerged and have lawsuit against
each other like Google, Microsoft, ZTE, HTC, Nokia. Another example is Huawei which was criticized for the copy of other smartphones.All the stakeholders are trying to protect their technologies and to differentiate from others.
So I think that the move wasn’t effective as the war still goes on and that new stakeholders will emerge.However, it seems that Some analysts said the two companies would eventually bury the hatchet and sign a cross-licensing deal, following the usual pattern of patent cases in the technology industry.

R&D of those companies is not in the process but in the technology for the product like apps or design. It is then easily imitable by competitors. It is important to have a protection on the innovation in order to secure market shares.
I do not think competition law could play a useful role in achieving a truce, as the smartphone market is evolving quickly.
Maybe some open patents may improve competitivity and innovation in this sector and I don’t think that the solution to that issue will come with competition law.

References:
http://www.theguardian.com/technology/2014/aug/06/apple-samsung-drop-patent-lawsuits-outside-usa
http://www.theguardian.com/technology/2014/may/03/samsung-ordered-to-pay-apple-120m-for-patent-violation

The US District Court Judge Lucy Koh’s strategy is similar to the way that a mother would use for solve a problem between her two sons who are fighting. Maybe make them talk for settle their disputes is effective if the parties involved are two little kids, but this don’t have the same efficacy if they are two big firms.

Nowadays it seems that her strategy is not working properly. The hostilities between Apple and Samsung have finished but only in the EU, where these giants of the smartphone industry kept endless legal fights, trying to ban the sale of the product of its competitor in some countries. European authorities have pressed these firms to stop, but in the US the situation is the same like two years ago.

Samsung and Apple keep a court battle since 2011 and they have been suing the one and being sued by the other around the world for three years. This year, Apple sued Samsung for the use of five patents that cover some iPhone basic features such as slide-to-unlock in several Samsung phones. The finality of this continuous confrontation is not about money. Apple intentions are slow down the progression of the phones that use Android, of which Samsung is the biggest seller and Samsung wants to keep being the market leader. In conclusion, the real purpose is control the market.

Furthermore, the lawsuits between other smaller smartphone companies continue, so, to sum up, the patent war in the smartphone companies is far away from over.

As per the statistics, the smartphone patent war has definitely slowed down but how much of it can be contributed to Lucy Koh is debatable. As mentioned in the infographic, the law suits were more to gain extra attention and as a result, a sales boost.
The lifecycle of a product like smartphone is very small. Given the length of a trial, both parties were very well aware that out of court settlement is the most likely outcome. Relying on a trail judgement is not suited for this kind of a market. So, the best they can hope to achieve out of these law suits is a better bargaining position for an out of court settlement. Also, these law suits helped them to be in top of the mind of potential customers which was very crucial given the large number of players in the market.
For a product like smartphone , it is nearly impossible to have in-house production facilities and technology for all the components and a manufacturer has to import them from some other third party which may be a competitor also. Given this complex relationship, patent war is bound to happen as no company would be willing to let other gain advantage. This is what happened in case of Apple and Samsung. Over the years, the court cases have reduced as the market matured which is more driven by market forces as compared to the judgement by Lucy Koh, which might have helped, but not to a large extent.

Lucy Koh’s intervention was honorable, but apparently not so efficient, based on the fact that Apple and Samsung continued to sue each other, as well as the other companies in the market. I think it is due to the fact that in the US, ways of thinking and doing business are completely different. It is more, as I heard, a win or lose mentality. And since Apple and Samsung are one of the best example of business rivalry nowadays, neither of them would choose to stop suing the other, and thus harm their credibility by “giving up” after all these struggles.

Maybe a mutual agreement between them would be the answer, but again, who would do the first step and seem “weak” to the other. Also this agreement should not only regroup those two firms, but all actives one on the market (Blackberry, Wiko,…), in order to be effective, for same reasons stated before (risk of being considered as weak, and so maybe more likely to become a target for claims about patent infringement).

And this situation is indeed, not profitable for consumers, because it can lead to withdrawal of products on the market, so less variety of choice ( but I recently heard that now court try to settle an agreement based on money , instead of imposing the withdrawal of the product concerned by the claim). Moreover, it is also a brake for innovation, which is a paradox in an industry where the only way to become better than the rival firm is to find the small innovation that you will present as the new indispensable feature.

It seems also unlikely that the solution to that issue will come with competition law, since in the US, courts and judgments are more company oriented than consumer oriented. The solution could maybe be, as I already said it before, a common agreement between all the actors in the smartphone industry, but it will be difficult to find a right balance for the smaller companies not to be disadvantaged compared to the industry’s leaders, who will be tempted to abuse of their bigger market shares, or bigger amount of patents they have (as in patent pools abuses: invalid patents will become shielded, inequitable remuneration, incentives to deviate…).

As the Robin Feldman( Professor of Hastings College of the law) said in an interview, few people heard about ‘Smart-phone Patent Wars’ or ‘patent trolling’ before the case of patent between Apple Inc and Samsung Company. In 2011, The Samsung Company, the major competitor of Apple Inc,was sued to the court by accusing the technology giant which copied the iPhone and iPad technology to design and manufacture in the smart phones and tablets of their own.

As mentioned from the blog, the cumulative innovation of smartphones In some sense,
 exhibit two types of cumulativeness: complementarity and sequentiality. On the one hand, the principle ‘tragedy of the anticommons’, proposed by American economist Michael Heller in 1998, applied to the complementarity because ‘the allocation of strong property rights to separate right-holders results in higher prices and higher transaction costs’. On the other hand, if intellectual property rights are defined too broadly, it’s likely to create hold-up opportunities for first-generation innovators because of the sequentiality. Such as Nokia Corporation,who holds many mobile patents, sued the Apple Inc to the court in October 2009, alleging violated the company’s 3G network and mobile Wi-Fi wireless patents.Many intellectual property experts believe that the smart-phone battle will slow down after a series of licensing and cross-licensing agreement being signed, but before that point, we waste too much time and money. I agree with Michael Carrier, professor of Rutgers School of Law in Camden, said “If companies spend hundreds of millions of funds for litigation, it shows the fact that our patent system exist problems.”

In my opinion, except the law of patent, the law of competition could intervene in the sector of smart-phone to avoid the abuse of dominant position in the market and for protecting the interest of customers. For example, article 102 TFEU dispose that ‘any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States’.

The European law of competition requires the holders of essential patents to the implementation of a standard, grant operating licenses of their patents on ‘fair, reasonable and non-discriminatory’ term. This principle allows companies to concern the benefit from the positive economic effects of standardized technology and to avoid the distortion of competition. In 2012, The European Commission opened an investigation against Samsung Electronics to check if the company has abused its rights of its patents to distort competition in the European market for mobile phone. Because in 2011, Samsung has sought injunctions in several European courts against competing mobile phone manufacturers, on the grounds that they were in breach of the operation of its patents.

I do agree that the patent holders should be fairly remunerated for the use of their intellectual property, but I think the implementers of such standards should also get access to standardized technology on ‘fair, reasonable and non-discriminatory’ terms because consumers will continue to have access to a wide choice of inter-operable products if this balance can be preserved. Anyway, I’m sure that the patent wars of smart-phone should not do harm to consumers’ welfare. Maybe sometimes, the patent wars could be ended by the intervention of the institution de regulation in EU. In April 2012, the European Commission reprimanded Motorola company’s mobility for taking such action against Apple Inc. The Commission ordered Motorola Company to resolve its dispute with Apple Inc in Europe at the negotiating table, not in the courtroom. When the law of patent lost the efficiency, the law of competition can take effect because such legal battles were anti-competitive, stifling innovation and hurted interest of consumers.

Souces:
http://www.techweb.com.cn/ucweb/news/id/2102412
http://tech.163.com/10/1111/09/6L6TFS73000915BE.html
http://www.cctime.com/html/2010-11-11/2010111021723935.htm
http://tech.ifeng.com/telecom/detail_2012_04/26/14173811_1.shtml
http://www.ft.com/cms/s/0/a5a3122e-cf99-11e3-bec6-00144feabdc0.html#axzz3KejhBzqI
http://obsession.nouvelobs.com/high-tech/20120131.OBS0224/samsung-soupconne-d-abus-de-position-dominante-par-l-ue.html

Referring to the question if “Competition law play a useful role in achieving a truce in the smartphone patent war? I think it is worth considering several aspects.

On the World Intellectual Property site the general issue of patens and competition law is illustrated. On the one hand, patents complement competition laws as a fair market behaviour is enhanced. But on the other hand, patent laws may be abused by its holders and not used in accordance with the original purpose they serve, as can be seen in the case of smartphone patent wars. Competition law’s aim is to prevent the abuse of someone’s market position. But as mentioned in a report in New York Times, acquisitions like the one of Motorola by Google or Nortel by a consortium of Apple and Microsoft seem not to be done because of economic reasons, but instead to have a weapon at court and be best equipped for legal battles. In this respect, I believe that current competition laws failed. The European Antitrust law states for example that a company with a dominant position in a market is prohibited to refuse innovating to the prejudice of customers. While this is not the case for the before mentioned examples, I still wonder if this legislation could be modified in order to account for the fact that companies with market power are actually conducting moves that prevent innovation in the whole industry, like seen in the patent war in smartphones.

Looking at this patent war and all big players like Google, Apple, Samsung, Nokia, Microsoft etc. I believe that it not only needs modifications in competition law, but at the same time, I think it needs even more cross-boarder collaboration as firms like in the discussion mentioned with Samsung, take this issue international immediately and therefore increase the complexity as common worldwide standards do not exist. It is true that this may take significant time and political consensus, but at the same time the whole smartphone industry develops into a direction that is hindering any new development and value for consumers. I would see governments in the role to act together against this problem. Also because while it is true that licensing my solve the inherit hold-up problem and patent pools can address the problem of the tragedy of anti common, I think that transaction costs are too high in order for this solutions to work in practice. This costs may be especially high as complementarity and sequentially render a smartphone an effort of cumulative innovation and there are hundreds of patents for many different parts of a smartphone, which ultimately would need many agreements between parties involved.
To conclude, in my opinion it needs more government involvement to solve this issues, as markets are imperfect and at least currently firms in this industry not in the position to solve it themselves.

Sources:

http://www.wipo.int/patent-law/en/developments/competition.html
http://www.ft.com/cms/s/2/de24f970-f8d0-11e0-a5f7-00144feab49a.html#axzz3KfaLMqeV
http://www.nytimes.com/2011/08/17/technology/a-bull-market-in-tech-patents.html?pagewanted=all
http://ec.europa.eu/competition/antitrust/overview_en.html

I believe that subsequent events have demonstrated that Lucy Koh’s move to get the two sides of the ‘smartphone patent wars’ to resolve their disputes outside the courts has definitely been effective. Even though at the closure of the famous case of Apple vs. Samsung, the jury held Samsung guilty of breaching Apple’s patents, Judge Koh did not agree to Apple’s request for a sales ban on Samsung smartphones. This, it can be argued, prevented further litigation and counter-litigation as each company would have tried to secure the dominant position and decimate the other. Indeed, Samsung and Apple’s decision in August 2014 to drop all patent disputes outside of the United States can be seen as significant lessening of the acrimony that seeme existed barely two years ago. Additionally, Apple, which appealing the decision of Judge Koh, dropped its request for a sales ban of many old Samsung smartphones.
I believe the underlying reason for moving away from litigation, and its appropriateness, can be appreciated by looking at the sequential-complimentary nature of smartphones. Here, not only does a smartphone depend on its predecessors from the same company, but also from its competitors’ company as well, so as to continuously move towards improvements in performance, design, technology etc. Looking at this issue not as a way to help an innovator appropriate the true value of the innovation, but as a means to provide the consumers with continuously improving options can make one appreciate the need to move away from cut-throat competition, which intense litigation is a part of. In this light, Judge Koh’s move is justified, and seems to be delivering results.

Sources:
http://mobile.reuters.com/article/idUSKBN0GR24L20140827?irpc=932
http://mobile.bloomberg.com/news/2014-05-14/apple-google-shaped-by-silicon-valley-judge-koh-s-gavel.html

Smartphones’ sector is a really lucrative industry and it is thus normal that competitors are ready to do everything in their power to gain market shares and competitive advantages. A key element to stay competitive in such a market is on the one hand to be ready to stand lawsuits, and on the other hand to obstruct competitors’ moves by suing them. As a first step, according to my opinion, I will describe the efficiency of Lucy Koh’s truce proposition in such a competitive context. Secondly, I will develop my opinion about the implication of competition law in patent war.

Why do Apple, Google, Samsung or other big companies take so much risks and spend so much money in defending their patent ? The ultimate goal is of course to keep a competitive advantage. Every actor wants to obstruct others’ moves in order to be as profitable as possible. In this context, lawsuits is an intrinsic consequence of these fierce competition. That is why, in my opinion, Lucy Koh’s ultimatum is totally useless, however good the intention may be.
According to the « Android graphic”, we can note that Apple and Samsung are constantly suing each other since 2011. Nearly all new products led to a long and costly lawsuit. We can consider this as a cycle. Thus, I think that forcing those two companies to « make peace » is a really naive obligation, and would be at best a short-term solution. We can be sure that the complexe legislation about patents and the pressure related to the competitive market would endlessly lead to new lawsuits between actors.
Moreover, this is one case of war between only two big competitors. However, they are not alone on the market. According to the Fincancial Time’s animated graphic, more than 20 actors are concerned, and most of them have « legal problems » with more than one other company. We can conclude that solve this complexe situation with private agreement is totally impossible.

Moreover, we learned from the first answer that the smartphone’s market innovation structure can be compared to a pyramid. Innovations are build on others’ ones. So, in order to put last piece of stone on the top of the pyramid, we have to collect the agreements people who put stones before. Since there are thousands of patents used in the smartphone’s industry, we can imagine how difficult it can be to find an optimal legislation.
A solution to this complex problem can be patent pools, which are « consortium of at least two companies agreeing to cross-license patents relating to a particular technology [1] ». Nevertheless, it is easy to understand that patent pools are source of time saving, but companies putting their patent in a patent pool can wonder whether it is more profitable to stay outside the patent pool in order to collect more royalties.
Furthemore, «patent hold-ups » are frequent in these kinds of industries, and measures have to be taken in order to restrict them. « A patent hold-up occurs when a patent holder make an intentionally false promise to license essential proprietary technology, and that patent holder’s subsequently breaches that promise and demands higher license fees than promised [2] ». In my opinion, one of the best solutions to counteract this phenomenon is a strengthening of legislation about contracts, or an integration of legal authorities.

To conclude this comment, I would say that this kind of complexe and competitive situation won’t be solved by such an ultimatum. Companies have to much interest in maximizing their profits and being the most competitive on the market. I think the best way to make them positively react is to establish kind of incentives that would awaken personal willingness from concerned enterprises to solve problems. The most drastic way is to establish strength constraints, which can impede the market.

[1] http://en.wikipedia.org/wiki/Patent_pool
[2] http://itlaw.wikia.com/wiki/Patent_hold-up

It turns out that the “Smartphone Patents Wars” did not calm down. The work of the judge Lucy Koh during the last years did not lead to a peaceful agreement neither to an end of the “fights”. Indeed, even though Apple prevailed in the last cast in 2012 (1), the two protagonists, Samsung and Apple, went back to court. Even after his death, Apple clearly still follows the mind of Steve Jobs who hated Android at its very beginning and saw Android makers as thieves of Apple’s ideas. (2)

In the last trial, Apple did not succeed in getting products of Samsung banned. (3) This kind of wish has become harder to obtain since a Supreme Court decision in 2007. Now, parties must rather settle for money. (4) However, Samsung has still not paid anything to Apple, according to SamMobile. (5)

In this new trial, they still accuse each other of infringing patents but on different products this time. (3) Here, Apple accuses Samsung of infringing five of its patents while Samsung claims that Apple infringes two of its patents. The products infringing each other patents are Galaxy Smartphones and tablets of Samsung and iPhone and iPad of Apple. (2)

What Apple thinks Samsung has stolen from it are “a tap-from-search technology that allows someone searching for a telephone number or address on the web to tap on the results to call the number or put the address into a map”, “a Google Quick Search Box” which seems close, according to Apple, to the “virtual assistant Siri” which “answer[s] queries in the iPhone”, the “autocorrection when words are typed” and, finally, “Slide to Unlock, which allows users to swipe the face of their smartphone to use it.” (2)

In this battle court, four of these five technologies above are Google’s products because Samsung uses Android. (3) That’s why Samsung received support from Google which sent experts to defend Samsung and which will help paying damages. (1)

In the future, the ‘Smartphone Patents Wars” never seems to come to an end. First, what should come out of this trial, which might take more than three years, is an appeal of Samsung and/or Apple. (3) According to Shara Tibken, the appeals of the both companies could eventually lead to the US Supreme Court. (6) Also, beyond these five patents of Apple, a sixth one could be the reason of an next trial. Indeed, still according to Shara Tibken, the technology of Samsung which “automatically detect[s] data in messages that can be clicked, such as phone numbers” seems to infring the ‘647 patent of Apple. (7) Yet, even if Apple is the winner of the battle court against Samsung, it could sue again but this time “against other Android handset makers”. (2)

At the end, this war wastes lots of money because of legal fees and none of that money is invested in innovation, which is the incentive a patent should give. The consumer may lose from this battle which leads to “fewer choices, less innovation and potentially higher prices”. (8)

Sources:

(1) LI K., Apple vs. Samsung Lawsuit Summary: Software Patent Trial Revolves Around Android OS and iPhone, iPad Duplication, Latin Post, 2014
(2) Apple sues Samsung for $2bn as tech rivals head back to court, The Guardian, 2014
(3) DUNCAN G., Why are Apple and Samsung throwing down? A timeline of the biggest fight in tech, Digital Trends, 2014
(4) ROBERTS J. J., Why the Apple-Samsung trial was a waste of time for all but fanboys and lawyers, Gigaom, 2014
(5) Danny D., Opinion: Apple’s patent lawsuit against Samsung doesn’t have the potential to change a thing, SamMobile, 2014
(6) TIBKEN S., In patent war, Apple and Samsung may both be losers, cnet, 2014
(7) TIBKEN S., Apple v. Samsung patent trial recap: How it all turned out (FAQ), cnet, 2014
(8) Dr. SAWYER R. K., Apple Wins Patent Case, Innovation Loses, Huffington Post, 2012

Even if the idea of Lucy Koh was a bright way to calm down this “smarphone” patent war, it remains true that it was not efficient at all. It can be clearly demonstrated thanks to both these recent articles :
http://www.generation-nt.com/samsung-blocage-importation-produits-nvidia-violation-brevets-actualite-1909075.html
http://www.phonandroid.com/samsung-pourrait-payer-des-royalties-a-apple-en-plus-du-milliard-de-dollars-dindemnites.html
As a matter of fact, Apple and Samsung use lawsuits, not only in order to protect their intellectual property but also as an “attempt to gain a short term sales boots and improve their position for an eventual settlement”. This can be also completed by the animation of the “financial time” in which one can clearly seen that most of smartphone company who is suited also suit the company who suited him (http://www.ft.com/intl/cms/s/2/de24f970-f8d0-11e0-a5f7-00144feab49a.html#axzz1sr16j7Fi). The patent war seems to fit with the “prisonner’s dilemnna” model. Combined with the fact that there is a huge amount of money at stake, it can be clearly understood that patent war won’t stop soon. The solution is the cooperation. In this term, I mean that Apple, Samsung and others would only use patent in order to protect their intellectual property. In this way of thinking, I would say that the proposition of Lucy Koh was bright. However, the expections was totaly different.

As a result, I think that law could play a role by reducing the number of patent per item or limited royalties in order to give incentives to cooperate and not neutralize each others.

The industry of smartphone is one of the most complex sector in terms of intellectual property rights and innovation. This sector is said “ high-tec” , it means that innovation is going very fast and is ephemeral. One of the characteristic in this field is the cumulative innovation. A first innovation comes out and will be improved over time by subsequent innovations that will use the primary technology. As we observed in the very first courses of Mr. Belleflamme, patents must be hold to induce innovation and to make innovators satisfied of the protection of their work (they get royalties… Money makes people happy). Then, it comes the problem of additional patents on the improved version of the good. A patent, over a patent, over a patent… Cumulative innovation becomes complex for patent holders and two important problems appear.
1) The Tragedie of Anticommons: it happens when the innovation is either complementary either sequential. Patents protect previous inventions and ensure to its innovator the respect of his work. When innovators need to access to an important number of previous invention, they are trapped into the tragedy of anticommons. It means that multiple patent owners have exclusion rights over the use of a common resource and it conducts to its inefficient under-utilization.
2) The Hold-Up opportunities for first-generation innovators: when the innovation is sequential and too broadly, an early innovator has the potential to claim against subsequent innovations. The effects of this behavior are importantly consequent: it reduces incentives to invest in R&D for this innovation and sometimes not to invest at all.

Competition law holds the role of regulation in the specific area of innovation. It has to ensure that firms respect the rules and agreements but more particularly its purpose is to protect the competition and therefore the consumers. Competition law has to encourage the innovation that will increase customers ’wellbeing. When two major companies such as Samsung and Apple, which have profits around $ 8.5 billion a year, keep fighting on patent’s infringement, they waste their energy in Court instead of spending it in Research and Development. Moreover, the patent war reduces the incentives for smaller firms to innovate as they are scared to be suit for infringement by richer companies. Lucy Koh’s move is ethically well-played but unfortunately it would never stop the patent war between Apple and Samsung or more generally between two of the most competitors in a sector. When there are millions at stake, a meeting in view of calming the war isn’t enough.
Through strict and advantageous measures, the Competition law policy should polish the innovation system. Indeed, due to the tragedy of anticommons problem, Public Authorities had found “patent pools” as a solution. Nevertheless, patent pools have some weak points that make the firms inside of it willing to leave it. In this case, it’s the role of competition law’s to create incentives for the firms to stay. For instances, they could imagine tax advantages or tax reduces for those firms. Weaknesses from the patent pools should be repaired and Authorities have to find solutions to it.
In the case of hold-up opportunities, Competition law thought that licensing agreements would be enough to avoid this second problem between sequential innovators. Unfortunately, it works only in certain situations (private information, symmetry, etc.).

To sum up, the question was “Are there any solutions that could push the industry back to the right path where consumers benefit more of inventions …,”. In my opinion, yes there are solutions. I am not sure if they exist yet but then, they should be imagined. I don’t master enough the subject to find possible and feasible solutions (yet), but what I expect from the Public Authorities is not to let the problems become bigger. It should find monetary advantages for the firms to respect the rules and not to enjoy weak points of the system.

http://www.researchoninnovation.org/holdup.pdf

I would like to take a theoretical approach to the second question and would thus like to investigate the role of competition law in achieving a truce in a (smartphone) patent war. I want to emphasize that I would like to take another angle at the problem than the one that Mr. Yann Ménière has taken. I will therefore not investigate the problem from the licensing side and competition policy’s ability to force to license under certain circumstances. In this case, I do agree with Mr. Yann Ménière that the role to be played for competition authorities is limited at most. I would like to investigate the problem from an angle of voluntary collaboration. As collaboration may very well lead to collusion, it is clear where the competition policy will come into my contribution.

The landscape of the smartphone manufacturing industry is changing rapidly with a multitude of players that are attacking the position of the historically two largest manufacturers being Samsung and Apple. Competitors like Huawei, Lenovo and LG are increasing their market shares up to little less than 5% in units in 2013. For all three this meant an increase by at least a percentage point over their 2012 figure (IDC 2014). The competition in the smartphone manufacturing industry is therefore increasing, which should theoretically lead to lower prices and thus larger benefits for the consumers.

My opinion on this increasingly competitive industry is now that there is an opportunity to make use of this increasingly competitive industry to allow for more collaboration. In my opinion the increasingly fierce competition will prevent the collaboration to become excessively collusive, as all parties would have to be in on the collusive agreement. The advantages of increased collaboration, on the other hand, can be vast. One clear example is the possibility to create joint patent pools and agreements that prevent each other from litigating on some items. Another really important issue is that if the number of fighting parties in patent wars increase, this will only decrease the propensity to innovate as attacks can come from even more directions and can be directed towards more parties. This will obviously decrease the social welfare.

I believe that the abovementioned intense collaboration kind of behavior in terms of patent collaboration would, for now, be deemed collusion. Especially in an oligopolistic industry as the smartphone industry this would raise some important concerns. If the competition keeps increasing as it has been up to today, I believe that one day the competition authorities will play a very important role in allowing and stimulating deeper collaboration. I also believe that, as industries will only keep evolving faster and patents will be even more sequential and complementary, these kind of issues will become more and more important.
Source: IDC Worldwide Mobile Phone Tracker, January 27, 2014

As the text explained, there is several factors which are reinforcing the patent wars. Not only the complementarity and the sequentiality but also the costs related to these patents. But more than that and this is very specific to the smartphones : The number of patents for one smartphone is incredibly high.

This is my answer to the second question :
I think law has a role to play in the smartphone industry. Indeed the costs are very high for the customers due to the royalties. We could imagine a sort of precedents obligating some cooperation between smartphones companies. By cooperation I am thinking of cheaper royalties, and a limited number of patents per phone.

I am convinced that patent war is strongly slowing down the evolution of this technology which has a huge potential. And that is why law must supervise the competition. Reducing the purchase cost and maximising the technologies possibilities is for me the only way where the society could benefit from the innovations.

These days complementarity and the sequentiality are strong brakes to innovation. Giving all what we have learnt, deleting this problem is very hard or even impossible. However I am sure that limiting the number of patents per item (not only smartphones) and reducing the royalties cost would encourage innovation. Indeed it will be more affordable for companies to invest in new innovations based on old ones.

I think that the patent war is not the only domain law has to influence. The actual society and the behaviour of the most important companies must change ! The “Laisser faire” is no more viable. People are struggling to life while companies are struggling to make more and more profits.

I would like to give my opinion on the second question. According to me regulation or public actions should be taken in situation in which the market solutions fails. I would like to apply this principle to the smartphone patent wars issue.

The inefficiency of this market is due to the structure of innovation in this field of smartphone which is largely cumulative. As a consequence two problems arise : the anticommons tragedy and the hold-up problem. The market try to cope with this with private solutions such as patenting pool in the first case or FRAND licensing in the second one. As the results of those private solutions are limited, the public authorities should intervene. I would like to share some actions that could reduce the damage of the anticommons tragedy and the hold-up problem:

Problem 1 (anticommons strategy) :

The patent pool system is interesting but it has a serieus weakness : every participating firms have strong incentives to leave it. Indeed, if a single firm leaves the patent pool, it may increases slightly its royalty (thus increase its profit) without changing much of the total cost of royalties of all firms (thus without changing much the of final price and so the demand). The problem is that all firms will do so. This will prevent the formation of the patent pool and makes cumulatives innovations more difficult to conduct.

Public authorities may act to changes this incentive to leave the patent pool. For example, tax breaks on the royalties could be given to the firms that are part of a patent pool. firms participating in a patent pool could also get a priority access to court when they file a claim for patent’s infringements and some harsh sentences of justice such as a sales suspension could be limited to firms infringing patents belonging to patent pools. I am not a lawyer so it is likely that those ideas are not workable but I’am sure that it is possible to give somehow legal advantages on firms whose patents belong to a patent pool.

Problem 2 : (hold-up)

this second issue make me think to the air transport market. Indeed airlines own time slots** on airports during which they can take off or land. Those rights are kind of similar to patents because it entitled them to exclude others airlines of using the runway (since runway is a rival good). In this market, the amount of time slot to a given airport owned by a single airline may not exceed a given ceiling. It has already happened that two airlines have to sell back some of their time slots to a given airport after they merged. What can be learned from this? If a company cannot participate in a market without the access to an essential ressources, fair competition may happened only if the public authorities guarantee a minimum access to this ressource to all participants.

In the case of airlines those ressources are time slots. In the case of the smartphone industry, thoses ressources are essentials patents on which most of the others technologies are build on.

We could imagine that the public authorities rate some patents as essentials and make sure that no company own more than a given share of those. As a results, every single of those company would be unable to create a product without the patent of the other one. At the end, those companies would be forced to cooperate and bill one another FRAND royalties.

The solutions to those two problems proposed here have to be implement on a very large scale (EU, USA…) to be efficient.

I think that the solutions explained above could force smartphones companies to stop throwing away ressources in fighting each other and rather focusing on developping new
technologies that could attract and pleased more consumers.

**Source (time slot) : http://en.wikipedia.org/wiki/Landing_slot

I think that patent wars have not decreased in intensity during the past few years. Indeed, we have recently seen fights in the eternal conflict between the two giants: Apple and Samsung.

Although Lucy Koh’s move for a peaceful behavior is a great idea to decrease the smartphone patent wars, I think that it is not especially effective and sufficient to end those wars up. The smartphone market and its stakes are so big that these two giants firms want to gain patents before the other does.

As an example, a new trial between Apple and Samsung had taken place past few months with many pursuits, appeals, and so on. Indeed, on Augustus 29 2014, one can read on the Silicon Valley website: “Apple revealed that it will appeal U.S. District Judge Lucy Koh’s denial of a permanent injunction on the Samsung products.”

I also think that the smartphone market is evolving very quickly and the consumers always want more and more improvements and innovations that firms have no choice to invest a lot in R&D and pursue the competitor when it copies the product of the other one.

For those reasons, the smartphone war is far to be finish and a new war will certainly come up in the short run with no peace for each other contrary to what Lucy Koh recommended in 2012.

Sources:

http://www.siliconvalley.com/apple-vs-samsung/ci_26431765/apple-v-samsung-apple-appeals-judges-refusal-block

No, smart phone wars have not by any measure calmed down in the recent past, in fact they risen and will continue to rise in the coming time. To corroborate the above mentioned fact, let’s just look at the last result of the last trial b/w the two giants; it resulted in Samsung paying 290 million to its arch rival
So to retrospect was Lucy Koh’s move effective? Well, I don’t think so! Let’s discuss this issue from a pure business sense, I mean, let’s look at what is at stake for both these companies.
Apple is the original creator and promoter of smart phone technology, but is it a leader at this moment, well that is very difficult to agree to. Whereas, what is the current standing of Samsung? Samsung is not just servicing the premium segment unlike its rival. It has phones to offer to every category, at the affordable price range for the category. Now let us look at the industry as a whole. It is still growing; there are so many people who need to be tapped. An original innovator poised against a worthy competitor, how much more ugly could it get?
No one is going to budge when it comes to the companies in question, they will try and take as much from the other company as much possible, because one’s loss is the others’ gain!
In light of the above move was highly mis-timed, and was bound to be a failure from the word ‘go’. To think of a possible solution, the only way to go about it is strengthening the law which governs all this. If companies want to go head on, for which they have a right as well, and then might as well let them go. You can’t impose a truce, but you can impose the law. Make the game fair and square, if you think entering into a war and winning incurs less cost than the profit it is bound to reap, then companies will continue to war, till they have had it all!
So, solution lies in strengthening the law, imposing stricter rules rather than creating opportunities of truce when majority of the market is untapped and ready to be taken on by the competition!

One very interesting fact about this patent war is that there are no winners. Everybody is suing everybody and everybody’s claims appear reasonable and unreasonable at the same time. So this fact itself should ensure that the industry will eventually autocorrect itself. In an attempt to destroy competitors, the smartphone companies will soon realize that they are threatening their own survival. In the meanwhile, competition law could play its role in attempting to stop this madness. However, its efficacy is debatable. As Yann Meniere has discussed in his blog, it fails to address the fundamental problem. At best, it can help accelerate the process of change. On the other hand, there is also the possibility that these patent wars could go on for a very long time. One reason could be that smartphone companies have hit a wall when it comes to innovations. There are so many models with so many features released year after year that it had to eventually slow down at some point. It is possible that the point has been reached. Which is why companies resort to tactics like patent infringement suits in order to bide their time. If that is the case, then competition law can play a very important role. By discouraging such frivolous suits, companies can be forced to spend more time inventing new features than wasting time and money filing lawsuits.

The mobile phone industry is a real patent thicket as Shapiro argues in one of his article. This element, combined with the fact that mobile phones are cumulative innovations, contributes to transform this market and particularly the smartphones one into a real minefield. In fact, the number of patent claim is incredibly high. And among all these disputes, one draws more attention: Apple versus Samsung. These two well-known enemies are fighting for a long time now. And last year, Lucy Koh tried to force both parts to find a pacific agreement. Unfortunately this attempt was a real failure.

Even if the two firms have cordial business relations (in fact, Apple buys many components from Samsung and is one of its bets clients), they are not ready to let it go. In fact, for both players, the stakes are heavy and it is important to strike the enemy as many times as possible. Loosing would mean paying a huge amount of money, damaging its brand image and renouncing to an important market which is immature and thus offers a large quantity of new customers to capture. Moreover, I am not sure that any judge or any court could have found an effective solution. I think that the key stands somewhere else, maybe in a modification of the legislation or in a different patent policy. Indeed, for me, Lucy Koh has fulfilled her part of the contract. Riding out a legion of famous and arrogant attorneys is not simple and keeping some critical sense when these lawyers try to test the rules is even harder. Despite her limited experience, she succeeded in doing so and she did not sound intimidated. On the contrary, she scolded Bill Lee publicly (one of Apple’s famous lawyers) and even sounds more informal than usual District judge.

Smartphone patent wars are far from ending. There will be many battles but the war will go on. Lucy Koh’s efforts will at best slow down things or will only be able to settle some of the issues only.
As companies try to add the latest and the greatest features to their smartphones year after year they cannot afford to be seen as missing a specific feature. After a specific company comes out with a innovation that sticks or becomes popular with the public, that specific feature will be a must have for any other smartphone to stay in the race.
As companies try to find alternate ways to copy the same feature, they are bound to infringe on others’ intellectual property or at the very least appear to be infringing. In my opinion companies tend to risk legal ramifications arising out of patent infringement cases because they think the cost of fighting or defending such a situation is lesser than the loss of revenue by not trying to include the same feature somehow. Also for the sake of not appearing as a copy cat companies that are sued will try and sue back, even if they know they are going to lose the legal battle.
Smartphone industry is growing rapidly year after year and not being a part of the industry is very costly for most of these players. And in their fight for supremacy or survival patent infringements are going to be the norm for the coming several years and patent wars will not come to an end anytime soon.

In my opinion i think Lucy Koh’s policy wasn’t effective and the ‘Smartphone Patent wars’ will go on with a vengeance.

In an increasingly competitive smartphone market, patent war between the companies never seem to stop , they will even use “slide to unlock”(tiny function) continuously launching patent litigation, suppress competition.Apple has gained two important U.S. patents about ‘slide to unlock’, it is to use these patents as a weapon in the worldwide to drag its competitors into patent war.In recent months, Apple has been sued HTC on a slide to unlock patent and other patents in Delaware and Texas .It also uses these patents in Miami and Germany Counterclaim Motorola Mobility, in Australia, the Netherlands and the western city of San Jose, California, filed a lawsuit against Samsung Electronics.

So the smartphone patent war will continue for a long time.”A lot of companies are spending hundreds of millions of money in the lawsuit, which shows there are serious problems of our patent system,” New Jersey Rutgers School of Law Professor Michael Carrier said. “Does it have to think about more harm than good.”

Smartphone market patent war intensified, starting from the terminal manufacturers to system camp. Such patent war has seriously affected the order of development of the industry, the smart phone market probably will stifle innovation.It is understandable that smart phone manufacturers to protect their patents, to increase the awareness of IP, but in order to suppress competitors as the main means let the whole industry into the ocean of patent wars.It will affect innovation and development, consumer perception.Consumers can not enjoy the new products and applications, loss of interest on the purchase. Thus,the ultimate victims will be the entire industry and smart phone manufacturers themselves.

I think as long as the “patent war” will also benefit for the winner, it will continue. Most than one year after the Koh appeal, Samsung is again condemned to pay $290 million more to Apple. Moreover, the United States Court of Appeals for the Federal Circuit has softened its jurisprudence. Now, to prove that he was injured, the plaintiff has just to prove that “The inclusion of a protected function gave a significantly more desirable product” or that “his absence would have made significantly less desirable”. Whereas before it required to prove that violated patents had played a key role in the purchasing decisions of consumers. That was most difficult. So Apple will again request the prohibition of the sale of several Samsung products. I think we should return to the demonstration of a real damage in the chief of complainant. A bit like that asked the Judge Posner in the Mottorola vs Apple case.

Competition laws improving patent pools *might* help, but it depends on the CEOs of the firms.
And a court ordering them to meet and work out their differences certainly has even less coercive power.

In my opinion, patent wars benefit companies like Apple quite a lot. Besides Microsoft, they have the most lawsuits with the most companies. Why is that?

Let’s think a bit strategically. Here’s the issue from the marketing perspective.
Considering the overpriced products they sell that are outperformed in one way or another by many lesser-known products around the world… the main feature of Apple products is the apple logo. As a basis for comparison, you can go to Alibaba and order tablet PCs that have all the options of the most expensive iPad, better technical specs across the board, and pay 100-200 dollars.
If Apple comes up with some small little design feature, they will try to patent it and they will fight the patent to the death. What other company has ever come up with something as ridiculous as patenting rounded corners on windows and icons? Most of their patents are on features/technologies that they haven’t even developed themselves.
If Apple loses monopoly over those features, the product differentiation that they rely on to sell their products begins to dissipate, and the Apple illusion will fade.

So Apple is incentivized to fight for every patent that they filed, in order to keep themselves as unique as they can.
Of course, this strategy isn’t unique to Apple, every big company employs it, but nobody relies so much on it, to the best of my knowledge, because nobody relies so much on hype-marketing as Apple does.

In light of this, large visible companies that sell highly marketed end products to consumers are much less likely to form patent pools. It does seem, indeed, that most patent pools seem to be for actual wide-application technologies, rather than products themselves.
The technologies and the weaving of different technologies are less visible to consumers and therefore less dependent on marketing. The utilitarian aspect takes precedence, therefore leading to more patent pools being formed.

But overall, the patent wars are pretty funny… especially in light of facts such as the iPad’s display being made by Samsung…

http://ipinsiders.com/profiles/blogs/did-you-know-how-many-patent