Tuesday, August 06, 2013

A patent reversal for Apple

It is interesting to see the patent fight going on between Samsung and Apple. Since about 2010, these two giant companies have been sparring over patent rights in an effort to assert dominance in a very competitive cell phone handset market.

Very simply put, Apple started it. Steve Jobs declared that Android, the operating system running on Samsung phones, steals from Apple. From that point forward, Jobs pointed his legal army at Samsung to stifle competition from Samsung.

Samsung now has a very comfortable lead in handset market share over Apple, worldwide. But at home, Apple is still doing very well. But you wouldn't know it based on the latest news that President Obama stepped in to help Apple.

Samsung has been asserting standard essential patents against Apple at the International Trade Commission. Apple has been unwilling to negotiate fairly, claiming that Samsung is asking for royalties that are too high. Never mind that Apple has been demanding $30 per handset from Samsung to license Apple patents. Apple would surely like to put Samsung out of the cell phone business, but they cannot in a free market. Apple would also prefer to skate on Samsung's patents and if they could, still get $30 per phone from Samsung.

Ultimately, Samsung prevailed at the ITC and was awarded an exclusion order that would prevent some older model iPhones and iPads from being imported into the United States. To prevent the ugly spectacle of an American company being unable to import it's own products into the United States, President Obama has stepped in and vetoed the ITC's decision. Samsung will not get the exclusion order.

While President Obama talks highly of the innovators, he is clearly biased towards *domestic* innovators. It no secret that he would prefer that Apple prevail against foreign companies like Samsung. But to pick winners and losers like this is so unbecoming of him. Or maybe not. Maybe he had a debt to pay to Apple.

Had the exclusion order been upheld, Samsung could negotiate with Apple in good faith as Apple was unwilling to do so. Obama says that the parties can still fight it out in the courts. Maybe so, maybe not. I don't know. But watching what is going on with Microsoft vs Motorola suggests that it's going to be tough sledding for Samsung.

In Microsoft vs. Motorola, we have a similar argument over standards essential patents. Microsoft is asking a court in their backyard of Redmond, to rule against Motorola. Microsoft is asking the court to impose upon Motorola, a very, very low license fee for Microsoft to pay for standard essential patents. This is despite the fact that Microsoft is unwilling to negotiate in good faith. This idea that we can forum shop or assert home rules against a non-local entity is not in the spirit of free trade.

If Obama wants American patents to be honored abroad, he needs to rescind the veto of the ITCs decision and let the exclusion order stand. If not, then this decision could be the start of an entirely different patent war. A war where patents are not honored across borders. Is that what you want, Mr. President?

I want that. That would free up trade. That would prevent the continuation of the war on free software maintained by the patent owners of the software world, namely Microsoft. In some ways, what President Obama did is good. But if he's going to do it for Apple, he needs to do it for foreign companies when he thinks that patent owners are overreaching.

Treat everyone equally, Mr. President. Don't just act in favor of the home team.
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