The biggest patent battle of the modern technology world has finally come to an end after seven years.
Apple Inc. and Samsung Electronics Co. told a judge Wednesday they’d resolved the first filed but last remaining of the legal disputes that once spanned four continents. The string of lawsuits started in 2011 after Steve Jobs, Apple’s co-founder who died that year, threatened to go “thermonuclear” on rivals that used the Android operating system. The companies didn’t disclose the terms of the accord.
While the overall Smartphone Wars included every major maker of mobile devices, the fight between Apple and Samsung was the most intense. Apple accused Samsung of “slavishly” copying the iPhone design, while a Samsung lawyer once called Apple a “ jihadist.” The ensuing litigation cost each company hundreds of millions of dollars in legal fees, and tested their reputations as innovators.
‘Sumo Wrestlers’
“The sumo wrestlers have tired of the wrestling match,” said Paul Berghoff, a patent lawyer with McDonnell Boehnen Hulbert & Berghoff in Chicago who followed the cases over the years. “They both were tired and happy to stop paying the outside lawyers. We may never know who blinked first, who made the call.”
For Apple, the Samsung case had become a distraction over “ancient history,” Berghoff said. The iPhone maker is embroiled in a multibillion-dollar legal battle over patent royalties to be paid to mobile-chip designer Qualcomm Inc., a fight that’s swept in regulators including the U.S. Federal Trade Commission and Apple’s contract manufacturers.
By many accounts, the iPhone revolutionized the market for smartphones when it was introduced in 2007 by Jobs, who described the device as “magic” and warned, “boy, have we patented it.”
Samsung, which was already on the market, had to adapt quickly as consumers snapped up the sleek iPhone, with its ease of use and design awards. These days, Samsung taunts Apple in commercials featuring people opening new boxes of Galaxy smartphones while a singer croons “I’m leaving you,” an obvious reference to the iPhone.
The technology landscape has shifted significantly since the dispute began. Apple has expanded its iPhone lineup to include more expensive as well as cheaper models. It’s also revamped the phone’s interface with new icons, colors and gestures. Samsung has added new models with curved screens and iris scanners that Apple has eschewed.
Chinese Phone Makers
The two companies remain far ahead of the competition globally in phone sales, but Chinese phone makers such as Huawei Technologies Co. and Oppo have begun to eat into Samsung’s market share while Apple’s has remained fairly steady.
In the first quarter this year, Apple held 16% of the smartphone market, while Samsung accounted for 23%, according to data from IDC. That compares with 30% for Samsung and 19% for Apple in 2012, the year of the original trial.
The smartphone wars follow a long American tradition of patent disputes whenever there are dramatic innovations in an industry, whether it be sewing machines, airplanes, radios, computers or diapers. Companies use their patents to slow down the growth of their rivals, for bragging rights or to force competitors to change their products.
“It always ends in a settlement because it just makes sense, once they get tired, to tie up all loose ends and call off the dogs,” said Berghoff. “You never stamp out the other side, but you can inflict some monetary pain and make them alter their technology. Sometimes that results in the other side coming up with a better product.”
New Ideas
The mobile-device companies were coming up with new ideas, but it’s unclear whether the patent disputes were a motivating factor, said Michael Carrier, a professor at Rutgers Law School in Camden, New Jersey, who specializes in antitrust and intellectual property law.
“What Apple/Samsung showed is that litigation is not the ideal way to solve these fights,” Carrier said. “At the end of the day, I’m not sure Apple would have said this was worth it. It was expensive litigation that went on for years, and I’m not sure what they got out of it.”
While the rulings were never significant to either company’s bottom line, Apple has long maintained there was a bigger principle at stake. After the 2012 jury sided with Apple, Chief Executive Officer Tim Cook said the lawsuit was about values, and that the company “chose legal action very reluctantly and only after repeatedly asking Samsung to stop copying” its work.
Jury Award
Apple won a $539 million jury award against Samsung in May in a retrial over damages stemming from their original showdown in federal court in San Jose, California, that ended with a $1.05 billion verdict. Part of that money had already been paid to Apple before a Supreme Court ruling on how damages were calculated, as was a $119.6 million verdict against Samsung that was upheld on appeal.
“This case has been sending toward settlement for some time,” said Michael Risch, a law professor at Villanova University School of Law in Pennsylvania. “This appears to be the final nail, which was waiting for a jury verdict and little headway to be made on appeal.”
Apple said after its May victory that the case “has always been about more than money” and “it is important that we continue to protect the hard work and innovation of so many people at Apple.”
A Samsung spokeswoman declined to comment on the settlement and Apple didn’t respond to a request for comment.
The iPhone maker previously reached separate settlements with Google, which developed Android, and HTC, the Taiwanese mobile device maker.
In 2012, HTC agreed to make quarterly royalty payments to Apple and pledged not to make phones that looked like copies of the Apple products. In Apple’s 2014 settlement with Google, which had bought Motorola Mobility, the two sides agreed just to drop their respective fights and work together on political issues involving patents.
Although the smartphone market is no longer growing, Apple and Samsung will probably remain competitors for decades to come in new categories such as self-driving cars, augmented reality glasses, smart speakers and artificial intelligence software.
By Susan Decker, Mark Gurman and Joel Rosenblatt
