Friday, August 31, 2012

Japanese patent ruling is a non-win for Apple and a non-defeat for Samsung -- that's all

If you just read that Samsung defeated Apple in Japan, it's because most of the headlines out there are correct only in an utterly formalistic sense but nonsensical from a strategic and commercial point of view. Some reports, however, do get this right. For example, this AP story has a title that is not only correct but also appropriate:

"Tokyo court: Samsung didn't infringe Apple patent"

That's all that happened. In one of more than 50 lawsuits these two companies filed against each other in ten countries on four continents, a ruling came down (an appealable one at any rate) according to which Samsung does not infringe on an Apple patent on a "synchronizing technology that allows media players to share data with personal computers".

Without a doubt, Apple would have loved to score its next win over Samsung just a week after that billion-dollar verdict in California. Everyone loves winning streaks, and if two consecutive wins occur on two different continents, even better. Microsoft actually achieved this against Motorola this year, winning a U.S. import ban on a Friday and a German injunction six days later. But this is more of a psychological matter than anything else.

Let's put today's Tokyo ruling into perspective. If you count each country separately, Apple holds tens of thousands of patents worldwide. It has, by that count, already asserted well over 100 patents against Android. It hasn't even asserted all of the ones it could assert -- for example, most of the patents it listed in a presentation to Samsung in 2010 haven't shown up in court yet. And Apple gets new patents every day, somewhere on this planet, that it could assert in the future.

The drop-out rate in this game is very high. IF a company files a lawsuit over X number of patents, it doesn't realistically expect to prevail on every single one of them. Even that California jury decided against Apple on one of its seven patents. Some of the other six will likely be invalidated over time, at least in part, but at any rate, Apple had temporarily withdrawn a number of more ambitious claims in favor of focusing on those that it thought were easiest to prevail on. In the coming weeks or months we'll see Apple's reassertion of some or all of the temporarily-withdrawn ones. If there had been a trial over all claims, the more and the less ambitious ones, the hit rate would also have been lower, even with the same jury, I'm sure.

I said before that it's exceedingly formalistic to declare Samsung a "winner" based on today's Japanese decision. Apparently, Japan is a "loser pays" kind of country, so it can recover legal expenses, but between these two behemoths, and even if just compared to the billion-dollar California verdict, it would be an overstatement to describe the economic relevance of that as chicken feed.

Things didn't get better for Apple. They didn't get worse for Samsung. But Apple has far too many patents that avoiding liability for one of them (provided that the appeals court affirms) helps Samsung.

There's a lot of spin-doctoring going on by some of the companies involved with these disputes -- I'll address this in my next post in another context, on the occasion of a postponement of a German ruling. The Android camp is clearly losing this patent war (not as quickly as Apple would like to win it, but still, Android is losing without a doubt, with Android-based devices having been found to infringe 15 valid Apple and Microsoft patents, all of them non-standard-essential). That's why some of the companies on the losing end, and those who for whatever reason seek to support them, try to make people believe that there have been wins and losses on both sides, while no reasonable impact assessment can arrive at the conclusion that this is a balanced battle. Currently, not a single standard-essential patent is being enforced against Apple or Microsoft anywhere in the world. Apple will have to pay something to Motorola in Germany and a small amount to Samsung in the Netherlands, but that won't change the equation for a cash-rich player like Apple,

If Android companies in general and Samsung in particular want to score real wins, they have to enforce reasonably powerful non-standard-essential patents. If today's Japanese ruling had awarded Samsung an (enforceable) injunction against Apple, it would have been a win for Samsung and a loss for Apple, and Samsung's chances for a settlement on favorable terms would have increased significantly. But that did not happen today.

I sometimes compare this to soccer, a low-scoring game. Even if there's a very lopsided game -- say, a pre-season match between one of the world's top ten teams against an amateur team from a small town --, the stronger team won't score a goal every time it launches an attack. But at the end of the match, all that matters is how many goals were actually scored. Nobody who wins decisively will care about how many opportunities he missed.

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