Background Information about Apple and Samsung
Technology is one of the most rapidly growing industries in the modern world. Companies need to be regularly updated about their competitors activities and strategies to succeed in the smartphone market. Apple and Samsung are among the most successful smartphone-producers that have flourished worldwide. Apple was founded on April 1, 1976, in California, United States. Samsung was founded on January 13, 1969, in South Korea. The market shares of Apple and Samsung exceed all their competitors around the globe.
Competition between Apple and Samsung
Apple is not just a product innovator, but it is also known as a creator of new markets who then dominates them as a first move. Apple is the pioneer of iPods, iPhones, and iPads. It has created these three innovative ideas. It also introduced the products to the market before any other company did. Its product line has established a significant level of competition and challenges that have exceeded all technology companies abilities. However, Samsung was able to keep up with Apple in competition. The two companies are successful competitors because of their rapid growth and success in invention and innovation. Recently, a serious issue became publicly known. Apple accused Samsung of patent rights violation. Apple won the case and was awarded $1 billion. Patent infringement is the act of making, using, selling, or offering to sell a patented invention, or importing into the United States a product covered by a claim of a patent without the permission of the patent owner.
Why Apple Sued Samsung
Apple and Samsung are mobile phones market rivals. Each of these companies has been seeking to scoop a large market share by utilizing technology and innovation to enhance its competitive edge. Apple sued Samsung for alleged infringement of design patents and trademarks. Apple claimed that Samsungs Android phones and tablets infringed Apples patent and trademark rights. For instance, Samsungs Nexus S, Samsung Galaxy Tab, Epic 4G, and Galaxy S 4G infringed Apples patent and trademark rights.
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Apart from patent and trademark rights infringement, Apple claimed that Samsung engaged in the false designation of origin when making its products and posing unfair competition, as well as unjust enrichment under state laws. Samsung is said to have copied the technology and innovation of Apple instead of developing its products independently. Samsung also copied Apples distinct user interfaces, basic designs of Android operating system, and packaging designs for products. Consequently, the intellectual property rights of Apple were violated. Apple asserted that it incurred losses because Samsung sold millions of iPhones and iPads copies and gained profits wrongly while Apple was incurring expenses advertising its products.
Samsungs Counter Suit
Samsung took long to respond and defend itself against Apples claims. It was expected that Samsung would respond to the allegations made by Apple by defending itself against the alleged violations of patent rights. However, Samsung retaliated by filing counterclaims in the court. The company reported that it has spent lots of funds on research and development. Therefore, the company had obtained numerous telecommunications-related patents. The company indicated that it could invent its own products just like or better than Apple. From the other side, Samsung indicated that Apple has infringed Samsungs 3G wireless patents. Therefore, Apple was supposed to pay Samsung royalties amounting to 2.4% of all the sales that it made of devices that it had designed using the technology of Samsung. The company claimed $0.4 billion damages.
Cases Argument and Courts Initial Decision
According to the court, Apples patents were essential to product sales. Therefore, customers sought these features in the phones they purchased. Judge Kimberly Moore said that had Apple not won an injunction in the case, then such a decision would virtually foreclose the possibility that any company could win such relief for patent infringement when the technology at issue contains many different facets and functions. On the other hand, Judge Sharon Prost said that Apple had failed to show that it was irreparably harmed by Samsungs conduct. She settled two of the patents at issue in the case, the phones slide-to-unlock feature and a data-tapping feature that allows the user to call a phone number in an email by clicking on it, related to minor features of iPhone. She further said that the third patent was not a close case as it involved a spelling correction feature that Apple did not use.
The case stems from a 2014 trial in San Jose in which a jury awarded Apple more than $119 million in damages for infringement by Samsung. The presiding judge denied Apples request for an injunction, blocking Samsung from including infringing features in its devices.
Samsung is separately challenging the infringement finding and monetary damages. Its appeal on those issues remains pending. Apples financial win at the trial court amounts to a fraction of more than $2 billion in damages it sought.
Each of the two companies supported its argument during the court proceedings. Apple claimed that Samsung copied its technology to manufacture products that had the feel and taste of Apples products. It was unfair competition, given that Apples products are supposed to portray a distinctive feel and taste, being courtesy of the companys innovative technology. On the other hand, Samsung claimed that Apple had infringed five of its United States utility patents and one United States design patent. Samsung alleged that Apple violated the antitrust law because it monopolized Universal Mobile Telecommunication System standard markets.
Initially, the court found that both companies infringed some patent rights. It was also established that the two companies did not violate some patent rights. Apple was not awarded the full $2.5 billion damages that it claimed. Instead, the damages figure was recalculated by the court. Therefore, Apple was awarded slightly more than $1 billion in damages by the court. Samsung was not awarded its $0.4 billion damages claim.
As the case progressed, there was a significant reduction of the issues at trial. As a result, Apple claimed that Samsung had infringed its three United States utility patents. The company also alleged that Samsung had copied its Apple iPhone design, diluting its trade dresses.
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There have been various hearings on the case. Therefore, the monetary value of damages awarded to Apple has always been recalculated. For instance, the court ordered Samsung to pay $1.05 billion damages to Apple after establishing that Samsung stole patented iPhone designs. The figure reduced to $930 billion. The $930 million damages fee awarded to Apple for infringed patents was reduced again. The reason for this decision is that Samsung did not infringe Apples overall trade dress. The court reduced the $930 million damage award by $382 million. Therefore, Samsung was to pay $ 548 million. In addition, Samsung was ordered to stop copying iPhone features. The company was not ordered to recall its Smartphones from customers and distributors to change the infringing features because the court did not want to get its products off the shelves.
The company claimed that it had spent a lot on developing and marketing its iPhone and iPad products, creating a benchmark for competition and consumption. Samsung copied Apples products and designs, though they were patented. The company claimed a financial damage of $2.5 billion because it made losses of $0.5 billion because Samsung was selling products similar to those of Apple. Also, Apple claimed that Samsung made $2 billion wrongful profits by selling products that copied Apples patents.
Apple claimed that infringement of its patent rights by Samsung led to unfair competition because Samsung imitated Apples products. Consequently, Apples market share and sales declined. The company asserted that Samsung was not only required to pay monetary damages for their patent violation but also compensate Apple for the extra damages it incurred due to the breach. Such damages include the decline in Apples reputation of innovators and pioneers of new technologies and the reduction in sales and downstream products. Samsung copied Apples technology and products to scoop some market share from Apple.
Samsung alleged that it invested billions in research and development and that it had preceded Apple by decades in the mobile market. Samsung was an owner of thousands of patents on standardized technologies. For instance, 3G cellular networking patent is owned by Samsung, but Apple infringed on it. Therefore, Apple was using Samsungs research unlawfully because it was new in the mobile market. It was supposed to pay Samsung for using its research, but it did not. Apple violated the law by entering the mobile market through cross-licensing agreements on industry standards rather than beginning from scratch. The use of patents by Apple to block Samsungs products was anticompetitive and a hindrance to fair competition in the market. Apples patents were vague and too broad to be valid. A $421 million damage payment was claimed by Samsung from Apple because it had infringed on its patents. Samsung also sought to appeal to the court for reconsideration of the ruling. The company wanted to ensure that none of their products is removed from the shelves, but all of them would be available to customers. The company also claimed that Apple was out to hinder competition in the Android phone market.
Laws Involved in the Case
In the Apple v Samsung case, patent law was infringed by Samsung. Five patents held by Apple and two patents held by Samsung were involved. All the five Apple patents were US patents. Apple accused Samsung of violating these patents, which relate to software features. On the other hand, Samsung accused Apple of breaching patents that relate to camera, folder organization, and video transmission functions.
Patent law protects holders from other making unauthorized use of their innovation. Therefore, a patent holder is granted the exclusive right to exclude others from using, making, selling, and importing the patented innovation for some specified period. The United States Patent Act grants limited-time authority to the inventors. It allows inventors and patent holders to possess rights over their discoveries exclusively.
Inventors should make immediate disclosures of the information they want patented to the US Patent and Trademark Office. Anything that meets the requirements of patenting should be of patentable subject matter such that it is manmade. Patentable inventions should also be useful to meet the utility requirement. A patentable invention should be novel in nature. It should be new such that it was not known or used by other within the country. Finally, an invention should be non-obvious to qualify for patenting. Therefore, a person with ordinary skill in the art should not be able to make the invention.
It should be noted that using, selling, and reproducing a patented invention is a breach of the Patent Act. In the Apple-Samsung case, both companies violated each others patent rights. Any profits that unauthorized users of patented inventions make should be repaid to the inventor in the case of a legal accusation. The losses that the inventor incurs due to this unauthorized use or production should also be repaid to the inventor in the case of a legal accusation.
The Uniform Commercial Code Law was violated by Samsung. The United States Patent Act is under the Uniform Commercial Code Law. Therefore, the major issue in the Apple v Samsung case was patent rights violation, which falls within U.C.C law. Software inventions are part of the novelties that can be patent-protected in the United States.
The Apple v Samsung case is a complex case that involves various patent and trademark rights. Interestingly, both Apple and Samsung were guilty of patent infringement in some aspects. The determination of the company that violated the others patent and trademark rights was a difficult task for the jury. The case involved software patent rights. Calculation of the correct amount to be paid as damages was also difficult, given that complex issues were involved. For instance, Apple claimed that Samsung had received payment for the chips that Apple purchased from Qualcomm and Intel. Therefore, these two companies had paid for licensing the patents, which Samsung accused Apple of violating. Apple defended itself by saying that Samsung could not claim payment for the chips for a second time from Apple. Qualcomm and Intel had already paid for the chips. The enforceable patent rights relative to the chips in question was now used up and exhausted (Bui 6). The court had established that Samsung had infringed Apples patent rights by copying specific designs of Apples iPhone. There was no overall violation of Apples overall trade dress. Therefore, Samsung was not guilty of violating Apples patent and trademark rights by manufacturing products that had the look and feel of the Apples phones. Companies should protect their inventions by the acquisition of trademark and patent rights.