Samsung’s Billion Dollar Question

August 31, 2012

This is a guest blog post by Jorge Contreras, American University, Washington College of Law.

Despite its own protestations to the contrary, I am confident
that the rumors of Samsung’s demise have been greatly exaggerated.  Of course, the Korean electronics giant
can’t be happy about the $1.05 billion verdict handed down by a San Jose jury
last Friday.  It will be even less
happy if Judge Koh imposes another $2.10 billion in punitive damages on account
of Samsung’s “willful” infringement. 
And spirits in Seoul will surely sink if the judge grants Apple’s
request to enjoin the future sale of infringing Samsung products in the U.S.

But Samsung, not to mention other manufacturers of
Android-based gadgets, will weather these setbacks and, I predict, be back in
the ring within a few months.  And
I don’t base that view on the inevitable appeals of the jury verdict.  Those will come, much to the delight of
the (many,  many) clever lawyers
employed by each side.  And those
appeals will take years.  Some
commentators are already salivating at the thought of a Supreme Court rematch some
time in the distant future.  We all
know that there will be plenty of room to reverse the findings of the nine
beleaguered laypeople who slogged through 109 pages of written instructions for
3 days in San Jose.  But not all of
the verdicts will be reversed, and the appellate decisions will come far too
late to make any difference in the market as we currently understand it.

No, Samsung’s immediate game plan must be re-design.  And the good news for Samsung, and
other Android makers, is that it shouldn’t be too hard.

Samsung and Google, the creator of the Android operating
system, correctly predicted that there would be an overwhelming public appetite
for fully-featured smart phones and tablets at price points well below
Apple’s. Google released
Android for free to support an ad-based revenue model.  And device manufacturers like Samsung,
HTC and others leaped at the opportunity to compete in the enormous market that
Apple, to its great credit, created with the iPhone and iPad.  But Samsung and Google made one serious
tactical error that, in hindsight, is now clear.  Their products looked, and worked, a little too much like

For Samsung, this mistake might be excusable.  The consumer products that it has sold
for decades all look the same.  Who
can tell a Samsung Blu-ray player from a Sony or a Toshiba or a Panasonic
player?  The same goes for
flat-screen TVs, window air conditioners and even microwave ovens. They are all
utilitarian black (or silver or white) boxes, without much to distinguish them
other than their internal features, price and performance.  Nobody predicted a couple of years ago
that relatively esoteric legal rights like design patents and registered trade
dress would play a major, and decisive, role in the shape of consumer
electronics products.

On the software side, one could argue that Google should
have known better.  Companies have
been fighting over the “look and feel” of software user interfaces since the bygone
days of Borland and Lotus (that would be the late ‘80s, for younger readers).  And, to be honest, the icons, screen layouts
and other visuals of Android do look a lot like Apple’s. Now we know that the
similarity was too close. 
“Infringing” is the legal term.

The good news, however, is that these problems should not be
too difficult to fix.  Let’s start
with the software.  Is there any
reason that app icons need to be squares with rounded edges?  Of course not.  How about circles, or octagons, or
pictures without borders?  Any high
school computer science student could make that fix in a matter of hours.  Would the change diminish the user’s
experience?  Of course not.  While the new “look” of Android icons
would take a few seconds to get used to, how many users would forego an Android
device just to enjoy the rounded-squares that were offered before?  Maybe a few (a very few) would change
their buying preferences on that basis, but those consumers were probably Apple
customers anyway.  Android is going
after a lower-end, price-sensitive market.  Would most teenagers sacrifice rounded squares to save a
couple hundred dollars?  Probably.

Icon design is just one aspect of the Android software that
would need to be changed in order to avoid infringing Apple’s intellectual
property rights.  There are others,
some more difficult to circumvent. 
Apple’s “utility” patents, in particular, would take some effort to
design around.  Thus, Android would
need to find substitutes for patented features like “pinch to zoom”, “tap to
center” and “bounce-back”.  But
there is a wide range of alternatives even for these features.  Zooming could be accomplished with
buttons, or slider bars, or moving one’s finger in a circle, or tapping the
phone on one’s forehead, or some other clever, but yet unanticipated mechanism
(not that I’m guaranteeing that Apple doesn’t have a patent covering some of these
variants as well – obviously somebody needs to do a bit of patent research
before launching into redesign). 
Again, assuming that the basic smart phone/tablet functionality is
preserved, would these changes weaken Android’s market appeal?  I doubt it, at least not in a
significant enough way to make a difference.  Remember, just a few years ago cell phone users tapped out
text messages using a 10-digit keypad (tap “1” three times for “c”, and hold
down for a few seconds to capitalize). 
In fact, users became quite good at it, and $20 phones held their own
against $200 Blackberries with full qwerty keyboards for quite a while.

And what about the physical product design?  Apple’s trial team made great use of
graphics depicting long rows of Samsung devices that looked suspiciously like
iPhones.  And they described in
loving, laborious detail the angst (and dollars) that went into Apple’s vaunted
design effort.  But who ever sees
the famous “rounded bezel” these days? 
Nobody:  because almost
everyone who owns an expensive iPhone sticks it into a protective
shell/casing/sleeve the moment it comes out of its patent-protected 2-piece
box.  And, by the way, those
protective shells look NOTHING like the sleek design patented by Apple.  They are fluorescent pink with Hello
Kitty stencils, ruggedized black rubber, polka-dotted, bling-encrusted,
spill-proof and otherwise blatantly “non-infringing”.  Suffice it to say: 
Samsung’s product redesign should not be hard, and I suspect that
consumers ultimately won’t care. 
Within six months, I predict that Samsung could be back on the market
with a redesigned, non-infringing product that consumers will embrace.

So where does this leave Apple, with its market-defining
design and scads of patents?  It
will remain at the top of the market, where it has always wanted to be.  People who love great design, who take
their devices out of their protective shells at night to admire their bezels
and sleek curves, like Porsche owners who lovingly wax their vintage Carreras
after everyone else has gone to bed, will keep buying.  And so will consumers who value Apple
products for the Apple “ecosystem” with its seamless connectivity, effortless
backup and ubiquitous cloud presence. 
But that’s not everyone, and not everyone wants, or can afford, a $400
phone and a $600 tablet (service plan not included).  There is a vast market for Samsung and other Android device
makers to tap.  If they can steer
clear of the intellectual property held by Apple and other proprietary platform
vendors, both camps should be able to coexist and consumers will enjoy the
greatest choice and flexibility, which is when markets work best.