A Minute With...

Deepak Somaya, expert on intellectual property strategies

8/23/2012  1:15 pm

The Aug. 24 decision in the Apple-Samsung trial is likely to have reverberations far beyond the two warring companies.

Deepak Somaya is a U. of I. business professor who studies patent and intellectual property strategies in high-technology businesses. In an interview with News Bureau business and law editor Phil Ciciora, Somaya discusses what effects the highly scrutinized (and for Apple watchers, revealing) trial will have on the lucrative consumer technology sector.

You’ve published research on how imperative it is for firms to integrate their patent and business strategies. Is the Apple-Samsung case another example of how the successful commercialization of patent-based products can be a tricky proposition?

Yes, absolutely. This case underscores the need to integrate business and patent strategies, and how challenging this can be when commercializing “multi-invention” products, which we discuss in our 2011 California Management Review article. Smartphones exemplify the “multi-invention” innovation problem, where so many firms make and own the inventions needed for building new products that business models and patent strategies have to be simultaneously devised and aligned with each other. Apple and Samsung have a lot of experience with patents, but I sense that both companies are struggling to figure out the endgame here. They have had to navigate through a thicket of very complex, uncertain and contentious issues. A tricky proposition, indeed.

U.S. District Judge Lucy Koh chided both sides for petty squabbling and misconduct. Does this confirm why venues like the International Trade Commission are important gatekeepers for resolving patent disputes?

In my research, I have highlighted a few areas in which specialized venues such as the section 337 proceedings of the ITC (for IP disputes relating to imports) are different from general-purpose venues such as the district court in which this case is being litigated. One area relates to the expertise of judges. In this case, however, Judge Koh is quite experienced in patents and patent law, so that is not a big difference. But, there are also other features of specialized venues, such as speed of adjudication, trial without jury, and customized or streamlined procedures that can place some restraints on the parties and encourage quicker resolution of the dispute.

Interestingly, I see that Judge Koh imposed some limits on the amount of time each side had to make its case, which could be seen as an attempt by her to streamline the proceedings. She rebuked the Apple team for the large number of expert witnesses they planned to call within their limited remaining time. I imagine there will be renewed debate about whether or not we need specialized patent trial courts in the U.S., but it is not clear to me that such courts would completely stop misbehavior from litigating parties when the stakes are so high.

Steve Jobs once said he would go “thermonuclear” in a patent war between Apple and Google, whom he blames for copying Apple’s mobile software. After the Samsung case is resolved, do you foresee Apple targeting Google next?

The thing about going “thermonuclear” is that it is very much a “going to war” mentality. You’ve got to think about the other side and what weaponry they have. Apple has maybe a few thousand patents, but participants in the Android ecosystem also have tens of thousands of patents. Some of those latter patents are “decommissioned” or “out of range” in various ways (limited by standards agreements or cross-licenses, not applicable to Apple’s products, etc.) but we’re still talking about going thermonuclear with a nuclear coalition.

The other thing about a “going to war” mentality is that it can limit your vision. In the end, Apple needs to be successful in the marketplace. And, the tech industry thrives on “coopetition” – competition and cooperation at the same time to create value for consumers. Apple is not immune from pressures to cooperate with the same firms that it is trying to attack in the patent arena. It seems to me that Apple needs to fashion a win that falls short of all-out war. However, Apple seems to have prepared for this for a long time. Much of their initial negotiation with Samsung was about how Android infringes their many patents. Google’s been playing catch-up very quickly with its patent strategy, but it’s anyone’s guess if that will be enough. It’s unclear how close to the brink this will go, or even if it will go over the brink. Patent litigation is not all rational, much as we’d like it to be.

Even though the ruling awarded more than a billion dollars to Apple, the famously reclusive company was forced to disclose a lot of previously top secret information – for example, how many iPhones and iPads it sold, how much it spends on advertising, future plans for a smaller iPad. Is that a concern for Apple?

I don’t know how much Apple worries about that kind of information. Things like products in the pipeline are probably already dated and quite imprecise anyway. The key issue is whether reading about how Apple designs and develops products will help competitors imitate Apple’s success. If it does, then it will have been a major setback for Apple. If not, these details will make fine dinner conversation, and perhaps find their way into a few books and case studies about Apple, but little else. The strategic question is whether this actually undermines Apple’s competitive advantage going forward.

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