18 May 2014

Apple/Google End ‘Thermonuclear’ War – But What of Samsung?

Nuclear - Wrong WayApple and Google have announced in a joint statement that they have ‘agreed to dismiss all the current lawsuits that exist directly between the two companies’ and ‘to work together in some areas of patent reform.’

The statement goes on to say that ‘[t]he agreement does not include a cross license.’

The settlement is symbolically significant.  It has been widely accepted, since the commencement of Apple’s various patent lawsuits against Android-based handset makers back in 2010, that the ‘true’ target of all this litigation was Google, as the provider of the Android operating system.  This was confirmed in Walter Isaacson’s authorised biography of Steve Jobs, which revealed the late Apple CEO’s strong animosity towards Google, including his infamous vow to ‘go thermonuclear war’ to ‘destroy Android’.

At the time, however, Apple faced a challenge in striking directly against Google, which did not actually manufacture and sell any Android-based products of its own.  Rather than pursue some complex (and potentially unsuccessful) indirect infringement theory against Google itself, Apple chose to attack Android by suing manufacturers, such as HTC, Motorola and Samsung, which it saw as responsible for direct infringement of its patents.

Now, more than four years after Apple’s ‘first strike’ against Taiwanese smartphone maker HTC, it is very clear that Android has not been, and will not be, ‘destroyed’ by patent litigation.  On the contrary, in Q1 2014, 81% of smartphones shipped were Android-based, while just 16% ran Apple’s iOS.  Tit-for-tat lawsuits have ultimately resulted in little more than a growing series of stalemates, the most recent of which was a ruling in the dispute between Apple and Samsung in California earlier this month which is widely regarded as inconsequential to both parties.

Google’s Short-Lived Motorola Acquisition

In the midst of these disputes, Google acquired Motorola Mobility, along with its patents and responsibility for its ongoing lawsuits, for US$12.5 billion.  Motorola had, in fact, launched a pre-emptive strike against Apple in 2010, although Apple was quick to counter-strike.  In any event, Google’s acquisition of Motorola meant that Apple realised, by default, its goal of engaging directly with Android’s provider.

However, on 29 January this year, Google and Lenovo announced that the China–based PC manufacturer would acquire Motorola Mobility – though not the majority of the patents that Google had inherited with its purchase of the Motorola handset business.

This means that, going forward, any infringement of Apple patents by the manufacture and sale of handsets will be Lenovo’s responsibility, not Google’s.  At the same time, the alleged infringement of former Motorola – now Google – patents by Apple will remain Google’s concern.  It does not seem that it would be in either Google’s or Apple’s interests to continue with the ongoing litigation in these circumstances.

Ceasefire

Apple may, or may not, wish to initiate new proceedings against Lenovo once the Motorola sale is finalised.  Google, for its part, is unlikely to have any interest in recommencing futile litigation against Apple.  It is therefore unsurprising that the agreement between the two companies does not include a cross-licence.  A licence to Apple’s patents is of little value to Google, unless it covers all manufacturers of Android-based devices (which it never would – Apple is not stupid).  And Apple has no need of a licence to patents that Google is unlikely to assert against it.

This is, quite simply, a ceasefire.  Apple’s litigation against HTC was also resolved in November 2012, with the companies agreeing on a 10-year cross-licence arrangement.  The ‘thermonuclear war’, that never really was, is clearly over.  Both Apple and Google have realised the futility of maintaining litigation that is costing them both in time, money and energy, and which is destined to go nowhere of any importance.

What Now With Samsung?

The big question now is what will become of Apple’s disputes with Samsung.  While Apple seemed to have the upper hand initially, the battle has devolved from thermonuclear shock-and-awe to something more akin to trench warfare.  And since neither company is likely to run out of time or money – or the capacity to work around each other’s patents – the entire exercise appears increasingly futile.

I have been arguing since early 2012 that the fight with Samsung is not one in which Apple can score a definitive victory.  The fact that Apple has since reached agreements with both HTC and Google/Motorola suggests that it is open to settlements on suitable terms, and that the ‘thermonuclear’ option is nothing more than a dying echo of the Jobs era.

Which makes me think – maybe Apple is not the stubborn one in the dispute with Samsung.  We know that there have been discussions about a possible settlement at the very highest levels, as recently as February this year, yet no agreement has been reached.  The truces reached with HTC and Google demonstrate that Apple is quite willing and able to resolve its disputes pragmatically.

So perhaps the problem is not Apple.  Perhaps it is Samsung.

4 comments:

Mark Summerfield said...

Some thoroughly depressing reading.... as you have said, and as expected from our current pantomine villain government, short-term gain (allegedly) in exchange for potential long-term stifling of scientific progress in Australia.

What I find most frustrating is that Australia is rated fairly poorly on most 'innovation indexes' (when compared to other countries) yet many of our research agencies (such as CSIRO) are recognised internationally as being first rate. There is also a well-recognised shortage of scientists and engineers in Australia. So it appears the shining stars that we do have will fade, and the demand for technical people will increase.

If you listen back to the budget speech, Mr. Hockey mentions "invention" and "innovation" a few times, and something about Australia having a long history of being innovative, which we should continue to support... Looks like they've made a fantastic start.

Mark Summerfield said...

Agree - thoroughly depressing all round

Mark Summerfield said...

I had hoped that I was being overly pessimistic, and that someone would challenge my selection of budget numbers, or point out some major funding injection that I have missed. That hasn't happened yet, sadly.

'Innovation indexes' do not measure quality of original contribution. For the most part they are based on proxies for actual innovation, such as R&D expenditure, number of patent applications filed, number of new companies formed, and so forth. This is actually quite valid - innovation is a process, and the best research, or the most ground-breaking invention, in the world will do nothing for the economy if there is no path to commercialisation. Most of what is legitimately called 'innovation' happens a long way from the lab!

As for Joe Hockey and 'innovation' -- he keeps using that word, but I do not think it means what he thinks it means!

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