Patent-ly Commercial?

Apple has been ordered to pay $533 million for the infringement of Smartflash LLC’s patents. This is significantly less than the figure of $852 that Smartflash had asked for. Apple is appealing the jury’s decision that (i) there was an infringement and (ii) that it was willful.

It should be noted that this is the second decision against Apple stemming from a Tyler federal court (the first being an award against Apple of $368 million for patent infringement of VirnetX Inc which was struck down at appeal because of the wrongful calculation of the figure).

More broadly, it is a move in a wider war. Samsung, Google, and Apple have been waging this legal to-and-fro for the last three years. Initial reactions in August of last year, when Apple and Samsung agreed to drop all claims outside of the US were focused, primarily, on possibility that the two would strike a cross-licencing agreement. That this has not yet happened is hardly surprising; given the competition between the two (repeatedly vaulting over each other for the top spot on the smartphone sales list) it seems strange that a mutually advantageous tone be taken – where the rest of their business model is competitive.

More persuasive was this analysis of the decision to reduce the scope of the war. The landmark ruling, catching headlines in America gave a judgement awarding Apple damages from Samsung of the value of $1 billion (which was later cut to $598 because the judge found two errors in the jury’s calculation method) was more of a commercial blow, for two reasons. Firstly, it signaled to the public that there was fault on the party of Samsung. Secondly, the entire process was having a negative impact on the Samsung-Google relationship (which is fundamental since Samsung focuses on hardware and Google on services).

What does this mean?

It means that patent law is being used as a tool to sculpt commercial relationships. It has been argued that the decision to reduce the scale of legal war was based on commercial reasons. For Apple, there was a clear win and continuing to increase the amount of resources is not a good business decisions. For Samsung, the stakes as a business were getting ever higher. This was the position near the middle of 2014. Now, it seems that smaller companies are copying the new approach, of using patents as a commercial tool – to bring the argument back around to the news story with which I began.

I would like to express some dissatisfaction with the use of the law in this manner.The law should be a shield and not a sword. There are many reasons for this, but above them all is the fact that commercial relationships should be just that – whether they are between companies or between an individual and a company. Adding the law as a variable in these relationships, which is the effect of patent law decisions at the present, risks upsetting these delicate webs. “Infringe” at your peril.


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