Why Does Samsung Make Apple Nervous? (Part 1)
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Tech companies pursue patent disputes so often it can almost seem like habit. But there’s been a large step forward in a patent dispute that has gone on for months, in countries around the world. The battle involves Apple (NASDAQ: AAPL)’s claims that Samsung is infringing on the iPhone with its Android-powered Galaxy Nexus smartphone. Apple will likely lose in the long run but its increased efforts to take down Nexus along with recently released market research and Samsung’s strong earnings projection all hint that Apple might be worried about the competition.
Last week, a judge granted a rare preliminary injunction that bans US imports of the Galaxy Nexus. Samsung appealed and was denied but the ban was then (temporarily) suspended by the Court of Appeals, awaiting some clarifications from Apple. In theory, if the injunction proceeded, US sales of the Galaxy Nexus would be on hold until a fall trial. If Apple won, the ban would be permanent.
But Apple has a shaky legal ground to stand on and could, at best, delay sales of Galaxy Nexus. And a potential delay would be just as good as winning to Apple.
Shaky Legal Ground
Apple initially went to court against the Galaxy Nexus over four different patents that pertain to actionable links, touch screen spelling suggestions, the slide-to-unlock feature, and the ability to search multiple areas at once. The latter is called the Quick Search Box in the Nexus and can search within the device and online simultaneously. It’s also the only patent that the court agreed upon for the injunction.
Why were the others tossed out? It comes down to “look and feel,” which is what an Apple spokesperson accused Samsung of copying with the other three features. The devil in those details is that Apple notoriously lost a similar argument nearly 20 years ago. Apple went after Microsoft (NASDAQ: MSFT) in 1994 for supposedly copying the “look and feel” of the graphical user interface (GUI) for its Macintosh operating system. The court ruled against Apple, finding that the element in question either weren’t original to Macintosh or were the only way that particular feature could be expressed. To vastly simplify: the court decided that how something looks can’t be copyrighted, but copyright can apply to the core function, or coding.
The injunction against the Galaxy Nexus came about because the court found merit in Apple’s claim that the search box applied to the copyrightable coding. That could cause a problem – if the Nexus weren’t an Android device with Google (NASDAQ: GOOG) behind it.
The Galaxy Nexus turned back up in the Google Play store after the injunction was temporarily suspended. The listing boasts that the devices will soon be upgraded to the forthcoming Android 4.1 OS, which is nicknamed Jelly Bean. Google stated that Jelly Bean is completely distinct from the iPhone. That means that the post-update devices, which have a shipping time of one to two weeks, would no longer have a potential infringement issue.
If the patent battle is so stacked against Apple, why does it bother?
Tune in for Part 2, where I’ll discuss the market research and financials that might have Apple nervous.
LynBetz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
