Superphones Spewing BLOOD in Europe
Somnath is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The boxing gloves are out in the mobile market.
Google-owned Motorola Mobility (NYSE: MMI) must recall all the Android tablets and smartphones it has shipped in the country which infringe Apple's scrolling patent popularly known as "rubber band," a court in Munich, Germany ruled on the 13th of September. The same was the key in its billion-dollar lawsuit win against Samsung in the US.
The recall will not take effect immediately because Apple will have to request a ban on specific products and provide a €25m (£20m) bond, while MMI can appeal.
The dramatic decision, the latest in an escalating war between Apple (NASDAQ: AAPL) and the smartphone and set-top box company MMI, follows earlier cases in which Apple had to disable automatic "push" delivery of email to its iPhone and iPads after MMI won a separate patent fight in Germany.
However, the court indicated that it was unlikely that an appeal against the validity of the patent would succeed. MMI, with Google's backing, is expected to continue the appeal. The court also ruled that MMI owed Apple damages for past infringement.
Even if Apple succeeds in forcing a recall, it is unlikely to seriously damage MMI's business worldwide. But it is another brick in a patent wall that Apple is building up against smartphones and tablets using Google's Android operating system worldwide, and particularly in the US and Europe.
Judge Peter Guntz said MMI had infringed Apple's "overscroll bounce" technology, which enables users to move documents over the screen of their device and let them bounce back to the center after releasing their fingers.
Neither Apple nor Google (NASDAQ: GOOG) responded to requests for comment.
Google bought loss-making MMI for $12.5 billion (£7.7 billion) last year, its largest acquisition ever, aiming to use the company's patents to fend off legal attacks on its Android mobile platform and expand beyond its software business. Though the recent acquisition of MMI by Google made them reduce around 4,000 jobs at Motorola Mobility and will close or consolidate about one-third of its 90 locations. The cuts represent around 20% of Motorola Mobility’s 20,000 employees, and 7% of Google’s work force. Two-thirds of the jobs reduced will take place outside of the U.S. We need to keep a close look at the future developments at MMI.
The outcome of those cases shows that Android has far bigger patent infringement problems than any piece of computer software has ever had in the history of the industry, and this has many of Google's hardware partners profoundly concerned. Samsung and HTC, two of the largest Android smartphone makers, are both suing and being sued by Apple in the US and Europe.
Motorola's parent company Google is expected to appeal the decision while contesting the validity of the European patent with the European Patent Office. In the meantime, the decision appears to fall on Apple on how much it's willing to spend on the case.
In August, Apple scored a landmark legal victory over Samsung when a US jury found the Korean company had copied critical features of the iPhone and iPad and awarded Apple $1.05 billion in damages and is seeking injunctions against a number of Samsung smartphones and tablets, including its flagship Galaxy S3.
Germany has become one of the major battlegrounds in the global patent war between makers of mobile phones, tablet computer devices and their operating software, as court actions there have proved to be relatively cheap and speedier than in other jurisdictions.
The ban may sound minimalistic on Motorola Mobility's part, but destroying the devices would prove painful for the smartphone maker. A recall, however, would also be damaging to the Google-owned division and likely incur heavy costs and cause embarrassment for the firm worldwide which is definitely going to hit the stock price of the company in a big way.
The stakes are high and the opportunity is huge after Apple’s introduction of the iPhone 5, so to help investors understand this epic Apple event, we've just released an exclusive update dedicated to the iPhone 5. By picking up a copy of The Fool’s premium research report on Apple, you'll learn everything you need to know, and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.
SomnathGuha has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. 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.