MacOS KenDensed: Patent Wars & Kindle’s Phantom Sales Figures

| MacOS KenDensed

Weekend Warrior: Ken RayThere’s plenty to look at in the Apple v Samsung patent trial, and analysts share their take, too. Big Bob Mansfield isn’t leaving Apple after all, Tim Cook and Larry Page are talking about patents, and Amazon is bragging about Kindle sales numbers without actually saying what those numbers are. Mac OS Ken’s Ken Ray has his own take on what it all means, and he’s not afraid to share.

The Samsung Smackdown
At last, our long, international nightmare has reached its middle. The Apple v. Samsung v. Apple jury came back with decidedly good news for the Cupertino company and bad news for Sammy and friends. The win for Apple starts off with an award: $1.049 billion.

After less than three days of deliberation, the jury returned saying Samsung had violated a number of Apple’s patents, while Apple — in jury members’ estimation — had violated none of Samsung’s.

A “Rubber banding” patent held by Apple, a “pinch-to-zoom” patent, a “tap-to-zoom” patent, two iPhone design patents and one iPhone home screen design patent were all said to have been infringed upon by the Korean electronics maker in some or all of the devices over which Apple sued. The jury did say, though, that none of Samsung’s devices violated the iPad design patent in question.

An AppleInsider piece says, “Apple proved through evidence that Samsung ‘took action that it knew or should have known would induce (divisions of Samsung) to infringe (some of Apple’s patents).” So they knew what they were doing and did it anyway.

So, Samsung is beaten. But how does Apple make them stay down?

Back to AppleInsider we go, where we find Apple “seeking a preliminary injunction against the devices found to be infringing on the company’s patents.” Apple says it would suffer “irreparable harm” if the Samstuff were to stay on sale.

Apple had to officially file its preliminary injunction proposal by August 29, which they did. BusinessInsider says “Apple has listed the eight Samsung phones it wants to ban as a result of its victory in court last week.”

Based on the jury’s ruling, Apple believes the Galaxy S II 4G, the Galaxy S II (AT&T variant), the Galaxy S II Skyrocket, the Galaxy S II (T-Mobile Variant), the Galaxy S II Epic 4G (Sprint Variant), the Galaxy S Showcase, the Droid Charge and the Galaxy Prevail should all be subject to a ban. Why they want to press that many is beyond me, though, since the piece says most of those phones are outdated. The Galaxy S II was last year, Sammy’s up to the Galaxy S III now. Other phones on the list are even older than the various Galaxy S IIs, though the piece says they are still on sale.

Samsung has two weeks to file a response — that’s Wednesday, September 12th — and they’ll all get together in Judge Lucy Koh’s court on September 20th to duke it out over selling the infringing stuff.

That’s what happens next near term. Long term though, well… it’s as I said before: At last our long, international nightmare has reached its middle. If we’re lucky.

Wired states the obvious: “Samsung will almost certainly appeal the jury’s decision in the case to the Federal Circuit, the Washington, DC-based appeals court that hears IP-related appeals.”

And Indiana University law professor and patent expert Lea Shaver says:

The court is going to be busy with this post-trial discussion and various motions for weeks, maybe longer. Appellate courts work slowly… Just to hear from the Federal Circuit could take a year and a half. This is a case it would not surprise me if the Supreme Court takes, so there may not be a truly final decision for years.

Right. Who wants a drink?

As for the Android side of the coin, prices for those phones could go up, or the makers of Android phones may have to settle for even thinner profit margins than they’re seeing today. Because Samsung is just one among a large number Android phone makers who may be targeted harder by Apple on the patents on which it’s already won. Steve Mitby, an intellectual property attorney tells Wired, “The result will likely be an increase in costs to Android users because of licensing fees to Apple … This will drive many Android consumers over to Apple. Next to Samsung, the biggest loser today is Google.”

What’s a Company to Do?
Samsung has three plans in the aftermath of last week’s San Jose verdict; one that might work, one that probably won’t work, and one that’s a bit surprising. A report from Korean Times says Samsung intends to appeal last week’s ruling, which might work. Additionally, the company intends to sue Apple if it puts out any 4G/LTE devices, which Apple already has and which will probably not work.

Finally, Samsung intends to tie itself tighter to Micorosoft and lessen its dependency on Android, according to the piece, which I find surprising. And I have to pause here and give props to Mark Fuccio. He argued on last week’s MacJury with Chuck Joiner, Michael T. Rose and me that the verdict could end up being a foot in the door for Microsoft in smartphones. Now AppleInsider has an unnamed official or officials at Samsung saying the company is “closely partnering with Microsoft to cut its dependency on Google Android,” though it is also working with carriers in the states to modify the potentially infringing Android phones it already has out there.

As for the 4G/LTE threat, the piece says “Samsung confirmed that it will immediately sue Apple if the latter releases products using advanced long-term evolution (LTE) mobile technology,” never mind the fact that they’ve already got an iPad that uses LTE mobile technology. And will probably have an iPhone that does so as well very soon.

I say that probably won’t work since the 4G/LTE patents owned by Samsung are considered standards essential patents, which means Samsung is committed to granting Fair, Reasonable, and Nondiscriminatory licensing terms for the technology’s use.

Of course, if they want to be a thorn in Apple’s side, they might sue anyway. We wait and see.

Cue the Analysts
News of the win for Apple was seen by most as, well, a win for Apple. Though BMO’s Keith Bachman sees risk for Apple in it. Fortune has him saying in a note to investors:

We think it will be important for Apple not to appear to be a bully to consumers. We would not be surprised to see the press take the view that the verdict lessens competition, and that Apple will need to promote the view that Apple was just protecting its innovation and IP.

Seeing it from the flip-side, Topeka Capital’s Brian White who says in his note:

We believe this verdict enhances the Apple brand as ‘the innovator’ in the smartphone and tablet markets at the expense of Samsung Electronics that some will now view as the ‘imitator,’ while also providing a strong disincentive for future ‘copying’ of Apple products.

Fortune actually had notes from a few analysts. Barclays Capital analyst Ben Reitzes said:

While we realize the verdict will be appealed, we believe the ruling marks an important victory for Apple against Android. Competitors may now think twice about how they compete in smart mobility devices with the industry’s clear innovator. If Apple forces competitors to innovate more, it could take longer for competitive products to come to market, and make it more expensive to develop them. As a result, Apple’s pricing umbrella could be sustained longer while it should also sell more units over time.

And from Needham & Co. analyst Charlie Wolf:

The bad news for Android licensees is that the three patents represent but a handful of the patents in Apple’s arsenal. We anticipate Apple will assert many of these reportedly even more powerful patents in future cases against Android licensees. Google will be forced design workarounds of the violated software patents, which was the intent of Apple’s lawsuit, not the monetary award. These workarounds are likely to materially degrade the Android user experience relative to the user experience on Apple’s iOS operating system.

One thing on which almost all of the analysts agreed, the money was no object in this case. First, with the expected appeals there’s no telling when or even if Samsung will have to pay the $1.049 billion dollar damages named in the suit. But even if they wrote Apple that check today, it would be less than 1% of the roughly $120 billion dollars in cash Apple currently has on hand.

That’s right. Apple could honestly and in all seriousness say, “Eh… it’s just a billion dollars.”

Mansfield: The Come back-ish Man
Well, look who’s not leaving after all. The Mac Observer says Apple issued a press release saying that retiring senior VP of hardware engineering Bob Mansfield is no longer retiring. Or at least he’s not retiring yet. He’ll stay on to “work on future products.”

Dan Riccio, who had been named Mansfield’s replacement, will still be Mansfield’s replacement, though instead of being VP of whozits and whatnot, he’ll be a senior VP. As will Apple’s VP of Mac Software Engineering Craig Federighi, aka Hairforce One.

I picture a Michael Corleone thing with Mansfield: “Just when I thought I was out they pull me back in.”

Cook & Page: Chat Time
The most welcome rumor of the week has nothing to do with iPhone directly, nothing to do with iPad directly, and nothing to do with a full-on Apple television. The most welcome rumor of the week: Apple CEO Tim Cook and Google CEO Larry Page are said to be talking about their perennial patent battles.

Reuters has secret sources (gotta love those knees) saying the two are talking behind-the-scenes about a lot of intellectual property stuff, including the mobile intellectual property wars.

The secret peeps say the two had a phone call last week, they’re expected to talk again in coming weeks, and lower-level Apple and Google officials are said to be talking between now and then.

Is it true? Maybe. Will it come to anything? Well, nothing seems to have come of then Apple CEO Steve Jobs meeting with then Google CEO Eric Schmidt at an outdoor cafe early in 2010, but hope springs eternal.

That sounds like a show that would be on after “Dawson’s Creek.”

It’s unclear what the two current chiefs are discussing and, of course, there’s no guarantee they’re actually discussing anything. But a boy can dream.

That sounds like a show that would be on after “Hope Springs Eternal.”

Kindle: The Magic Numbers Tablet
And finally this week, Amazon is doing that thing it does: touting numbers without stating numbers. The seller of books and everything else issued a press release yesterday saying that the Kindle Fire is sold out.

As if this proves something. They control production and release of the Kindle Fire, and isn’t it interesting that they make this big noise about running out of them. I’m sorry, selling out of them just six days before their southern California event where they’re expected to announce — wait for it — a brand new Kindle Fire or two.

Amazon also points out that ten of the top ten best-selling items on Amazon since Kindle Fire launched are Kindle devices and content, which I guess is something since they do sell a lot of things. Then again, go to Amazon and try to avoid seeing something about the Kindle. I mean Apple sells products made by HP, Klipsch and M-Audio among others, but I’ll bet their top ten products are made by Apple.

Okay, it’s not quite the same but you see what I mean.

Finally, Amazon says “In just nine months, Kindle Fire captures 22 percent of U.S. tablet sales,” though you will have to take their word for it since — as usual — they have not, do not and — most likely — will not say how many Kindle Fires they’ve actually sold.

Millions. Amazon CEO Jeff Bezos is quoted in the press release as saying, “We’re grateful to the millions of customers who have made Kindle Fire the most successful product launch in the history of Amazon,” though I really hope someday he breaks down and says how many millions.

“Fun with numbers” without “numbers!” It’s like “fun with numbers” without the “fun.”

Comments

RonMacGuy

This is a case it would not surprise me if the Supreme Court takes, so there may not be a truly final decision for years.

So you’re telling me that we will have to read opinions from people who think they know what they are talking about on the subject of patent law for years?!?!?

oldmorris

I have not read this article. I am posting to complain about the stupid image representing the author. I find it offensive because it simply is ugly, creepy and weird. Get a better image for Christ’s sake. Anything would be better. Enough already with this creepy, ugly, stupid image. Thanks for letting me vent. lol

RonMacGuy

LOL, Ken, frankly I like the pic, but so many people here don’t.  I just don’t get it.

furbies

I am posting to complain about the stupid image representing the author

Maybe Ken is using that image because if we were to gaze upon his true visage, we’d be struck deaf, dumb and blind ?

wab95

Ken:

A couple of quick thoughts.

First, if Samsung sue Apple over FRAND patents, it will not serve their public image well, will make them appear unreasonable and sore losers, with an emphasis on the word ‘losers’, and potentially undermine both their credibility in ongoing and future court cases, as well as their credibility with consumers and investors. No one would tolerate. That behaviour from Apple, and Samsung hope to fly in that same atmosphere, they will have to play by similar rules. Of accountability.

Second, I too believe that this recent court ruling may have cast just the life line that MS need in order to gain some traction in the smartphone and tablet space; and that Samsung may be just the vehicle to power them into a place of competiveness. I see an opportunity for symbiosis.

As for your photo, it reminds me of an episode from The Outer Limits, where they used a negative photo to illustrate and alien on screen. Perhaps not everyone’s cup of tea, but you can cite prior art.

MacFrogger

Ken,

Seems to me that Horace Dedieu’s estimate of 5 million Kindles is a solid estimate.  Here

rickag

Dear Samsung

Good luck sueing Apple if they introduce an LTE capable iPhone.  I guess you forgot that Apple acquired use of about 6000 patents from Nortel of which over 100 are related to LTE.

Samsung, man up, you got caught cheating, pay your dues and start acting like adults.

Accountant

it would be less than 1% of the roughly $120 billion dollars in cash Apple currently has on hand.

If Apple has $120 billion in cash on hand, a bunch of Apple execs are going to prison for serious SEC reporting violations and probably fraud.  Their last quarterly filing lists less than $8 billion in cash, less than $30 billion in combined cash and short term investments, and about $50 billion in total current assets (and about $30 billion owed in current liabilities).

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