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9/11/2012
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Beyond The iPhone, Why Apple Sues Samsung

Apple wants more than to stop Samsung's smart phones from launching. Mindful that Android already controls half the market, it is setting its sights on making a royalty on every Android phone sold.

Getting royalties on the Samsung phones is all Apple wanted in the first place. Back in 2010, Apple offered Samsung a licensing deal, $30 per device and $40 per tablet.

From Samsung's perspective, that would mean for every device it sold it would be forced to fork over some profit to Apple. But Samsung can iterate quickly and isn't a single-device company, so paying Apple some money per device would cause more damage than a one-time settlement deal.

The fight for intellectual property between Apple and Samsung actually began overseas, when Apple fought against the South Korean company in Australia, Europe, and Asia.

According to CBS News, the Samsung Galaxy Tab was delayed in Australia because of an iPad patent. Again, the same thing happened when Samsung tried to launch in Europe.

The battle is rather predictable. Little fights break out in court when Apple flexes its IP muscles, preventing or delaying Samsung from launching in countries around the world.

The interplay between the two companies often is passive aggressive, noted Sadhu. Apple has been aggressive in asking for evidence from Samsung, wanting to examine call center records for evidence of confusion of consumers between the look and feel of their devices and accusing Samsung of destroying evidence buried in employee emails.

Samsung isn't Apple's only target. Apple and HTC were in a patent fight in 2012. Apple and Motorola Mobility currently are battling it out in the U.S. Court of Appeals for the Federal Circuit and in a Florida district court.

Two purchases of patents occurred, that arm both Google and Apple with significant intellectual property for the future of computing. In the first, Google got protection by buying Motorola Mobility for $12.5 billion, which was announced in August last year.

"Motorola Mobility's patent portfolio will help protect the Android ecosystem. Android, which is open-source software, is vital to competition in the mobile device space, ensuring hardware manufactures, mobile phone carriers, applications developers and consumers all have choice," according to a Google blog post.

The second occurred when Google wanted to buy Nortel Networks. Nortel, however, was bought by Apple, Microsoft, and other technology companies for $4.5 billion in 2011. The alliance of technology companies got 6,000 patent assets from this deal.

The other way to play the game is to be friendly. For instance, Microsoft and Apple signed anti-clone agreements. All of this puts Microsoft in a good position, with anticipation of its new Windows Phone 8 and Surface tablet.

On days like Wednesday, when Apple fanboys line up outside stores to buy the latest iPhone, it's easy to believe Apple is dominant. IDC reports that Apple only has 19% of the worldwide smart phone market. Android, on the other hand, has more than 50%. So it's clear Apple can't just dominate the closed system--it needs to bank on the open system as well. And to do this, it needs to flex its patent muscles.

Should companies have this much IP protection? The battle continues. Apple filed a new U.S. lawsuit against Samsung on Aug. 31, claiming the Galaxy S III, Verizon Galaxy S III, Galaxy Note, and Galaxy Note 10.1 violate Apple patents. Apple wants to stop the flood of copycats on the market, the new court document said, which includes 17 new products.

With the future of computing going to the phone, Apple doesn't want to make the same mistake it made in the PC era and lose a battle to big players like Microsoft. It knows better than to try to eradicate an open system--so it better figure out a way to make money from it.

Samsung isn't just waiting around for Apple to strike again. It looks like Samsung is fighting back with LTE patents. According to the Korea Times, Samsung wants to sue Apple over the iPhone 5 for infringing on its fourth-generation (4G) long-term evolution (LTE) connectivity patents.

The battle has only just begun.

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