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Apple vs. Samsung verdict: how will it affect consumers?

The news about the verdict in the infamous Apple vs. Samsung trial has begun to settle in, and everybody is looking forward to the post trial phase. Let’s try to predict what can happen next for the two parties, and most importantly, how will their fight affect consumers.
August 25, 2012

The news about the verdict in the infamous Apple vs. Samsung trial has begun to settle in, and everybody is looking forward to the post trial phase. Let’s try to predict what can happen next for the two parties, and most importantly, how will their fight affect consumers.

What’s next?

Is the verdict a crushing blow for Samsung? At first glance, it certainly seems so, but the truth is the war is far from over. Samsung and Apple are engaged in more than 50 other legal actions in ten countries. Moreover, the San Jose trial that Apple just won will be followed by intense legal wrestling over injunction motions and the actual amount of damages that Samsung will have to pay. The jury found that Samsung willfully infringed on Apple’s patents, meaning that Judge Lucy Koh can decide to increase the value of damages up to three times the sum dictated by the jury. In the worst case scenario, Samsung might have to cough up $3.15 billion.

Even if Samsung loses on all fronts in the following weeks, the Korean conglomerate can still appeal the verdict at the Ninth Circuit Court of Appeals. It’s rare that federal judges fully reverse the decisions of district courts, but in many cases, appeal courts have modified the rulings of inferior courts to some extent. Apple will likely appeal as well; the jury let Samsung off the hook for the tablet-related patents, and the damages obtained by Apple are, at least for now, below their initial demands of $2.5 billion. An appeal is almost certainty, at this point.

Assuming that Apple will emerge victorious from the appeal as well, how will that affect the consumers, the two parties involved, and the mobile industry as a whole?

Product bans might become a common occurrence

Don’t expect an immediate effect on the average smartphone buyer. No money will exchange hands anytime soon, and, in terms of product bans, Judge Koh is not expected to tackle the problem sooner than September 20. Some watchers speculate that, given the breadth of the case, the injunction phase might be delayed even further.

Samsung risks being slapped with bans on dozens of products, as every device in question was found to infringe on at least one of Apple’s patents. The Cupertino-based company will have to prove that the availability of the products on the market causes it substantial financial harm. Most of the devices on the infringing list have reached the end of life status, meaning that injunctions will do little harm to consumers (and Samsung). Some however, like the successful Galaxy S2 and the Galaxy Ace, can still be found on shelves. In the eventuality of Apple obtaining injunctions for them, these devices will be pulled from the market. However, Samsung might try to obtain stays on the injunctions until the appeal is judged, which should give them some extra time to find workarounds.

But these are just the immediate, superficial effects of yesterday’s ruling. For consumers, the real consequences will be far more pervasive and profound.

Price hikes?

Apple’s resolution to enforce its IP rights against Android OEMs will only grow, while the verdict obtained in San Jose will serve as a solid precedent in upcoming trials. Apple is coming out on a fortified position, and competitors will have to scramble to remove any potentially-infringing features from their devices. Given the broad nature of some of Apple’s patents, that might prove difficult if not impossible. As a result, Android OEMs will be forced into paying Apple royalties.

The royalties will be passed to customers, unless phone makers are willing to eat the price hike. Let’s face it, only Samsung is in the position to do that now; the other OEMs are fighting for survival, and profits are already scarce across the industry (unless your name is Apple or Samsung). I believe that Apple’s victory will cause some sort of price increase for Android phones, although it’s impossible to estimate the extent of the inflation.

A wave of change

I also think that the landmark victory that Apple obtained in court yesterday will spur a wave of change (I wouldn’t call it innovation) in the mobile industry. If Apple can patent rectangles with rounded corners (the jury asserted the validity of Apple’s respective patent), no one is safe anymore. Like it or not, Android OEMs will have to think of unique design features that would protect them in case of legal attacks from competitors.

That’s an ambiguous situation. Diversity and originality are important and all manufacturers should strive for them. But where will it stop? What if every phone maker patents the unique design feature that it came up with? Nokia – that flat, square design of its Lumia phones; Sony – the transparent line and the plastic bottoms of the Xperia NXT devices; HTC – the chinned phones?

Samsung has already been accused that it let its legal team interfere with the design of the Galaxy S3 and Galaxy Note 10.1. Unless something is done about it (meaning a sweeping patent law reform), I can see a future where all phone makers overdesign their products, just to ensure originality.

Ten years from now, we will look back at yesterday’s verdict as a momentous event that changed the industry to its core. I am just not sure that it will be for the better. What do you think?