Why Apple Sues

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jobsminifig

Apple’s critics generously assign a variety of motives to Apple for filing lawsuits.

Apple sues because it wants to control the market, overcharge for its products, exclude competitors from the market or punish competitors for daring to not think different. It’s all part of Apple’s “quest for global tech domination.

But these aren’t actual motives. These are appeals to emotion. They’re legitimate perspectives, but expressed to negatively encapsulate spectacularly complex technical, legal and ethical issues into sound bites that make you want to agree with the author that Apple is bad and wrong.

Apple has only one motive for patent lawsuits, and I’m going to tell you what that motive is.

What Is a Patent Lawsuit, Anyway?

A lawsuit is often viewed in isolation by the gadget-loving public as an act of aggression by one company against another.

Sometimes gadget fans feel like children whose parents are screaming at each other. It’s stressful, and everybody wishes they would just stop.

But that’s not how the companies see them. They see lawsuits as marriage counseling.

A civil courtroom is simply a place where differences of opinion can be settled by arbitration in a process that results in decision that’s binding theoretically on both parties.

More to the point, a lawsuit is just one part of a larger companywide program of innovation development and protection.

The company invests in research and development. Smart people think through hard problems. They come up with new ideas. The original ideas are articulated in the form of patent applications, which are filed with national authorities according to the laws in each country. And there’s no point to any of that if you don’t defend those patents via the legal system.

Hate the Game, Not the Player

I’ve found that most of the people who think they’re critics of Apple’s litigiousness are in fact more critical of the system.

They criticize Apple because they mistake Apple’s skill with needless aggression. And they mistake some other company’s incompetence with niceness.

Specifically, these critics believe that small things shouldn’t be patentable, only large things. And they believe that only functions should be patentable, not design or look-and-feel.

In reality small things — very small things — can be patented under current US law. And so can design.

Maybe these things shouldn’t be patentable. But they are. And if you don’t patent small things and design things and sue when those patents are violated, your competitors will. That’s how the system works.

Nobody likes the patent system. We all dream of the day when the US has a patent system that’s fair, rational and maximizes innovation.

But companies shipping products right now don’t have the luxury of dreaming. They live or die by the existing rules.

This is especially true for Apple. Apple makes one phone. If that phone were banned over patent infringement, the company would be mostly destroyed overnight. Contrast this with Samsung, which has a bazillion phones to fall back on and, in any event, also sells refrigerators, TVs, cameras and all the rest.

So getting the innovation development and protection process is existentially important to Apple. It’s vital that they get it right, and they do.

Why Companies Sue

There are, in fact, many motives that drive technology companies to sue over patents.

Some failing companies desperately need cash. As they take inventory of their assets, they find that the intellectual property patented during glory days can now be converted into badly needed capital. Kodak and Yahoo, for example, probably sue with this motive.

Others seek revenge. They sue after being sued as a reaction (cough)Samsung!(cough). It’s basically a strategy from boxing. The second your opponent connects, you instantly punish him with a counter punch. It puts him at a psychological disadvantage.

Still other companies want to straight-forwardly monetize their R&D. People are using their ideas, and they want to get a monthly check for it. Microsoft is big on this motive.

Speculation is another motive. Patent trolls roll the dice on investment in the purchasing of other people’s R&D, then they hunt for infringers in the hopes that settlement revenue will exceed purchase price.

Another form of speculation is when a very tiny company sees a very large company succeeding with an idea that some court might agree is a patent violation. Essentially, they want a piece of the action. Many of the lawsuits that Apple faces fall into this category. Companies are currently suing Apple over claims that Apple infringed patents used in Siri and Facetime, among others.

But none of these motives drives Apple.

Why Apple Sues

Apple’s nightmare is a world in which all phones and tablets look and feel the same, and everybody buys on price, or on processing power or whatever.

Apple sues in order to prevent competing products from looking, feeling or functioning the same way Apple products do.

In other words, Apple’s program for innovation development and protection is about fighting an industry slide into commoditization.

These lawsuits, which are mostly about past products, are fundamentally about future products. They’re prophylactic. What these court cases do above all is change the decision-making process for competitors.

A patent-law attorney uninvolved in the Apple-Samsung case named Robert W. Dickerson Jr. told The New York Times that “Companies in the future are going to have to consider how much they want their product to look and feel like their competitors’ products in terms of shape, size, the way it feels, the way it looks, how the icons are similar, or will the icons be quite dissimilar.”

On one end of the commodity spectrum, you have full-fledged commodities, such as crude oil or, say, high-fructose corn syrup. These commodities are sold based exclusively on price. The barrels don’t have fancy labels in branding.

At the other end of the spectrum, you have products that are the opposite of commodities, where brand preference and brand loyalty enables the manufacturer to charge more for a product perceived as having qualities available exclusively from the one company. Examples include the McDonald’s Big Mac or the Toyota Prius.

In just about every single industry of consumer goods, there is a battle between commoditization and de-commoditization. There are the Nike type companies, who want to say their shoes and brand are unique, and you should pay a premium. And there are dozens of other companies who’s message is: Just as good as Nike but cheaper!

A few years ago, LEGO sued a Chinese company called Tianjin COKO Toy Co. because its Coko Bricks product looked too much like LEGO. They were incompatible — you couldn’t plug a Coko into a LEGO. And Tianjin innovated — they came up with slightly different colors and unique Minifig-like characters. But LEGO sued and Tianjin had to shut down the operation.

Coko wanted to commoditize the colorful plastic toy brick industry so it could win on price. LEGO wanted to de-commoditize the industry, so it could compete on brand and product differentiation.

This happens in almost every industry, and it happens in the mobile handset market.

Apple routinely comes out on top in global branding studies, which are based on perceptions of brand value. Apple achieves this in part by successfully fighting the forces of commoditization.

The interesting thing to note about Samsung is that Samsung plays both sides of the field. It’s one of those do-everything companies (like Google, for example) that champions both commoditization and decommoditization. And that’s one reason why Samsung is such a successful company.

Yes, Samsung does innovate. And they also copy. And they make brand-focused products. And they make generic, commodity products. They do it all.

But Apple is a specialist. They make radically de-commoditized products exclusively. And part of their strategy is to fight the forces of commoditization.

And that’s why they sue.

 

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