See you in court: Smartphone giants’ patent litigation strategies and outcomes

Sep 12, 2014

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iStock_000024075594XXLargeIn recent years, two titans of the smartphone industry – Apple and Samsung – have found themselves locked in courtroom battles. New research suggests that these disputes, which have resulted in extensive media coverage, are little more than show, and that rather than spending their time pursuing litigation against one another, the opponents would be better served learning to co-operate.

The study, by Drs. Deli Yang of Trinity University, and Maho Sonmez of UTSA, San Antonio, Texas, examines the relationship between court decisions and market reactions, focusing on 16 pairs of smartphone disputes between Apple and Samsung across six countries. The research reveals that these patent litigation battles have little effect on the market regardless of international jurisdictions.

Litigation can prove costly (frequently stretching into the tens of millions of dollars), time-consuming and often inconclusive, with courts in different countries prone to delivering differing rulings. In addition, the research indicates that the net financial benefit for the instigator is minimal.

“Financially, the winner doesn’t gain that much,” says Dr. Sonmez. “Whether the result is positive or negative, it provides publicity for both companies.”

Since neither winning nor losing in court add much value for the firms – and, in fact, lead to little or no change in the market from before the litigation – the researchers recommend that the two companies should put less effort into litigation and more into negotiating an amicable partnership.

The lack of tangible results “implies the importance of focusing on innovative effort to collaborate rather than fighting in court,” says Dr. Yang. The authors note that Apple and Samsung make substantial sums of money by co-operating in areas such as manufacturing and supply, demonstrating that they are capable of collaboration.

“Each company has its strengths – you can’t have it all,” Dr. Yang concludes. “In the end, they need each other.”

Is It Worth the International Vendetta? Investigating the Patent Litigation Strategy and Firm Market Value Relationship with 16 Pairs of Smartphone Patent Dispute Cases by Drs. Deli Yang, Trinity University, and Maho Sonmez, UTSA, San Antonio, Texas.