Joff Wild

Perhaps the most extraordinary thing about Apple’s slam dunk, home run, golden goal, six hit (insert other hyperbolic sporting term here) victory over Samsung in San Jose’s courthouse yesterday was just how quickly it took the jury to reach a verdict. Although the nine jurors heard days of in-depth testimony and were provided with thousands of pages of documentary evidence, the deliberations leading to their decision to award Apple over $1 billion in damages took less than 24 hours.

No doubt, some in Samsung will regard it as a home town verdict, given how close San Jose is to Apple HQ in Cupertino. That, though, would be a mistake: the consensus seems to be that Samsung had a weak hand which Apple’s lawyers, Morrisson & Foerster, exploited ruthlessly. Indeed, it could well be that Quinn Emmanuel, which represented the Korean company, will argue that it did a great job for its clients by keeping the damages so low – less than half the $2.5 billion that Apple had originally asked for.

Of course, the damages awarded yesterday have to be ratified by Judge Lucy Koh. She could reduce them, strike them out or even raise them; then the case will no doubt proceed to the CAFC in Washington DC, where the award will again be looked at. With all that still to come, the final sum Samsung pays out, if there is one, may not match what the jury mandated yesterday.

But then damages are not the big issue here. As Apple has fought its thermonuclear war against Android, what is really at stake is the company’s ability to exclude competition which it believes is infringing on its patent rights. A billion dollars here or there is nothing to it or to Samsung or any of the other big Android manufacturers. What really matters is being able to put products in front of consumers, what those products can do, how they can do it and how much they cost.

Following its triumph yesterday, Apple holds the whip hand on that front. Assuming Apple is granted the injunction it wants and that the CAFC upholds the decision (which is by no means certain given its record of reversing first instance decisions), the question for the company’s leaders is how they play their win: do they use it to extract a prime licensing fee from Samsung; or do they seek to shut the competition out and wait for it to spend money developing potentially sub-optimal workarounds?

The former option is the one Microsoft would take and would mean Apple having a significant stake in every unit Samsung sells, so forcing the company to up its price and/or lower its margins; but it would also mean greater competition and, potentially, a smaller share of the market. The latter choice will no doubt have an impact on both the price and the attractiveness of the Korean company’s offering, but will lead to accusations that Apple is seeking to stifle competition, with all the negative brand connotations that could have. With victory comes responsibility, and Apple has some big calls to make. My view is that licensing is the best option for all kinds of reasons, but a thermonuclear strategy may preclude that option.

More broadly, yesterday’s decision was a major shot across the bows of the entire Android eco-system. If Samsung, with all its patents, can be left so utterly defeated in a US courthouse, what chance is there for other Android producers? As yet, there does not seem to be a magic patent bullet to fire at Apple. That, in turn, could be very good news for companies seeking to sell portfolios in this space. The fact is that Android needs more cover and this means its community of users needs more patents. They can generate them internally, but the easiest and quickest option is to bring them in from elsewhere. Kodak’s decision to extend its auction may end up looking extremely prescient; while the likes of RIM and Nokia, who are both rumoured to be contemplating big sales, may also see new and exciting opportunities. IBM, too, could get in on the action. Undoubtedly, aggregators and intermediaries generally must be licking their lips.

All that said, though, it is important to remember that we are nowhere near done with this case. To return to the sporting analogy, half time is approaching but has not yet arrived. Once Judge Koh has had her say, we can return to the dressing rooms to contemplate the second half, but unless the two sides sit down and reach an agreement the final score will only be known once the CAFC has delivered its decision. Even then there is an outside chance that the Supreme Court may take things into extra time. As of today, Apple stands triumphant. It is by no means certain that this will be the case in a couple of years’ time when everything is finally done and dusted.