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What does Apple's win in court against Samsung mean for consumers?

August 28, 2012 1:13 p.m.

GUEST:

Steven Osinski, SDSU marketing lecturer, who has experience in mobile technology and the wireless industry

Related Story: What Does Apple's iPhone Win Mean For Consumers?

Transcript:

This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

CAVANAUGH: Just when you thought it was safe to find an alternative to the iPhone comes Apple's victory against Samsung. Many technology experts decried the ruling as a blow to consumers, leading to fewer choices and higher prices. Others say it will finally force apple's competitors to come up with their own innovations. Steven Osinski is San Diego state's lecturer on the marketing department. Welcome to the program.

OSINSKI: Thank you so much.

CAVANAUGH: Remind us why apple sued Samsung.

OSINSKI: The claim was apple felt that Samsung had taken some of the apple trademarks and patents and applied them to their smart phone as well. And the jur found after three days of deliberation that that was the case, which was kind of like a solid blow to Samsung and the smart phone industry in general.

CAVANAUGH: There was a very complex lawsuit. I remember hearing news reports before the jury came back. They had to answer 700 question, they had to go through all this paperwork, and yet they come back in only three days.

OSINSKI: It was kind of surprising. The jury was given 140 pages of questioning tech 92ings. What it tells me is that based on the presentations made in the case itself that it was a convincing enough argument in favor of the trademarks and patents.

CAVANAUGH: What did they find they actually copied?

OSINSKI: From the look of the icons themselves, the idea of having a rectangle with circular kind of edge, that was something that Samsung had stolen from apple. In addition to that, are the techniques and applications, the pinch screen, when you pinch on the screen, is everything factifies in size.

MAUREEN CAVANAUGH: It gets bigger and smaller.

OSINSKI: That was something they felt was violated. The dilemma in the industry that's causing some questions is -- and it's ironic, we're at San Diego state, the university just started a new semester, and you think about fraternities, each has a separate private handshake. And I think there's only so many things you can do with your hand. The dilemma in this case is how many innovative ideas could any smart phone manufacturer actually pursue when you have a limited space of the gene, and there's only so many things that people that are commuter savvy could utilize.

CAVANAUGH: Yes, there is a limited universe there one would imagine. And apple is now asking a judge to ban U.S. sales of eight Samsung smart phones. What do you think?

OSINSKI: No, to be candid, I think this is above all else, a psychological victory for apple. It's a wake-up in the industry, but Samsung is going to look at this as an economic situation. They have been fined $1 billion. Most of the industry feels they will appeal. What is going to happen that's interesting, Samsung will appeal, so the products will probably get a stay or an injunction so the phones do not have to be removed right now. Secondly, it's never going to happen. And if it could, it would be very negative for apple. If people would imagine that the phones they have in their possession are going to be repossessed. That's definitely not going to happen. If Samsung decides not to appeal, they may have to send some modified software code out to their users, and that would modify some of the appearance of the phones.

CAVANAUGH: Tamara is calling us. Welcome to the show.

NEW SPEAKER: Thank you. I just purchased a Samsung skyrocket through AT&T. And I'm worried how the lawsuit might affect software updates for our phones. There are any lists available?

CAVANAUGH: Let's find out. Thank you for the call.

OSINSKI: That mar-Ait's a good question. A large number of the phones that are in violation are not even available in the you said. What I would recommend that you do for the quickest answer, probably contact the AT&T realist store that you purchase today from, or any AT&T store. Even call the customer service number, and they could probably verify that for you immediately. One other thing, the skyrocket that you're talking about is a brand-new model; is that correct?

NEW SPEAKER: Yes.

OSINSKI: I think you're also excluded. I think the lawsuit was for previous models.

CAVANAUGH: Okay. Thank you for the phone call. So it is as we speak, I know I've read that the judge is going to rule on this probably some time next month, Samsung can continue selling its smart phones and tablets in the U.S. would you recommend that consumers buy them?

OSINSKI: First off, the tablet has been excluded.

CAVANAUGH: Okay.

OSINSKI: The tablet piece of the case was over. The jury ruled that Samsung did not violate apple patents in developing the tablet. So the Galaxy tablet is fine. I almost feel that this is it a battle of the Giants. Samsung has been fined a billion dollars, but their war chest of cash is $14 billion right now. I would probably elect to fight this, and if that happens, apple is not going to get their wish of having these phones rejected in the near future.

CAVANAUGH: I keep saying in the U.S., in the U.S. does this verdict affect Samsung products outside the country?

OSINSKI: Not legally. In other words, the American courts can argue that it does, and for American companies to choose to do business in these company, it may depending on the rule of law. But internationally speaking, it doesn't have much of a reach at all.

CAVANAUGH: Outside of the concept of the battle of the Giants, is there a larger complication as to what this decision means to consumers?

OSINSKI: I think ultimately when you have diversity in products, things get better. I think what will happen as a result of this is to avoid the litigation, the embarrassment, and a lot of those situations, I think that the code writers and phone manufacturers are going to look closer and say, how can we be truly unique? And as a result of that, on the good side, the consumer will be rewarded by better choices of products and more diverse lines of products. That's the good news. The potential negative, Sony years ago with the beta max, they sunk a lot of their resources to be total he different, but unfortunately technology leaned the other way, and all their customers were up a tree.

CAVANAUGH: Dave is on the line from Cardiff. Welcome to the show.

NEW SPEAKER: Thank you. My question is does the android operation system come under one of the arguments that they infringed upon.

OSINSKI: The operation itself is not. That will be a battle that apple as I understand it has to take up with Google at some point. Not all the Samsung phones are android.

CAVANAUGH: Okay. Why wasn't Google automatically part of this lawsuit considering that the android operation system is the one with the pinch technology and the icons?

OSINSKI: It'd be the equivalent of having an issue where I'm wanting to sue you, and unless I bring the other company in as a third party, it wouldn't be the situation. I can assure you right now that Google is seriously looking at the situation and trying to figure out what to do.

CAVANAUGH: Okay. So you're seeing -- this was another thing that developed as I was reading about this. There seems to be a sort of plethora of lawsuits developing now in this smart phone high-technology world. In fact, I think just today, Google announced it's suing apple over patents owned by Motorola, which Google now owns. Is this the future now?

OSINSKI: Unother than I would believe it is a clash of the Giants. I feel that everybody has a very big stake in these for every one of these companies, so although it is in a sense the cost of doing business, simultaneously, everybody is trying to draw their own line in the sand and say this is our territory, our product, our technology, and hold the line with that.

CAVANAUGH: Could this drive up the cost of smart phones?

OSINSKI: You know, again, short-term, it possibly can. The longer term, I don't think it will. I think if the code writers start making distinctively different products out there, there could be depending on what the cost of the products are, it could work to the consumers' advantage. If the next Samsung you version phone has a whole different smart phone application, that Miranda Rights cause the prices to go down.

CAVANAUGH: Even for Apple.

OSINSKI: Even for Apple.

CAVANAUGH: Russell is on the line from San Diego.

NEW SPEAKER: I think this is another example of where -- since the '70s you've noticed that these corporations will buy each other up just to get their patents in order to know able to control a certain portion of the market. And in this, they've done things like somebody can apply for the patent for the exclusive or which is just the inverting of a bit, the video screen on your computer is just the inversion of the thing in order to change the color of it, and that's absurd. There's no other way of doing that. How could you -- this is just an example of now they're starting to use the fact that they have mountains of patents in order to beat each other up just for financial gain.

OSINSKI: Russell, I would agree with you. To be candid with you, in Google's recent acquisition of motor Ola's mobile division, the whole purpose was not for the product, it was for the patents.

NEW SPEAKER: Absolutely. I can't remember what it was lotus notes had, but somebody bought it then started going around just merely to sue other companies because they had certain patents for the technology, and that guy walked away with tons of extra money after she just ran around and started suing people.

CAVANAUGH: Okay. I guess I'm going to piggyback on what he was saying, and when a company like apple develops a product that leads to so much high demand isn't it to be expected that other companies will want to develop a similar product only in a way that's cheaper and maybe more accessible to a wider audience, more consumers?

OSINSKI: It's a very good question. Just to put things in perspective, I got some recent numbers on the size of the industry right now, and apple has 35,900,000 smart phones out in distribution right now, which represents about 15.4% of the smart phone market, where Samsung has about 25%. So Samsung has a lot more at stake. But what you're saying is true, when a manufacturer makes successful product, other people want to carry through.

CAVANAUGH: Skip is calling from San Diego.

NEW SPEAKER: I wanted to further build on the IT argument. In this case, specifically where the victory for apple would spur innovations from other companies. And my specific question is isn't the pinch to zoom patent something that apple bought? So in that case, how does the argument go?

OSINSKI: It's a good question. To be candid with you, I'm not sure if they bought the patent from somebody else. But the bottom line is, whether they bought it or not, in the legal contract, it said that in the purchase agreement that apple has full rights to it. As far as the Court is concerned, it is now apple's product, so they can certainly do that even if it originated somewhere else.

CAVANAUGH: Interesting. I remember reading in the articles that came out on Friday as to how apple presented its case. They made a really heartfelt application to the jury basically saying we put our blood, sweat, and tears to try to come up with these things on the cutting edge of technology, we work and or, that's what this company is all about, and to see somebody come along and basically just swipe this stuff and market it is just plain wrong. Now, of course I'm wildly paraphrasing, but that's basically what they say.

OSINSKI: The strength of the jury is that people want to make decisions by logic. And the judge literally to the tune of 140 pages of legal instructions approached from a logical perspective. But as much as we try to make decisions by logic, the emotional appeal has to kick in. And apple is a company that is perceived as an American-grown company with a wonderful story. So I would imagine the attorneyses probably did play that argument. And it was probably successful

CAVANAUGH: San Diego-based Qualcomm, affected in any way by this rule something

OSINSKI: I don't think so. I'm not a legal expert. Because they're a chip manufacturer more than anything else, I think it's not going to be a real problem.

CAVANAUGH: Ian from Solana beach. Welcome to the program.

NEW SPEAKER: Morning, Maureen. I have a question. The android system of Google and also the apple OSX are based on open-source releases of Unix. In android's case it was Linux, and in the case of OSX, I believe it's OSD. How is it possible for these people to put patents on top of open-source systems?

CAVANAUGH: Thank you.

OSINSKI: It's a great question. To be honest but, I'm not an attorney, but I need to say that as much as it's open-source, if we really scratch Tcertainly applications of the code are not open. Apple is claiming ownership, and that's proprietary. So that was the argument they built.

CAVANAUGH: And describe for us, what does it mean to be open-source.

OSINSKI: In other words -- and please to the gentleman that made the call, as I understand open-source, it's readily available, and anybody can utilize it.

CAVANAUGH: Basically a different kind of operation system than apple has which is proprietary.

OSINSKI: But certain pieces utilized by apple and the android system are from open-source software. That is a correct point. But I have to believe that the cases from a legal perspective were brought on the proprietary software.

CAVANAUGH: Samsung and apple, both very, very profitable companies. What is the bottom line for Samsung? What kind of an effect will have the $1 billion rule having on it?

OSINSKI: I don't want to sound callous with somebody else's money, but really inconsequential. As I shared earlier, to me it's a psychological victory for apple. It's a psychological media issue for Samsung. Every company gets ideas from other companies. I don't know if you can call it blatant theft or anything like that. So I think Samsung is going to be fine. Cultures of companies are different at the same time as well. Ways of doing business vary. So this within an American court for a Korean company, I don't know if it's going to hit them that hard. They certainly would have rather won the case, but do I see this as a game-breaker? Not at all.

CAVANAUGH: Should we expect to see the whole idea of these tiny little differences, you know, that maybe the phones are not exactly the same? They're almost the same but have these little innovations?

OSINSKI: The devil is in the details. It really matterses what kind of innovations they are. I think if anything results from this, they're going to try to be as different as they can be.

CAVANAUGH: And how much -- just speaking between ourselves here, how much do companies really borrow from each other's technology?

OSINSKI: In my opinion, quite a bit. And that's why it keeps the larceny busy in America, and all over the world. It's very hard to reinvent something that's on the right path. And I don't believe that companies literally say, or at least ethical companies don't literally say let's steal their yell ideas. I believe what happens is they try to build from those ideas, but have they built far enough? Or is it too much like the prior product?

CAVANAUGH: And Samsung is going to ask a judge to vacate the billion dollars verdict. So I guess this story isn't over yet in addition to all the other lawsuits that we were talking about, coming down the road.

OSINSKI: Exactly. I guess for the future legal market, some good employment.