Patents: a complex web of relationships – Mobile World Live

Patents: a complex web of relationships

07 JUL 2011

Patents remain something of an industry hot topic, with the US$4.5 billion sale of Nortel’s patent portfolio accompanied by numerous smaller deals, and with new legal actions seemingly being initiated by the day. For example, in the last couple of weeks, Apple’s spat with Samsung has grown in intensity, and Microsoft is also reported to have the handset market number-two in its sights.

Samsung’s involvement in these two instances is interesting, because it highlights exactly how complicated relationships in the mobile industry can be. Starting first with the Apple case, Samsung has for a long time been an important supplier of components to the iPhone and iPad maker, and when the first case was filed, Apple appeared to be taking a pragmatic approach: Tim Cook, its COO, said that “we are Samsung’s largest customer and Samsung is a very valued component supplier to us, and I expect the strong relationship will continue.”

However, as the number of cases filed increased, it was reported that Apple is considering a switch of suppliers for some of its future processors. To a fair degree, it seems likely that this decision is driven by a desire to broaden its supplier base, as volumes of its iPhone and iPad grow. And with a new version of the iPhone due in the near future, it would make sense for Apple to review its supplier contracts to ensure it is getting the best deal, both in terms of the technology available and the prices it pays.

But it does not stretch credibility too far to think that Apple does not feel the need to spend more and more cash with a rival. Even aside from the patent battle, the fact is that Samsung’s Galaxy-branded products are the most high-profile competitors to the iPhone and iPad lines, and with Samsung expected to become the biggest smartphone vendor in the near future, this company is clearly a threat to Apple’s future growth. The more Apple spends with Samsung, the more cash the company has to fund a legal process which already looks set to be drawn-out and complex.

The Microsoft situation is also interesting, in that Samsung is both a customer of Microsoft, and a company which offers products using a rival technology – and Microsoft stands to make cash either way. The computing giant is reported to be chasing Samsung for patent fees related for its Android devices, which are said to infringe Microsoft’s intellectual property. Microsoft has previously negotiated deals with vendors including HTC – but with Motorola among the companies holding out.

According to reports, Samsung has been offered a sweeter patent licensing deal if it agrees to support Windows Phone to a greater degree, which is an interesting way for Microsoft to attempt to build support for this platform. Indeed, with Microsoft’s close tie-up with Nokia changing the landscape heavily, there has been some suggestion that other vendors may be less keen to play second fiddle to the new supporter – which may be true of Samsung, which is certainly the company with momentum on its side at the moment.

What these cases are likely to come down to, rather than the judgement of the courts, will be negotiation. And the complex relationships of the companies involved means this is likely to be a drawn-out and delicate process. With competitors being customers or suppliers, and partners as well as rivals, there will be few black-or-white discussions. A smooth resolution is likely to be more beneficial – across the board – than a court case. And the details will be hidden away, with the companies only indulging in mutual back-slapping in their public statements.

But the only solid fact is that it is rare to see a penniless lawyer.

Steve Costello

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members

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