THE NOTION of Apple and Google being locked in a bitter battle for consumers would have seemed incongruous just a few years ago. A maker of computers and media players and a search engine would have seemed more likely allies.
But that’s exactly what has happened. With both companies competing for a greater share of the mobile phone and tablet markets, Google and Apple are now direct competitors. Android is currently beating Apple in terms of market share and sales. According to Gartner, Android was the best-selling smartphone operating system in the second quarter with 43.3 per cent of the market. Apple’s share was just over 18.2 per cent.
Things are getting heated, and companies are turning to the courts to protect their intellectual property and limit their rivals.
Apple has filed suits against a number of its Android-using competitors claiming they had infringed its patents, including Samsung, HTC and Motorola.
“Competitors should create their own original technology, not steal ours,” a spokeswoman for Apple said.
The tech giant was granted an injunction by a German court on August 9th effectively preventing the sale of the Samsung Galaxy Tab in most of the European Union, a major blow for its rival.
This follows a similar move that delayed the launch of the tablet in Australia. The German injunction has been lifted partially, and a hearing on the matter is due to take place next Thursday.
The Tab lawsuit was just the latest in a long line of patent-focused legal action between Samsung and Apple. The two firms have sued each other in the US, Germany, Japan and South Korea, following an April lawsuit by Apple that accused the Galaxy smartphones and tablets of “slavishly” copying the iPhone and iPad. Other phone makers have also been seeking out the help of the courts.
Once billed as king of the smartphones, Nokia settled a copyright case against Apple earlier this year that saw it earn a once-off payment that could be worth as much as $600 million and ensure ongoing royalty payments.
Meanwhile, HTC has filed a complaint at the US International Trade Commission against Apple, seeking to block imports of the iPhone, iPad and Mac computers because the products infringe three patents related to wireless technology. It follows a case lodged last year at the ITC that made similar claims.
And it’s not just happening in the mobile phone market. This week, social gaming firm Zynga found itself on the wrong end of a patent infringement case taken by Agincourt Gaming, which claims the Farmville maker infringed two of its patents dating back to 1996 that relate to redeeming virtual prizes in games.
Patents can be a tricky business, as many companies are finding out. Companies are investing billions buying them to defend against potential legal action.
Earlier this week, Google struck a defensive blow with the announcement of its intention to purchase mobile phone manufacturer Motorola Mobility.
The deal doesn’t signal a sudden desire to start making hardware. Google may have paid $12.5 billion (€8.7 billion) for a phone manufacturer that has fallen behind its rivals in recent years, but the deal also nets it more than 17,000 patents to combat the iPhone.
“We suspect that Google will now try to provide an umbrella for the Android community that provides IP protection from key rivals such as Apple and Microsoft. This is broadly how Microsoft protects Windows Phone,” Nomura said.
“We do not believe that Google will aim to continue to make handsets long term, but will rather look to spin the business out to an Android partner – such as Huawei, LG, ZTE, for example.”
Before the Motorola deal, Google had few patents on mobile-phone technology. Last month, it bought more than 1,000 patents from IBM, and bid for Nortel’s, but was beaten by a group that included Microsoft, Apple, and Blackberry maker RIM.
“The analogy to a nuclear arms race and mutually assured destruction is compelling,” said Ron Laurie, managing director of Inflexion Point Strategy, which counsels firms on purchasing intellectual property. He said Google and its rivals look evenly matched. “Google may have become a patent superpower.”
The Motorola sale has prompted analysts to examine other potential targets. Eastman Kodak may hold patents worth five times more than the business itself. The camera company had a market value of $30 billion at its peak, but has slid 98 per cent as smartphones have hit demand for its digital cameras. But it still has one weapon left in its arsenal: the digital imaging patents it owns, which according to MDB Capital Group, could be worth more than $3 billion.
Interdigital is reportedly also being eyed as a target for a number of companies. It owns about 1,300 patents related to mobile technology.
The patent arms race may only be beginning.
