Patent disputes can be a double-edged sword for consumers

PUBLISHED : Tuesday, 04 September, 2012, 12:00am
UPDATED : Tuesday, 04 September, 2012, 2:04am

Hardcore fans of Apple have long accused rivals of copying the American firm's best-selling products, the iPhone and iPad. A California court's order that South Korea's Samsung pay US$1.05 billion for infringing on intellectual property rights was met with cheers that justice had been served. Patent theft is a serious crime and offenders have to be punished, but in so fiercely competitive an industry it will be years before the appeals process is exhausted and a final judgment is made. Other legal cases will be brought elsewhere, furthering the danger that consumers will lose out.

Apple has been quick to seek advantage from its victory, asking a court to ban Samsung from selling eight of its smartphones in the US. But the American company, the most valuable in the world, has not been as successful in its legal fight elsewhere. Judges in Japan, Britain, Germany and the Netherlands have not found patent infringements, while a South Korean court imposed fines on both companies after determining they had copied each other's technology. Mixed legal opinions are to be expected. Innovation is about tapping consumers' needs and desires and learning lessons from products that have gone before, leaving it a matter of debate whether copying, stealing or otherwise has taken place.

Smartphones are by far the hottest electronics products, and lawsuits abound as competitors try to crush rivals. But a market without competition can lead to greed, which means higher prices for consumers. Challengers push the boundaries, coming up with new and improved ideas; without them, complacency can set in. Nor is it in the interests of Apple and Samsung, the biggest players, to gain a reputation for putting legal action ahead of getting on with creating better products.

Apple's strength has been its ability to take ideas and make them workable and sought after. Wrapped around a distinctive shell, its products have become icons of chic and cool. But to maximise profitability, choice and flexibility have been limited. Competitors like Samsung have provided what Apple has not.

Competition provides more choices, quickens the pace of innovation and lowers profits. Apple's market share for smartphones has been falling and Samsung threatens to cut into its tablet computer dominance. Using global patents and intellectual property to file lawsuits will make rivals think twice when creating new products and, if successful, shut them out. That is good for profit margins, but not consumers.