Interview IPEG in The Korea Times

Today an interview with IPEG’s founder appeared in The Korea Times. The interview was taken by email by Technology reporter Yoo-chul Kim. The full text used for the interview read as follows

Questions:

 *Is Apple really an innovation killer? If not, please say why. 

To call Apple an “innovation killer” would be a travesty of facts. No matter from which part of the world you are or on who you want to side in the current technology disputes, Apple introduced a revolutionary and innovative way to distribute music. iTunes and the iPod caused the music industry to change its out-of-date business models. Later it also influenced publishers and movie industry to revisit their business models when Apple introduced the iPad. It created a whole new experience on how people engage in music, TV shows, apps, podcasts, books and so on. In doing so it created a giant innovation in terms of business models. Hence the patent fight as competitors jumped the wagon Apple started to set in motion.

*The U.S. Patent and Trademark Office nullified Apple’s patent claims on a touch-screen “bounce back” feature, a decision that could help Samsung in its fight against a $1 billion patent infringement verdict. What do you think about? What’s judge Koh’s bet?

As it goes in many global patent disputes, the longer the legal worldwide battles go on, the more holes are made in a party’s patent position. Every large patent battle starts with a selection of easy-to-explain patents, preferable user-interface patents, like the “rubber banding” patent that now is being revoked by the USPTO. The longer you fight, the greater the chance that the battlefield becomes a patchwork of wins and losses, making the outcome in the various jurisdictions unpredictable and much less understandable (for both sides, that is). Its hard to understand why even courts in one country can disagree among each other whether a party infringes a patent or whether a patent is invalid or not, let alone how the outcomes of the legal battle in different countries affects each party’s position. Patent fights become a  jigsaw, leaving both parties at odds what the final result of the patent battle brings them.

As far as I understand US patent law, I don’t think Judge Koh has any say on this other that that she has to accept that the party granting the patent in the first place, the USPTO, revised its opinion and withdrew the patent. This USPTO decision can be appealed by Apple, but Judge Koh can’t influence that anymore. However it gives legal weight to Samsung’s argument that some Apple patents were initially granted in error.

*Apple was ordered by Koh to publicize its key financial figures. Koh is changing her mind? Apple is a secretive firm. The order will hurt Apple’s decades-long values? And Why?

That is a way too dramatic view. It is all part of a fierce Intellectual Property battle, a win here a loss there. Winning a damages order, having to disclose financial data to prove its alleged damages, its all part of the game. Apple has still many options, I guess, from appealing to asking for a protective order not to disclosure their proprietary financial data to the other party, only to a trusted third party, or many other options the US counsel may advise.

*U.K. court ordered Apple to launch an advertisement. You think the ruling will affect other issues in other countries?

Personally I find this a rather odd decision. The Court, as I understand it, ordered Apple to publicly state that Samsung did not infringe a certain patent, so as to “diminish” the public relation exposure Samsung got after the first wave of publicity painting Samsung as a copycat rather than an innovator. Given the amount of publicity every bit of information on this high profile patent battle seems to get, any news of a “win” of one party over the other creates a new avalanche of blogs, publications, editorials and comments, enough to restore whatever impression the public has over on one of the parties. It only contributes in my view to the irrationality of patent battles and will only enlarge the frustration many feel over this type of IP litigation, asking what, if any, result in the market this type of legal fights have.

*Apple said jury foreman Hogan was balanced not biased. But Korean media (hope you understand about Korean media’s favorable stance towards Samsung _ off the record) said Hogan is disqualified citing his involvement in Seagate issue and quotes quoted by many foreign media. Hogan biased or balanced. Please say why.

I am not particularly familiar with this small piece of court-related razzle-dazzle. I seriously doubt how relevant this is, honestly. Of course any small “victory” in a court battle is being magnified so as to distinguish the “good” versus the “bad” guy. Overall I believe it’s just one of the many issues that always seem to happen in any large scale IPR (and other legal) battles. Not very exciting in my view.

*You think is there a possibility that the California verdict may be

thrown out by Koh in December 6 or is there any possibility that the judge Koh to decide Samsung to pay below $1.05 billion. Please say why

In general it is my impressions that most jury awarded damages are later overturned or dramatically lowered by Judges or Courts in the US. Of course in this highly visible and hugely “public” patent battle, big numbers like the jury award of over a billion dollar, bodes well for the generally laymen public that follows this titanic struggle. Look at the outrageous rumors on internet gossip that followed the jury award that Samsung intended to pay with nickels, 30 trucks of five cent coins. It fits in the current time: facts and fantasy shaking hands. I am sure that things are sure to simmer down over time.

*How can you define about the dispute. My Samsung sources said Samsung doesn’t have any plans to sign a cross-licensing deal because Samsung still believes the axis for smartphones is still divided by the both. That’s why Samsung recently announced to build another handset factory in Vietnam (Korea Times exclusive, which Samsung confirmed, later). What do you think. You think the dispute will keep continue throughout next year as well?

If you look at the statistics, over 90% of electronics and related patent fights end in a settlement, sooner or later. I am convinced that over time this will be true for the Samsung Apple dispute as well. However, its way too early now for any party to settle. The price would simply be too high. There is a risk for Apple though. The initial “drive” behind the fierce global IP fight was for Apple to draw a line in the sand, to show that it would not accept any party to go beyond sound competition by “copying” its main features and what they believed to be their hard fought innovation. The more the battle starts to resemble an Emmentaler Cheese (cheese with holes), the lesser effective Apple’s efforts to draw a public image of Samsung as the copier and Apple to be the innovator, will stick in the public mind.

*What Apple exactly wants for the fight with Samsung.

It’s a well known phenomenon: as soon as a dominant player in the market loses market share (Apple) against a forceful newcomer (Samsung), the fight shifts from the marketplace to the court. So did Apple. It took on Samsung in patent litigation at many different fronts to see if the Korean company could be stopped eating its market share. Its as old as patent litigation itself. It happened to ASML, now the world’s largest lithography equipment maker in the world. After ASML (Netherlands, former subsidiary of Philips Electronics) started to eat market share from Canon and Nikon, who traditionally dominated the market for these machines (that makes chips form silicon wafers, that those machines produce), Nikon started a multi-jurisdictional patent fight, trying to curb its market failure.

The Australian Judge called the patent dispute over wireless transmission technology “ridiculous” and suggested this might be best settled in mediation between the two giants. Is it indeed “ridiculous”? There is some truth in it. This is why. Both Apple and Samsung perfectly realize that there has never been any company in the world that managed to throw competition out of the market all together by means of patent litigation only, so what is the ultimate goal of this costly litigation strategy?

It’s the fine combination of playing the litigation card, starting preliminary settlement talks here and there, force competition to alter details of its product in some markets, drive production costs to go up by forcing the other to adept workarounds are the core of any patent litigation strategy.

This enforcement strategy was preluded by a stage in which both parties amassed as many relevant patents as they could possibly get (either by own creation or by acquisition depending on R&D outcomes and timelines) to make  sure that life of the competition can be made as difficult as possible. All this to maintain market dominance (for Apple) or to achieve effective market entrance (for Samsung). So, patent litigation is therefor not a goal by itself but rather a supporting market tactic, but always part of a larger corporate strategy to maintain (or increase for that matter) market share.

The ultimate goal however is, both parties know that, not to push competition over the market edge but to let them “pay”. Not just for paying lofty monetary compensation by means of license fees that one party wants to force upon the other, but also to refrain competition from using nice add-ons for their products, making the competing product less attractive. The market of consumer electronics is fast, small steps in product improvement are short lived and consumer behavior is capricious, so any advantage in time for “must-have” gadgets means better market penetration and consumer loyalty. Being able to force competition to alter those “goodies” or make expensive workarounds will immediately pay off in terms of market share.

A good example is Apple’s multi-touch user interface, covering tasks that people often use smartphones for — displaying a list of instant messages or e-mails, reviewing photos and documents, scrolling, displaying their calendar, viewing a Web browser and looking at maps. It made all the difference when Apple first launched this multi touch technology in its iPod and later iPad and iPhones (“techno-ready marketing”). There is no way any competitor of Apple could have entered the market not having these multi touch features. So using the patents to make competition’s life as difficult as possible o force them to work around these “must-have” features, causing launch delays or even potential market failures is in the patent strategist portfolio of tools. The positive side-effects of using user interface patents in court is that it is much easier to explain to any court than using overcomplicated patents that can only add to the Russian Roulette outcome of patent litigation in many jurisdictions (especially jury type of litigations) and hence complicate strategy aims.

*Need your perspective about Tim Cook leadership.

Haha, who am I to have a fair judgment on this subject? From a distance, being a rookie when it comes to running a company, let alone a tech giant, it seems he is doing very well, wouldn’t you agree? If you follow the fashionable way to judge a CEO by the way the share price of his company is doing he might not be the Steve-Jobs 2.0, but taken the economic climate we are in, Apple is in great shape and an role model for many companies, an example of how to stay in the forefront of an extremely volatile market

*Tell me your thoughts on the patent dispute among firms in the IT industry. Are these mostly legitimated claims? Or do you think they hamper innovations as some would say.

I have a feel that I know where you are coming from. Many voices are heard these days that software patents, take the ones in this Apple-Samsung IP litigation as an example, are wrongfully granted, that it is that they are too easy to get. The threshold for “inventive step” should be higher, or, alternatively, they should not be granted at all. I disagree. Like in any other industry patents for new and innovative IT products are necessary to maintain innovation, to be used in cross licensing, to function as a strategy tool and to encourage R&D activity. Of course when it comes to software it remains a challenge to make sure the examiner has access to a sophisticated source to find whether a proposed patent covers what is already known or practiced. Even if many software source code is not “published” third parties should be allowed to show that a patent application covers what has been done and used already in the market. Other creative solutions should be considered to make sure software patents are not granted too easily. That’s a work in progress. Many Patent Offices around the world are working to improve the system. Abolishing the system all together does not help, certainly not Western economies that thrive on knowledge.

*In your mind, who is the viable candidate that challenges Apple the most in the IT industry? Can Samsung Electronics be called such a contender?

No doubt about it. Of all smart phones sold in the world, 1 out of 3 is a Samsung

*Samsung still believe Apple’s request to pay just a dollar in return for using Samsung-owned mobile patents is unacceptable. You think design is more valued than technologies? Without techs, design should be meaningless.

 

I am not sure what the last has to do with the first. The dollar-per-patent is just a means to get paid for what Apple believes it has created and should be rewarded for. In my view that has little to do with appreciation for design. Of course design is as important as technology. A well designed phone that does not function well is as unattractive as a jewel of technology that has an awful look and feel.

*How about pre-conditions for Samsung and Apple before entering a comprehensive cross-licensing periods? Please tell me.

Cross licensing only makes sense for either party if there is something in for both of them. I cannot see that that is the case, unless one party has or will achieve a technological advantage over the other in a technology that is crucial and imperative to maintain market share. I am not familiar with the facts enough to have an opinion on this whether this is the case (or will soon be). In the absence of this I don’t see a cross licensing to happen any time soon

*You think Samsung is a copycat company? Don’t you think the patent fight is a growing pain for Samsung? Designers are influenced from here and there. It looks far Samsung simply copied Apple. Needs your opinion about this.

In general I cannot believe that a tech giant like Samsung who has done so remarkably well in the market for consumer electronics where other companies like Sony and Philips, Nokia and others have failed to maintain market momentum should ever be called a copycat. As a reminder: most of the American and European companies that became giants in their own right, started off by looking (too) closely to their competitors, or, probably more exact, started of by copying but soon became creators themselves. Being a copycat alone or remaining a copycat, will not help to survive in this highly contentious and competitive market for consumer electronics.

*Final words for the presiding judge Koh? Please…,

I wish you all the wisdom in the world, with a couple of million eyes and ears that follow each and every step you make, knowing that in the public eye, you never do it right. Be a jurist and a fine and sharp one and remember, its only an opinion, after all.

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