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Business | July 04, 2011

Samsung's defense scoffs at Apple's attitude

Look at this irony: "The Samsung Defendants admit that they have not ceased competing with Apple notwithstanding Apple's efforts to avoid such competition."

Late on Thursday, Samsung filed its answer, affirmative defenses and counterclaims to the amended version of Apple's complaint in Northern California. Most of the document consists of "boilerplate" and the usual wholesale denial of all allegations, but there are a few interesting things to say about it. In particular, Samsung scoffs at Apple's attitude toward its competition by (repeatedly) stating the following: "The Samsung Defendants admit that they have not ceased competing with Apple notwithstanding Apple's efforts to avoid such competition." The term "Samsung Defendants" means the legal entities (Samsung's Korean parent company and two U.S.-based subsidiaries) that Apple is suing. Funny as Samsung's ironic remark may seem, that's the obvious position for Samsung to take. While Apple describes Samsung as "the copyist", Samsung naturally argues that it's just competing. Intellectual property and competition are two conflicting goals. The question is how to reconcile them. If all copying is allowed, there's probably a lot of competition, but investment in innovation and the introduction of new products won't be sufficiently incentivizied. Innovators need a certain "breathing space" -- but there must also be room for (fair) competition. I believe Samsung has stepped over that line, though probably not as far as Apple claims. Not only does Samsung suggest between the lines that what Apple calls "copying" only amounts to "competition" but Samsung also stresses its own role as an innovator and its own patent portfolio: "From 2005 through 2010 alone, Samsung invested more than $35 billion in research and development. More than a quarter of all Samsung employees -- over 50,100 engineers overall, including about 8,700 in telecommunications -- daily engage in cutting-edge research and development projects." "[...] Samsung has in its portfolio as of April 1, 2011, 28,700 United States patents, including 5,933 in the telecommunications field. Samsung is consistently ranked ahead of other technology companies in terms of the number of issued patents obtained in the United States, with 4,551 issued patents in 2010 alone." Samsung also points out its market position: "During the last half of 2010, Samsung sold more Android-based devices worldwide than any other company." Consolidation: Samsung drops its separate California suit and integrates its essence into its defense against Apple's lawsuit Samsung originally filed a separate countersuit about two weeks after Apple filed its complaint with the same district court. Yesterday Samsung filed a notice of voluntary dismissal of that separate lawsuit because the judge had suggested that Samsung convert it into counterclaims against Apple's complaint. Samsung has responded vigorously -- almost furiously -- to Apple's original lawsuit. It's quite a logistical challenge to bring complaints and manage cases before eight courts in six countries on three continents. But I have no doubt that Apple can cope with the situation. It owns patents around the globe, and it can hire lawyers wherever it needs them. Apple has been doing business with Samsung for a long time and will have evaluated its counterpart's tactical options prior to embarking on this adventure. ----- More can be found on Florian's blogg.
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