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Suing Samsung: Apple's Bid To Protect Its Brand Has Big Risks

Apple Samsung Lawsuit

First Posted: 04/20/11 08:03 PM ET Updated: 06/20/11 06:12 AM ET

Apple's lawsuit against Samsung makes it obvious the Cupertino company is fiercely protective of its intellectual property. A win would force Samsung to cease production, though the likely outcome seems to be settlement, and not shutdown.

If Apple can make its case, it will effectively warn the rest of the industry that its aesthetic is sacred with a marketing coup on brand protection. But should the suit falter, Apple will open up the field for all and any competitor to begin working off of Apple's distinctive look and feel, rendering Apple's devices less distinctive.

Apple, notorious for aggressively alleging infringement against anything that seems to threaten its intellectual property, has targeted Samsung in a suit that claims the company "slavishly" copied Apple's iPhone and iPad with devices like the Galaxy Tab and Galaxy S line of smartphones.

Apple is demanding that Samsung cease manufacturing the devices in question, as well as pay the legal fees incurred in the suit.

However, experts say the suit is unlikely to get its day in court and will instead be unceremoniously settled, potentially with cross-licensing agreements that will allow both parties to continue using the technologies of the disputed patents.

So why would Apple spend millions in legal fees just to prove a point?

Experts say Apple's willingness to sue Samsung isn't just a matter of intellectual-property protection, but a defensive maneuver to maintain its competitive edge in the rapidly growing smartphone and tablet markets. Though Apple currently holds 83 percent of the tablet market, with predictions that they will continue to dominate for at least two years, a flurry of competitors -- plenty of which, besides the Galaxy Tab, look like variations on the iPad -- are knocking at the door. Google's Android operating system has also been stealing its smartphone share.

Whether or not the Apple wins the suit, it will have forcefully relayed the message to the tech community that it is ready to stave off its competitors, especially those competitors it views as having piggy-backed off its work.

"The big picture is these two companies are engaged in a combat. Cross litigation efforts about patent, about design, are actually a way to gain a competitive advantage in this industry," said Harry Wang, director of mobile research at Parks Associates. "If you can have any way to play down your competitor, that will be a good strategy. It sends a signal across the industry."

Especially when it comes to the tablet market, where competitors are still vying to produce a legitimate iPad rival, Apple's case may set the tone for developers trying to think up their own device, by making certain design elements off-bounds.

"The horse has left the barn as to the phone and the Android platform. You could win a lawsuit and force someone to redesign, but they're not going to pull their phones and redesign," said Mark Lemley, Professor at Stanford Law School. "But maybe you send a message to folks who haven't yet designed the tablet, but are planning to do so."

And beyond the industry, Apple's high-profile lawsuit will not go unnoticed by prospective smartphone and tablet buyers. If Apple prevails, Samsung will be forced to stop making devices that look too much like Apple's. Even if it doesn't, Apple may be able to brand its rival as a copycat and convince consumers its products are merely iPhone and iPad wannabes.

"This suit is part of a public relations campaign. The message they're sending is not to Samsung, it's to consumers: 'We're real, we're the original, these people are just a pale imitation,'" said Lemley.

Litigation is a dangerous game, and not only because of the legal fees. Both Apple and Samsung have more than enough money that the price of litigation alone won't bankrupt either. For Apple, the real danger may be that a failed suit will alert other competitors that they can be bolder in hedging close to Apple's design when coming up with new products.

"This is the lack of wisdom behind this particular lawsuit," said Eric Shuster of IntelliClear, an IT research and consulting firm. "They're bringing more and more attention to the space. It's probably going to backfire. It's going to embolden other manufacturers to say, 'If you cant bring Samsung down what's going to stop everyone else?'"

Apple is already suing phone manufacturers HTC and Nokia for many of the same reasons. But HTC and Nokia don't provide Apple with a significant amount of the components used in its devices: in 2010, Apple accounted for 4 percent of Samsung's annual revenue, making it Samsung's second largest source of revenue. Samsung has since threatened countersuit in response to Apple's suit.

"If they shut down Samsung, they'd have to redesign, or Apple could lose and have sufficiently pissed off Samsung that it drops them and they run into a product shortage," said Lemley. "Neither of those outcomes is very likely. We are jockeying for position here. They're trying to trip up the Android network, but at the end of the day, maybe some money changes hands and they settle."

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