Chapter 8 Case Opener

Chapter 8 Case Opener

Technology Companies at War In the past five years, there have been significant innovations in technology such as smartphones and tablets. Technology companies rely on intellectual property law (IP), such as patents, trademarks, copyright, and trade secrets, to protect their innovations. For example, Apple and Samsung, the two largest smartphone companies, have filed various patent infringement suits against each other in courts around the world. Apple and Samsung are strong competitors, so if one company were able to obtain an injunction preventing the other company from selling certain phones and tablets, this injunction could be devastating to the losing company. In one of these cases that proceeded to a jury trial, Apple argued that Samsung copied Apple’s design of the iPhone and iPad—specifically, that Samsung copied the rounded rectangle shape of the iPhone in violation of Apple’s design patent and the iPhone’s trade dress. Steve Jobs, the former CEO of Apple, emphasized the importance of neat, clean design for Apple products, and Apple has thus sought and received hundreds of design patents along with trademarks protecting its products. Similarly, Samsung has asserted a number of its own patents against Apple, including a patent covering the ability to photos from a camera phone.

Critics argue that these patents and trademarks are too broad (i.e., that something as simple as a rounded rectangle or sending a photo from a phone should not be protected by patents or trademarks). Critics further argue that such broad IP stifles innovation and prevents smaller players from entering the market because they cannot withstand the costs of litigation associated with competing in the smartphone and tablet markets. In response, the patent owners argue that they have expended sig- nificant resources in creating their products and deserve to avail themselves of the protection afforded by IP. Critics further argue that technology companies spend millions of dollars on litigation rather than on developing and improving products. Technology companies respond that they have no choice but to seek enforcement of their intellectual property through the legal system.

Furthermore, in January 2013, Apple Computer was granted a trademark for its retail store design and layout.1 Specifically, the trademark covers the design, the shelves in the store, and the location of the tables displaying products. One of the main reasons this trademark was important to Apple was that alleged fake Apple stores in China confuse customers.

1. Do you think technology companies should be able to receive protection for allegedly basic ideas (e.g., store design or shape or color of a product) and functionalities?

2. How does intellectual property litigation between competitors (such as Apple and Samsung) affect you? 1 Erin Geiger Smith, “Apple Trademarks Design of Its Retail Stores,” Reuters, January 29, 2013.


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